- Developer to focus on 'asset light' strategy
- Demand rises for mid-market hotels in Dubai
LONDON:
Emaar Hospitality Group is to sell five of its hotels — including the iconic Address Dubai Mall and Address Boulevard — to Abu Dhabi National Hotels (ADNH), the company said on Tuesday.
The company — which is a subsidiary of the Dubai-listed real estate company Emaar Properties — has signed “definitive” documentation with ADNH, with the deal expected to be finalized this year or in early 2019, according to filings on the Dubai and Abu Dhabi stock exchanges.
Mohamed Alabbar, chairman of Emaar Properties, said in a statement, the sale was part of the company’s efforts to shift toward an “asset-light business model”.
In July, Alabbar reportedly told CNBC Arabia that the company was considering the sale of non-core assets such as its hotel portfolio and that Emaar Hospitality would focus on hotel management instead.
Under the proposed deal, ADNH will enter long-term management agreements with Emaar Hospitality Group to continue running the assets under the Address Hotels + Resorts and the Vida Hotels and Resorts brands.
The portfolio of hotels to be sold also includes Address Dubai Marina, Vida Downtown and Manzil Downtown.
“This transaction will strengthen our presence in Dubai and will expand our current luxury portfolio of hospitality assets,” said Sheikh Ahmed Mohammed Sultan Suroor Al-Dhaheri, vice chairman at ADNH, in a statement.
ADNH’s luxury hotel portfolio already features the Ritz Carlton Abu Dhabi Grand Canal, The Park Hyatt in Saadiyat Island and Sofitel JBR in Dubai.
Emaar Hospitality is set to retain its Rove hotel brand — a mid-market hotel chain launched in 2015. The company’s fifth Rove hotel — Rove Dubai Marina — opened in April this year.
Analysts see the budget hotel sector as a growth market for the emirate.
“Emaar in recent years has been focusing on developing its budget hotel ‘Rove’ brand which as a category should outperform luxury hotels in Dubai given rising number of tourists from countries like India and China,” said Ayub Ansari, senior analyst at Sico Bank in Bahrain.
While he awaits further details on the deal including the currently undisclosed sale price, Ansari expects the proceeds of the sale will fund Emaar’s ongoing retail expansion projects.
Emaar continues to expand its flagship Dubai Mall, while earlier this year it revealed plans to develop ‘Dubai Square’, a new mega indoor and outdoor retail space within the Dubai Creek Harbor development.
News of the hotel deal follows disappointing third-quarter results for the parent company Emaar Properties.
It posted a 29 percent drop in third-quarter profit, recording a net profit of 1.1 billion dirhams in three months ending Sept 30., compared to 1.5 billion dirhams a year earlier.
Revenue from Emaar hospitality, commercial leasing and entertainment businesses reached to 1.95 billion dirhams during the first nine months of the year, a similar level to the previous year’s results.
Emaar said ithat its hotel brands had continued to record higher occupancy than the Dubai industry average.