Nov. 2 (Bloomberg) -- The world’s tallest hotel will open next year in the North Korean capital of Pyongyang as the impoverished totalitarian regime burdened by international sanctions seeks foreign currency through a boost in tourism.
The 105-story, pyramid-shaped Ryugyong Hotel, whose foundations were poured almost three decades ago, will open partially in July or August, Kempinski AG Chief Executive Officer Reto Wittwer said today at a forum in Seoul. The German luxury-hotel manager will be the first western hospitality company to operate in North Korea, he said.
North Korean leader Kim Jong Un is courting overseas visitors as one of the main means to earn much-needed foreign currency as the international community imposes tougher sanctions on the politically isolated Asian nation for conducting nuclear tests in 2006 and 2009. China is North Korea’s largest trading partner and biggest source of tourism. U.S., European and South Korean nationals are advised by their own governments against traveling to North Korea.
“This pyramid monster hotel will monopolize all the business in the city,” Wittwer said. “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.”
Kempinski, based in Munich, is handling management while Egypt’s Orascom Telecom Media & Technology Holding SAE funds the hotel as part of a $400 million mobile-phone license it won from the North Korean government in 2008, he said. Cairo-based Orascom has spent $180 million on completing the hotel’s facade.
“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.”
Wittwer, the 64-year-old Swiss hotelier, said he was approached more than a decade ago in Geneva by Ri Chol, who at the time served as ambassador to the United Nations and mentor to Kim, who came to power in December after the death of his father. Ri was looking for new investors for the hotel since construction stopped in 1993 because of insufficient funds and economic mismanagement, Wittwer said.
Kim’s time at a Swiss boarding school may have made him more willing to consider the idea of opening up his country, he said.
The top floors of the hotel will house guests in 150 of the originally planned 1,500 rooms, which “will be developed over time” to remodel the insufficiently designed spaces, Wittwer said. Shops, restaurants, a ballroom and Orascom’s offices on the ground and mezzanine floors will also open next year.
Kempinski’s five-star Hotel Adlon Kempinski, which overlooks Berlin’s Brandenburg Gate, is frequented by guests ranging from heads of state to movie stars attending the city’s annual film festival.
Ryugyong, which means “capital of willows” in Korean, will be the tallest hotel in the world at 330.02 meters (1,083 feet), according to Emporis GmbH, which collects data on buildings of high public and economic value.
Orascom owns a 75 percent stake in Koryolink, North Korea’s sole mobile-network operator, through the 25-year mobile phone license it obtained in 2008.
Naguib Sawiris, founder and executive chairman of Orascom, visited North Korea Oct. 4-6, during which he toured a beverage factory and a dolphinarium, according to the official Korean Central News Agency.
To contact the reporter on this story: Sangwon Yoon in Seoul at email@example.com.