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INTERVIEW-Kerzner says company still profitable in downturn

Published 03/18/2009, 07:30 AM
Updated 03/18/2009, 07:40 AM
CASP
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* Hotel occupancy down but room rates unchanged

* Will revive stalled projects when signs economy improving

* Expects Moroccan project to be profitable in first year

By Tom Pfeiffer

EL JADIDA, Morocco, March 18 (Reuters) - Bahamas-based Kerzner International has seen a drop in occupancy at its hotels but is still making profits despite the global economic crisis, the company's founder, Sol Kerzner, said.

The proportion of its hotel rooms filled has fallen to between 67 percent and 68 percent, from about 80 percent, but the company has not cut room rates, Kerzner said.

"We're making money right now. Occupancy is in the high 60s -- between 67 and 68 percent. We are not cutting rates and we are definitely profitable," Kerzner told Reuters during a tour of the company's new seaside resort in Morocco.

Kerzner made his name building Sun City in South Africa and the Paradise Island resort in the Bahamas. Last year, the company opened its $1.5 billion Atlantis resort on a palm-shaped island in the Emirate of Dubai.

However, Kerzner has put new projects on hold, including a multi-billion-dollar resort in Las Vegas, because of the economic crisis.

The company hopes a U.S. economic stimulus package could help the American leisure industry recover this year.

Kerzner said construction costs had tumbled and it could make sense to move ahead with some projects, but timing would be key.

"It's a question of calling the right time so that you take a bit of an advantage," he said. "But the most important thing is to open to a stronger economy."

"The minute there are real signs of an improvement, we will go back to these (stalled) projects," he said.

He said his company was well financed and did not have any debt problems.

Hotel occupancy at the Dubai Atlantis project was in line with other Kerzner sites despite the economic downturn, he added.

"The project is running like our other projects, in the high 60s, with a very good room rate and, as expected, food and beverages are working pretty well," he said.

The Mazagan site on the Atlantic south of Casablanca will offer 500 hotel rooms and Morocco's biggest casino with more than 400 slot machines and 50 gaming tables. The 240-hectare site will also include convention facilities and an 18-hole golf course.

Company officials expect Mazagan to create 1,500 jobs and Kerzner forecast it would be profitable in its first year of operation.

Morocco is aiming for 10 million tourists per year by 2010, up from 8 million at present, bringing much-needed jobs and foreign currency earnings.

Government officials said the north African country's tourism industry is holding up well in the global economic downturn as tourists who would normally visit Spain, Greece and other European countries choose cheaper destinations nearby. (Editing by Andrew Macdonald)

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