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Viewing cable 06ASHGABAT263, STARWOOD HOTEL MANAGEMENT PULLING OUT OF

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Reference ID Created Released Classification Origin
06ASHGABAT263 2006-03-08 11:45 2011-08-30 01:44 UNCLASSIFIED Embassy Ashgabat
VZCZCXRO1987
RR RUEHDBU RUEHLN RUEHVK RUEHYG
DE RUEHAH #0263 0671145
ZNR UUUUU ZZH
R 081145Z MAR 06
FM AMEMBASSY ASHGABAT
TO RUEHC/SECSTATE WASHDC 7067
INFO RUCNCIS/CIS COLLECTIVE
RUEHAK/AMEMBASSY ANKARA 2521
RUEAIIA/CIA WASHDC
RHEFDIA/DIA WASHDC
RHEHNSC/NSC WASHDC
RUEHBS/USEU BRUSSELS
UNCLAS ASHGABAT 000263 
 
SIPDIS 
 
SIPDIS 
 
SCA FOR DAS GASTRIGHT, EUR FOR DAS BRYZA, SCA/CEN FOR PERRY 
ANKARA FOR FCS 
 
E.O. 12958: N/A 
TAGS: AMGT ECON EINV PGOV PREL TX
SUBJECT: STARWOOD HOTEL MANAGEMENT PULLING OUT OF 
TURKMENISTAN 
 
1.  Summary:  Starwood General Manager Holger Wessel informed 
Ambassador today that Starwood, which manages the Sheraton 
Grand Turkmen and Four Points Ak Atlyn Hotels, will be 
pulling out of Turkmenistan by the end of the month. 
According to Wessel, the move has been a long time in coming. 
 The State Committee under the Ministry of Sport and Tourism, 
which owns the hotels, has refused to invest in the 
infrastructure and training required to meet Starwood 
standards as required under the terms and conditions of the 
management contract.  End Summary. 
 
2.  Holger reported that "secret shopper" inspections of the 
property showed them meeting only 55 percent of Starwood 
standards.  According to Holger, the owners have no 
understanding of preventative maintenance and no willingness 
to fund maintenance contracts.  They have refused to allow 
local employees to go abroad for training, and insist on 
awarding service and supply contracts in a non-transparent 
way (read:  lining their own pockets), resulting in a poor 
level of service. 
 
3.  During a Starwood corporate visit in December, the State 
Committee confirmed that it "did not have the money" for the 
physical maintenance or employee training required by 
Starwood.  At that time, Starwood and the State Committee 
agreed verbally to an "amicable divorce" at the end of March. 
 Starwood requested written confirmation, but  the Chair of 
the State Commmittee said he was not able to take the 
official decision himself  -- it would require a decree from 
the President.  Holger does not believe anyone ever informed 
Niyazov.  Starwood has sent two letters to the State 
Committee stating the company's intention to leave by the end 
of March, but has not received any response.  The three 
expatriate managers intend to depart on April 2; it is 
unclear how the GOTX will run the hotels afterwards. 
 
4.  Comment:  We have all noticed the decline of the Grand 
Turkmen and Ak Altyn over the last year; many embassies and 
companies have been shifting business to the President and 
Nissa hotels, which are owned by the Presidential Apparat and 
managed by a team of Italians.  We have just occupied our new 
Public Diplomacy Center in the Ak Altyn (which also houses 
the British, French, German and Japanese Embassies) and will 
be working with the MFA to determine how best to protect our 
interests. 
 
5.  Comment continued:  The sad Starwood saga is yet another 
example of the declining business environment in 
Turkmenistan.  As is typical, the construction of hotels, 
factories and other properties is financed from the off-shore 
Presidential Fund, but government ministries do not have the 
budget to maintain them.  It is possible that the Tourism 
Ministry's problems with financing result from the 
Presidential Apparat's desire to push them out of business in 
favor of its own, newer properties.  The overall hotel market 
here is difficult, and even the best hotel has low occupancy 
rates.  It is typical of the GOTX approach to economic 
development that rather than investing in the infrastructure 
of the hotels themselves (or improving the overall climate 
for foreign business people and tourists) the GOTX is 
attempting to boost occupancy by forbidding single expats 
from renting apartments or houses. 
JACOBSON