October 28, 2005

Eritrean desert hotel first step in tourism drive

By Ed Harris

GELALO, Eritrea (Reuters) - Rising out of the shimmering
heat of the Eritrean desert, the Hotel Gelalo offers tired,
dusty tourists a refuge from the burning sun.

But in one of Africa's hottest corners, where even camels
huddle in the shade of small, leafless acacia trees, Eritrea's
newest tourist project has greeted few visitors so far.

"We expected to have more customers than this," said one
staff member at the luxurious hotel, where only a handful of
the 25 rooms were occupied.

The fat cream-colored stone pillars and shaded corridors of
the Gelalo, which the government says was built using cheap
military labor, overlook the dramatic, rocky Red Sea coast.

Adorned with modern art sculptures and antique Italian
cannons, it promises peace and quiet for just $20 a room. The
hotel is on the main route between the port of Massawa and the
southern coastal town of Assab, but it remains remote, reached
only after several hours along a bumpy road.

Eritrea's government says the country attracts about
150,000 tourists a year, and it wants to boost that to more
than 600,000 before 2020. Tourism Minister Amina Nurhussien
says Hotel Gelalo is just the first step.

"We are inviting big investors to come," she said, adding
that the coast road would soon be completed to make access
easier. More visitors will also be drawn to the area by Massawa
international airport which was completed in January, she said.


Since the state-owned Hotel Gelalo threw open its doors
earlier this year, it has remained a rather forlorn island of
comfort in a blistering landscape.

"It's in a very odd place for a hotel, because there are no
other facilities anywhere around," said one American traveler
who had recently stayed at the hotel. "It's so strange."

Private investor interest in tourism has largely been
restricted to Eritrea's large Diaspora.

Some are concerned that the sector will be held back by
government red tape and by travelers' fears that the region
remains unstable because of lingering tensions after a
1998-2000 border war with neighboring Ethiopia.

The conflict between the Horn of Africa neighbors killed
70,000 people and there has been a political deadlock since
2002 when Ethiopia refused to accept a demarcation decision by
an independent boundary commission.

Some 165,000 tourists a year used to come to Eritrea before
the war, but the conflict and its aftershocks have hampered the
Red Sea state's ability to carve out a bigger slice of the
lucrative east African tourism pie.

Border tensions resurfaced in recent weeks when Eritrea
banned UN helicopters from its airspace, reducing the capacity
of the 3,300-strong UN Mission in Ethiopia and Eritrea (UNMEE)
to monitor military movements.

Diplomats in the capital Asmara were also skeptical about
the government's commitment to supporting business.

"I believe in the tourist potential of this country, but it
will never be realized while they are so 'anti' the private
sector," said one western diplomat.

"The difference between what they express on the private
sector and what they practice is very large."


Earlier this year, the International Monetary Fund said the
lack of transparent regulation and the growing role of the
state in commercial activities was undermining investor

But there are some glimmers of hope. Italian-Eritrean Primo
Giovanni returned to his Horn of Africa home after 42 years as
a businessman in Italy and now owns hotels in Asmara, Massawa
and on the Dahlak Islands.

"I like to spend money in my country. When I get $10, I
want to invest in my country," he told Reuters in his latest
venture, the capital's plush Albergo Italiana hotel.

"I was born in Eritrea. My parents are Eritreans."

But his new hotel's grand opening has been delayed by
several months because of a lack of water. The antique-style
furniture and paintings remain locked behind tall green gates
in a tidy backstreet.

Giovanni says poor infrastructure has often left him short
of supplies -- to the annoyance of some of his guests.

"Gin they have, but tonic? The Brits go crazy," he said.

Like many residents, Giovanni sees the unfinished border
dispute with Ethiopia as the major hurdle to boosting tourism,
not government policies on business.

The border between Eritrea and Ethiopia has still not been
demarcated despite an agreement to do so following the war. And
both sides continue preparing for the possibility that conflict
could break out again.

"If we can solve the Ethiopian issue, many Italian
investors will come," Giovanni said.