Dispute over operation of Viceroy Palm Jumeirah heats up

Viceroy management secured an injunction from the DIFC Courts to prevent any further action by Five Hotels and Resorts, to take control of the hotel’s running.

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A dispute between the US-based Viceroy Hotel Group and a company controlled by the high-profile Indian-born businessman Kabir Mulchandani over rights to operate Dubai’s luxury Viceroy Palm Jumeirah has escalated.

Viceroy management on Friday secured an injunction from the DIFC Courts to prevent any further action by Mr Mulchandani’s company, Five Hotels and Resorts, to take control of the hotel’s running.

The court ruling follows a move earlier in the week by Five Hotels and Resorts to oust the Viceroy regional president Anton Bawab and his staff from their offices and replace Viceroy branding with Five’s. “Viceroy requested the DIFC Courts’ assistance following the actions taken by the hotel’s owner on Monday, June 19, when it announced the purported takeover of the hotel by Five Hotels and Resorts, a company affiliated with the hotel’s owner, and took steps to attempt to remove Viceroy from the property,” according to a statement on Saturday by Viceroy Hotel Group, which is 50 per cent owned by the Abu Dhabi investment firm Mubadala Investment Company.

It is not clear on what basis Five Hotels has moved to take control of the Viceroy Palm Jumeirah. Mr Mulchandani’s master company this month was rebranded as Five Holdings, having formerly traded as Skai Holdings, which built the hotel and is its beneficial owner. Viceroy Hotel officials say they have a long-term agreement to manage the hotel and have been given no indication on what basis Five made its move. Five representatives could not be reached for comment.

On the day it took over the hotel, Five Holdings said it was launching a new brand, Five Hotels and Resorts, which would manage a Dh7 billion portfolio of four Dubai hotels, including the Viceroy Palm Jumeirah.

A statement attributed to Aloki Batra, the Five Hospitality chief executive, said: “We believe now is the right time to disrupt the hospitality industry. The people who actually provide a hospitality experience never receive the real benefits while most of the commercial benefits are taken in most cases by operators. This needs to change. There needs to be a much more equitable distribution and we will be introducing this in our hospitality vertical immediately to ensure our philosophy is executed from the heart.” Viceroy’s statement counters that “the owner’s wrongful actions at that time breached the existing hotel management agreement”.

Bill Walshe, the Viceroy Hotel Group chief executive, said: “Contrary to the hotel owner’s statements ... Viceroy has always been, and remains, the legal operator of the Viceroy Palm Jumeirah Dubai. The court’s order requires, among other things, Viceroy’s name, signage and branding to be reinstated at the hotel.”

A week before its move to take over the hotel, Mr Mulchandani’s company announced a Dh2.1bn real estate investment trust (Reit), which it said is the region’s first hospitality-focused Reit. The main asset in the Reit will be Five’s Dh4.3bn Viceroy Palm Jumeirah, the announcement said. Mr Mulchandani said in the statement that it also is expected to include the Dh1.28bn Viceroy Dubai Jumeirah Village, which is 40 per cent complete and on track to open in the third quarter next year, and that “additional projects will be added as they are announced or acquired”.

Separately, Mubadala is expected shortly to announce that it will acquire the half of Viceroy Hotel Group it does not already own, following the seizing of the other half, owned by Malaysian businessman Jho Low and his affiliates, by US authorities in an unrelated dispute.


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