By Mohsen Allam CEO Richard Turner, is a seasonedveteran of the world’s emerging markets. By Courtesy Egyptian Tourism Resorts With a goal of being operational by 2010, Serenia looks to outshine its high-end competition. By Courtesy Egyptian Tourism Resorts With Serenia, Egypt Tourism hopes to corner the elite residential and vacation property market.

By Tamer Hafez

The real estate market is on the crest of a wave, with regional and international brands showing interest in what they see as a very lucrative sector.

Local real estate investment companies are not missing out either. Players such as Talaat Moustafa Group (bt100 number 24) are hitting the luxury end of the market with luxury hotels and the sort of ultra-luxurious resorts that were once exclusive to European and Far-Eastern countries, designed for a clientele that never asks ‘How much?’

The real estate market has always rewarded pioneers. With this in mind, Egyptian Tourism Resorts (bt100 number 71) has decided to offer something more: a vision of the complete integration of services in an ultra-luxury, ultra-exclusive context. With an increasing number of wealthy consumers seeking the next fashionable destination, Egyptian Touristm is targeting a market brimming with opportunities.

New Egyptian Tourism CEO Richard Turner has been working in emerging markets for the past 20 years, making him an ideal candidate for a company operating in one of the fastest growing economies, in arguably the most attractive region for real estate investment, worldwide.

“The attractiveness of the Egyptian market is in its upside, which includes deregulation, the general direction of the government towards growth, good underlying principles to make this economy a growth economy,” says Turner. “I see that the main drivers of this economy are real estate and the stock market.”

Turner sees potential in specialized products, services and destinations for the ultra-rich crowd, believing that this niche market is the future of real estate development in Egypt. Describing what he sees as a hole in the real estate sector, he explains: “Right now there is a need for luxury in the context of a general touristic community rather than in the form of pockets [independent high-end hotels]. The market is crying out for this level of sophistication, and the need for more integration with ultra five-star and six-star facilities at its core.”

Egyptian Tourism is already well underway in its ambitious plans to create an exclusive haven in Sahl Hashish, where phases one and two, each six million square meters, are now open for investment. The company has also secured internationally renowned names such as the Trump Organization and Talaat Moustafa Group as partners. Now with Turner as CEO, Egyptian Tourism is ready to begin the next phase of development.

Most would find the magnitude of the Sahl Hashish project remarkable in the way a local truck driver would find the Ritz Carlton VIP lounge remarkable. Egyptian Tourism has owned and developed the 32 million square meters on the Red Sea known as Sahl Hashish over the last 10 years, laying out the infrastructure and basic services to support the establishment of luxury hotels and resorts. “We provide security, sewage, water, telecommunications, Intenet Protocol (IP) TV, data, transport, concierge services and food and beverage services,” sums up Turner.

He explains just how vast the project is: “Categorically we are the largest fully integrated resort under a single management team worldwide. The capacity of Sahl Hashish is 200,000 dwellings, meaning 70,000 hotel rooms, 70,000 villas and 70,000 apartments. In context, it is larger than downtown Cairo in area.”

With a development of this size, targeted at a niche market, a bold and unconventional model was needed. “The model we used when designing Sahl Hashish was to make it a fully integrated touristic community,” says Turner. “We are currently outsourcing expert IP providers, resort management, administrative systems and operators.” Not only does this allow development work to take place at a faster rate, it also reduces overheads. “As such, we have low comparative overheads to establish the company’s operations at a very fast rate,” continues Turner. “We don’t have to wait five years to realize profits, we are seeing results immediately; instant service, instant branding and return. Of course you must pay a little more for each individual service when following this model, but in the current local real estate climate this is the best way to go about it for instant returns,” he says.

“We plan to bring full integration to Sahl Hashish from one to two years of operation. As we don’t plan to have high fixed overheads and long term investment in operations, it is all about partnering with major brands and service providers to get a fast start-up. We don’t plan to grow organically, it’s all about operations now,” he continues.

Targeting the ultra rich means providing services usually beyond the scope of tourism developments. “[W]e have space allocated for an airport facility, but we are still deciding on the feasibility. Even though it would be more convenient to our clients, on the logistics side it may be a detractor. In addition we believe that the government would be better placed to continue its expansion of Hurghada air-traffic than we would,” says Turner. “Our own airport would require a high amount of traffic when we are at full capacity and the frequency of landing aircraft on such a continual basis may not be suitable. At this point, Hurghada airport has been performing very well, with zero incident rate in addition to being directly connected to Europe and other international markets.”

In the popular card game tarneeb, a trump card is a valuable one; it can change the game from a loss to a win, or a win to a grand slam. In the case of Serenia, an ultra-luxury hotel development that will be established in Sahl Hashish, it is Egyptian Tourism’s grand slam, or at least one of them.

The Serenia brand will include a variety of high-end luxury products with no specific target market in mind, but rather faith in the build-it-and-they-will-come business methodology. “The Trump Organization is completely behind the development [of Serenia], and so it will not be segregated to one target market, it will have a variety of products under the Serenia brand,” says Turner. “Also we are cooperating with the brand called One and Only, which has 10­–15 ultra-exclusive branches around the world. The Trump brand is a high-end, high-service luxury brand, while the One and Only is an ultra-exclusive luxury boutique model, and so they complement each other. The Trump brand is a long term services model, while the other is a short-term boutique model,” says Turner. Luring the two brands to the one location was a major trump. “We took the two major luxury brands circulating the world markets for the past 10 years and are servicing them both in the same place. Serenia will have a world class marina port and a world class PGA-classified golf course,” says Turner.

Serenia should be operational by 2010, and according to Turner, “Serenia will [be] adapted [to] the concept of less is more. It will be like having lunch in Burj Al Arab Hotel in Dubai, you have to book six months in advance.” And just like the Burj Al Arab Hotel, Serenia will be an elite membership community. “Serenia will be on the list of top 10 destinations worldwide in its first year of operations,” says Turner with great enthusiasm, before adding an interesting fact; “Serenia has the highest investment per room in the world.”

The bigger a company becomes, the easier it is for competition to cause headaches by eating into its market share. Sahl Hashish is the exception to the rule, according to Turner, who believes that not even Port Ghalib, a super-luxury development belonging to Al-Kharafy group, is a cause for concern. “Port Ghalib and Sahl Hashish are like two fish swimming in the Indian Ocean,” he says. And he’s not worried about an international super-brand coming to the local market to compete with Sahl Hashish either. “We don’t copy, replicate ideas or model anything on something seen before. In addition, for someone to copy us it would be very difficult as we already have 10 years of infrastructure building in Sahl Hashish, and that is very difficult to compete with.” He points to the business model — with its instant service and branding approach, resulting in quick profits — as another barrier competition would have to climb over.

As a new CEO, Turner is keeping his eye on the future, while also juggling the development of the company in the current market. “[Egyptian Tourism] has always been an infrastructure engineering and construction company developing its own initial quantum of development,” he says. “But now with several hotels operational and completion of the downtown [shopping] area [inside Sahl Hashish], the company needs to focus on being an operations provider, community manager and facilities manager to bring that last 10% to an operational phase, from being just a development to a true tourist destination. I see that the company has reached in its life cycle a stage where it needs to expand its core operations to managing these facilities and services.”

Managing a company through a transition is tricky enough for anyone, let alone a newcomer. “As a CEO in a global market, you have to study the methodology, technology and implementation before agreeing to take that post in a company. You need to make a sensible assessment of its status quo and its future prospects, and Egypt Resorts is within my expectations,” says Turner, reflecting on his new role.

He believes that the adoption of international practices is critical, not just for Egyptian Tourism, but for all Egyptian companies competing in the global market. “The problem is that there are currently very few foreign CEOs. [] Companies are now looking for international standard implementation, and this is now where the task lies for the markets in Egypt as they open up, i.e. implementing international management practices in Egyptian companies as they emerge as regional and international players,” he says.

On a more macro level he believes that political and economic stability are the key issues in a country like Egypt when it comes to long-term investments, especially in real estate, where investors are not able to simply get up and leave if conditions become less favorable. “The major issues that impact the economy are the stability of Egypt, in which case the government will not allow anything to happen that would destabilize the country in any way. The second is the stock market, and despite its massive growth, it is still a small market by comparison to other stock markets. Meanwhile, prices are relatively cheap compared with other touristic destinations. Accordingly, I don’t foresee a problem in the coming 10 years at least,” he says.

Turner forecasts a long-term window of opportunity lasting another 30 years until the local market catches up with the international market. “[Real estate] has the potential to produce 10 times the current generated value,” he says, adding that he also sees huge untapped potential in the North Coast. “It is my assessment that if the North Coast — west of Alexandria — is properly developed, it would be bigger than Hurghada and Sharm El-Sheikh put together.”

As for Egyptian Tourism, expansion will come in two different areas, the first being physical expansion. “We are currently eyeing two locations in Dahab and Berenice, overlooking the Red Sea coast line. These two projects will be similar, but smaller than Sahl Hashish. One of our goals is to connect all three locations via an aqua marine connection. This will be the first time any investor has ever done this type of connection to three ultra-exclusive locations before on the Red Sea,” he explains. “Also we are holding talks with Talaat Moustafa and Kingdom Hotels to build a Four Seasons in Sahl Hashish, and are cooperating with Shangri-La Casinos, a Russian brand.”

At the same time, Turner is thinking about the marketing of the Sahl Hashish brand to ensure it develops and retains its niche. “We have a comprehensive and complete ‘no brand’ strategy. We want people when they see the logo — which is a simple picture — to immediately know Sahl Hashish, its values, principles and the kind of experience it offers, much like the Apple brand. It is a simple apple that is bitten from the right [but] just looking at it, everyone knows what it is, what the products look like and the values it upholds,” he says.

“Speculation is the greatest marketing tool ever,” says Turner in conclusion. “Brands that use speculation are exclusive brands. If you have them, it means that you are better than those who don’t. This means that you are a member of an elite exclusive society, which means that you had to pay more than others to get there.” bt