North Korea

Kempinski withdraws from North Korea's Hotel of Doom

European chain Kempinski says it could not 'at this time' run the Ryugyong to its standards, apparently referring to economic sanctions

PUBLISHED : Sunday, 07 April, 2013, 12:00am
UPDATED : Sunday, 07 April, 2013, 10:16am


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A luxury European hotel chain has pulled out of plans to manage one of the biggest hotels in the world in Pyongyang as the crisis over North Korea's threats of war deepens.

Kempinski Hotels and Resorts planned to manage the 105-storey pyramid-shaped Ryugyong Hotel when it opened this summer in what would have been a coup for the hermit nation's new leader Kim Jong-un.

The group's Swiss-born chief executive Reto Wittwer predicted in November that the hotel would "monopolise all the business in the city" and would be "a money-printing machine if North Korea opens up".

As the political crisis over North Korea intensifies, however, Kempinski - which describes itself as Europe's oldest luxury hotel group and operates five-star hotels and resorts in Europe, the Middle East, Africa, India and China - has withdrawn from the project.

In a statement apparently seeking to distance itself from the project, a spokeswoman indicated that increased economic sanctions against Kim's regime earlier this year were a key factor in the decision.

"Kempinski Hotels confirms that KEY International, its joint venture partner in China with Beijing Tourism Group (BTG), had initial discussions to operate a hotel in Pyongyang, North Korea," the statement said.

"However no agreement has been signed since market entry is not currently possible."

Asked if Kempinski might get involved with the Ryugyong Hotel at a later date, the spokeswoman added: "As you imagine, negotiations are always very complex and involve many different issues.

"KEY International, our joint venture partner, was handling the negotiations and decided that it is simply not possible at this time to enter the market and allow us to operate a hotel according to our standards."

It is not known if North Korea will seek another partner to operate the massive hotel or go ahead with the summer opening without an international partner.

Recent visits to the hotel - including one by the South China Morning Post described in today's Post Magazine - suggest that while the exterior is complete, with a dazzling coat of reflective glass in place - much of the interior of the building remains a concrete shell.

Kempinski had planned to operate some 150 rooms at the top of the Ryugyong Hotel in its initial opening. The hotel is intended to later have a total of 1,500 rooms, enough to accommodate North Korea's entire annual complement of western visitors in just a few nights.

Work on the 330-metre tall hotel began in 1987 under the rule of Kim Jong-un's grandfather as a way of outshining South Korea, which was hosting the Olympics the following year.

With the structure completed, work came to a halt in 1992 and the hotel became an embarrassing blot on the capital's landscape and earned the nickname Hotel of Doom before construction resumed in 2008.

An Egyptian developer, the Orascom Group, is believed to have bankrolled the completion of the project in return for the right to set up North Korea's first mobile phone network.