After towering over Pyongyang, North Korea, as an unfinished shell for two decades, the Ryugyong hotel could open as soon as next summer under a joint venture that includes Kempinski Hotels.
The Geneva-based Kempinski Hotels confirmed that it is in negotiations via Key International, its joint venture partner in China with Beijing Tourism Group to operate the 150-room hotel, which at 105 stories would be one of the tallest in the world and easily the tallest building in North Korea. Whether the hotel will operate under the Kempinski brand has not been determined yet. The rest of the building will be mixed-use, including shops, restaurants and MICE facilities. The hotel portion of the building may expand, as Ryugyong was originally designed to have 1,500 guestrooms.
When asked why it would want to enter North Korea, Kempinski Hotels said it believes in early market entry into countries that are poised to open up to international business, citing its early entries into China and Russia.
“This pyramid monster hotel will monopolize all the business in the city,” said Kempinski CEO Reto Wittwer on Thursday at a business forum in Seoul, South Korea. “I said to myself, we have to get this hotel if there is ever a chance, because this will become a money-printing machine if North Korea opens up.”
This would mark the first time a Western hospitality company would be allowed to operate in the totalitarian communist nation. Construction began in 1987 but the building has been languishing unfinished since the 1992 when the fall of the Soviet Union sent North Korea into an economic crisis. Construction on the distinctively pyramid-shaped building, sometimes referred to derisively as “Hotel Doom” in the Western press, resumed when Orascom Telecom Media & Technology Holding, Cairo, agreed to fund the completion of the development for a reported US$180 million after launching the Koryolink mobile phone network, of which it owns a 75% stake, in North Korea in 2008.
“Orascom’s investment is compensated by very unique modules,” Wittwer said. “In North Korea, they compensate with mining rights, raw materials, commodities and commodity exchanges because they don’t have cash.”
Despite the country’s political isolation, North Korea does conduct trade, primarily with China and South Korea, and is developing special economic zones to lure foreign investment. North Korean exports totaled US$2.5 billion in 2010, according to the CIA World Factbook.