Abu Dhabi, UAEMonday 17 June 2019

Damac eyes new hotel partnerships in 2019 to drive growth

Hospitality unit of Dubai property firm aims to deliver 15,000 keys by 2023

Jean Faivre, president, hospitality, Damac Hotels & Resorts, says firm plans to add 5,000 keys per year until 2023. Victor Besa/The National
Jean Faivre, president, hospitality, Damac Hotels & Resorts, says firm plans to add 5,000 keys per year until 2023. Victor Besa/The National

Damac Hotels & Resorts, the hospitality arm of Damac Properties, is scouting for new hotel operator partners to grow the business in the GCC and beyond, as it seeks to deliver 15,000 hotel rooms over the next three to four years.

On Sunday, Damac signed an agreement with UAE-based hotel management company Rotana, under which Rotana will operate Damac’s luxury hotel apartment project Damac Towers, in Riyadh, as an Arjaan by Rotana property with 454 serviced apartments. The project is set to complete in the third quarter of this year.

Damac has two of its own luxury hotel brands, Damac Maison Royale and Damac Maison, through which it manages premium hotel apartments at five properties in Downtown Dubai and Business Bay.

It has also started forging partnerships with local and global hotel operators to provide the hospitality elements of Damac’s mixed-use schemes in Dubai and the UK.

As well as the Rotana deal, it has an agreement with Radisson Hotel Group since last August to build a 481-room Radisson hotel at the Damac Hills residential community in Dubai. There is also an agreement with Paramount Hotels & Resorts for the latter to operate the Damac Towers serviced apartment project on Sheikh Zayed Road, due to open in the third quarter of 2019.

In total, Damac’s hospitality unit plans to open around 5,000 keys per year until 2023, Mr Faivre told The National at the Arabian Travel Market in Dubai. “We are gearing up to sign new deals in Saudi Arabia, Oman, Jordan and Qatar,” he said.

Damac Hotels & Resorts saw 15 per cent year-on-year revenue growth in 2018 as it expanded its portfolio, but Mr Faivre is uncertain whether that same rate can be achieved this year, “as the market overall has shown a drop”.

Hotels in the region have seen declines in revenues and room rates in recent years and Dubai-based Tri Consulting last monthpredicted “mixed results” for the Middle East hospitality sector in its hotel market report for 2019.

According to the report, 2018 was a challenging year, driven by supply progression against minimal expansion in demand.

Low oil prices, weaker economic growth and currency fluctuations were among the reasons for lower tourist spending in the Middle East, which also resulted in a drop in average room rates by 4.1 per cent last year, while revenue per available room fell 1.9 per cent, according to Tri Consulting.

“There is a dip due to oversupply which has placed additional pressure on rates," Mr Faivre added. "But we believe this is only a cyclical trend and this additional supply will eventually be absorbed."

There are no plans to spin off the hospitality unit into a wholly owned subsidiary of Damac Properties, he added.

Updated: April 30, 2019 03:06 PM

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