Emaar Properties has sold five Dubai hotels to Abu Dhabi National Hotels, with the group to retain the sites under management agreements.
The transaction was part of an asset disposal programme, with the group thought to be planning to sell around USD1.4bn in assets, including USD700m in hotels.
The five hotels will be managed under the group’s Address Hotels & Resorts and Vida Hotels and Resorts brands.
Mohamed Alabbar, chairman, Emaar Properties, said: “Emaar’s hospitality business has recorded robust growth since its inception in 2007 and moving to an asset-light model will enable the business to unlock its true potential.”
Sheikh Ahmed Mohammed Sultan Suroor Al Dhaheri, vice chairman, ADNH, said: “This transaction will strengthen our presence in Dubai and will expand our current luxury portfolio of hospitality assets which comprise the Ritz Carlton Abu Dhabi Grand Canal, The Park Hyatt in Saadiyat Island and Sofitel JBR in addition to our upper and upscale properties namely, Le Meridien, Sheraton and the two Hiltons in the Abu Dhabi Emirate currently under re-branding to Radisson Blu.
“ADNH also holds stakes in resort properties in Morocco and Egypt. With a legacy of over four decades, we are constantly exploring ways to grow and increase value to our shareholders. We are confident that the partnership between ADNH and Emaar Hospitality Group will help drive both companies in their next phase of growth.”
In an interview with CNBC, Mohamed Alabbar, chairman of Emaar Properties, said: “It is the start of expanding into the hospitality sector. We have to focus on the issue of management and hotel management contracts like other global brands such as Hilton and Marriott.”
Emaar has a portfolio of 50 hotels under the Address Hotels and Resorts, Vida Hotels and Resorts and Rove Hotels brands, including 35 upcoming projects in the UAE and international markets, as well as 15 hotels and serviced residences operational in Dubai.
Olivier Harnisch, CEO, Emaar Hospitality Group, said: “Since 2007, we have been shaping a new identity and presence in the hospitality scene, and with three distinctive brands, we have now achieved a remarkable milestone in our growth journey of having a robust portfolio of 50 hospitality projects – both operational and upcoming – together offering more than 25,000 rooms and residences. While our primary footprint is the UAE and the Middle East and North Africa region, we are delighted by the response from owners and developers to our hotel concepts, and are expanding to new geographies.”
Emaar Hospitality Group’s upcoming international projects are in Saudi Arabia, Bahrain, Egypt, Turkey and The Maldives. In the UAE, the group has expanded its presence from Dubai to Abu Dhabi, Sharjah, Ras Al Khaimah and Fujairah. “Our ambition is to be one of the world’s most admired and trusted hospitality companies, and with Dubai evolving as a global tourism and business hub, we have earned remarkable brand recognition in global markets that power our onward journey,” said Harnisch.
He added: “Across the MENA region, there is a strong focus on economic diversification with tourism and hospitality serving as central pillars of the strategic vision outlined by governments. The UAE Vision 2021 and Saudi Vision 2030, for example, outline the important role that the hospitality sector plays in job creation and in diversifying non-oil revenues. Our strategy is to leverage the growth of the Middle East’s tourism sector, which grew 5% in 2017, by strengthening the hospitality infrastructure and assuring visitors distinctive guest experiences through our hotel projects.”
The average room rates of Dubai hotels dropped by 9.7%, due to an increase in supply, in July, hitting a 14-year low, according to STR.
“Although growth in demand was significant, performance levels remained low due to pressure from increased supply. The average daily rate level would be the lowest for any month in the market since August 2004,” STR said.
During the first half, more than 2,600 rooms were added to Dubai’s hospitality sector, with the opening of 10 high-end properties. Dubai Tourism said in its first-half 2018 report that the number of four-star properties increased from 114 to 138, representing 25% of the rooms inventory.
HA Perspective [by Katherine Doggrell]: As Emaar’s chairman noted, they’re all at it these days, asset light is quite the trend. Even AccorHotels spent its capital market day talking about its glorious asset-light expansion plans for the future and, with 33 brands in its stable and market dominance in Europe, it is well placed to start leveraging that.
At Emaar, recognition in Dubai and the surrounding region is high, but at 50 hotels its brands are not quite the global force that some of the global operators can lay claim to, although only a decade in, there’s no reason to sniff.
The good news for those in Dubai is that the targets for the 2020 expansion, on which so much of the hotel room growth is built around, are being met. Above all, owners want their rooms filled.