Dubai-based Emaar plans hotels in London and Paris in expansion drive

The move comes as the hotel industry faces headwinds at home with a strong dollar and regional political strife putting downwards pressure on room rates.

Powered by automated translation

Emaar is targeting to open new hotels in London and Paris as part of a major international expansion.

Emaar Hospitality Group yesterday also revealed plans to open hotels in Nigeria and Bahrain, adding to its existing presence in Turkey and Egypt.

The move comes as the hotel industry faces headwinds at home with a strong dollar and regional political strife putting downwards pressure on room rates.

The addition of thousands of new hotel rooms across the city is also weakening average daily room rates.

Significantly, the Nigeria and Bahrain deals were struck with Eagle Hills, an Abu Dhabi-based developer run by former Emaar executives. The Emaar chairman Mohamed Alabbar is also a board member of Eagle Hills, which is spearheading huge new master plans from Serbia to Egypt.

The dual responsibilities of the high-profile Emaar chief has fuelled speculation among investors over whether his main focus will now be on the publicly traded Emaar Properties or the closely held Eagle Hills.

The expansion of the Emaar hotel brands overseas is an extension of the strategy pursued by its main development wing.

“We want to be a global brand with a global vision,” said Philippe Zuber, chief operating officer of Emaar Hospitality Group.

The company has been scouting a number of international locations and is particularly interested in countries that are already popular with Emirati tourists such as the UK, France and Germany, he said.

He was speaking on the sidelines of the Arabian Travel Market in Dubai.

Emaar this week reported a 7 per cent rise in first quarter profits which topped Dh1 billion. But earnings growth was driven by its retail and residential operations as its hospitality revenues remained flat.

Analysts blamed the performance of the hotel business on the effect of a strong US dollar. The dirham is linked to the dollar and so the purchasing power of tourists visiting from countries in the euro zone and Russia has weakened as the greenback has advanced against the euro and rouble over the past year.

The slowdown in hotel revenues confirmed “our view that the hotel business will grow at a slower pace on the back of currency challenges and growing room supply”, the investment bank Shuaa said on Sunday.

But Mr Zuber said yesterday that the strength of the dollar was not the main driver for the unit’s flat revenues, and instead cited the refurbishment of its Al Manzil hotel in Downtown Dubai as the main reason for the lack of earnings growth.

Emaar generated hotel revenues of about Dh495 million in the first quarter of 2015, about the same as a year earlier.

It said that occupancy rates at its flagship Address brand averaged 92 per cent during the first three months of the year. Its Vida Hotels and Resorts brand averaged 91 per cent occupancy.

That is better than the city’s already high average hotel occupancy rate of about 88 per cent.

Emaar has launched a third brand called Rove Hotels which is pitched at the mid-market. It plans to operate at least 10 such hotels in Dubai in conjunction with the developer Meraas Holding.

In Nigeria, Address Hotels + Resorts will operate The Address Centenary City Abuja as well as the Address Residences Centenary City Abuja.

The approach will be similar at Marassi Al Bahrain, where it will also operate an Address-branded hotel and residences complex as well as a Vida-branded hotel and residences complex.

Follow The National's Business section on Twitter