The Saudi Egyptian Touristic Development Company, owners of the Grand Hyatt Cairo announced that it is considering running its central Cairo hotel itself following a bitter dispute with Hyatt Hotels over alleged mismanagement during the recent unrest.

The Saudi Egyptian Touristic Development Company bought the Corniche-front hotel in 1990 for USD 380 million and initially managed it under its own Royal Nile Club brand. In August 2003, Sheikh Abdul Aziz Bin Ibrahim El Barahim, owner of the company, signed a 10-year management agreement with Hyatt, renaming the hotel Cairo Grand Hyatt.

The dispute between owners and management company started over two months ago, with the Saudi Egyptian Touristic Development Company claiming Hyatt Hotels failed to meet its management responsibilities by allowing vital foreign staff to leave during February's unrest. They claim that the conduct of Frederic Boulin, the French general manager who fled Cairo for Sharm El-Sheikh with 12 other foreign employees at the height of Egypt's political upheaval was a breach of contract and that the loss of "indispensable staff" crippled the running of the hotel although the remaining Egyptian employees were able to secure the premises.

Abdel Aziz Al-Shehail, a spokesman for the Saudi Egyptian Touristic Development Company, said that the company demanded the appointment of a new general manager something that was denied by Hyatt Hotels who insisted the French manager keep his post. "Absolutely, I don't know why they believe in this person," said Al-Shehail.

In addition to this problem, the hotel staff organised a demonstration in front of the property in February and March, chanting and staging sit-ins. The workers’ demands included salary adjustments, profit shares and contractual job security for all those working on a month-to-month basis. Hyatt Hotels said their management tried to settle the differences between staff and Saudi owners, urging the latter to adopt a more understanding approach to dealing with workers’ complaints. The Saudi Egyptian spokesman denies Hyatt was involved but says issues with workers have been resolved.

The dispute led to an announcement from Hyatt Hotels in late March that it had terminated its contract with the Saudi hotel owner. “It is unfortunate that the contractual disputes have not been resolved, forcing us to exit this property, but this does not diminish how important Egypt is and will remain to the Hyatt brand,” said Gebhard Rainer, managing director, Hyatt International (Europe Africa Middle East) LLC. “We will continue to operate two Hyatt hotels in Egypt, and are interested in pursuing new development opportunities there.”

The Cairo spokesman for the Saudi firm denies this. "Hyatt broke contract terms with us - it was not a termination," and accused the hotel management of urging travel agencies and regular clients not to deal with his hotel. He also criticised Hyatt's operation record as inefficient: "The maximum occupancy rate was 62 per cent under Hyatt management, much less than when the hotel was under our management and it reached 83 per cent”

The company's five-star hotel riverfront hotel, still operating under the Grand Hyatt brand, may return to self-administration under its former name of the Royal Nile Club. Al-Shehail said that the company is “still in arbitration and the hotel will keep the Hyatt brand name until the settlement of the dispute."

However, according to local hospitality industry sources, there are a number of companies that have expressed their interest in managing the property on Cairo's Corniche, a location popular among upmarket visitors to Egypt’s capital city.

Al-Shehail says that despite current controversies, Saudi Egyptian is pushing ahead with other projects in Egypt, saying it is encouraged by the country's political change. "We will raise our investments in Egypt by US$500 million through establishing a new hotel called Al-Ameer in Cairo's Garden City.”

Hyatt currently provides management services for two Hyatt Regency hotels in the Red Sea resorts of Sharm El Sheikh and Taba Heights, both of which are owned by entities unassociated with the Grand Hyatt Cairo and are not affected by the dispute.