JAL Hotels expects to begin operating a luxury 471-room hotel in Dubai in April despite the financial problems plaguing its parent company, Japan Airlines (JAL). JAL Hotels already operates the JAL Fujairah Resort and Spa, which opened in 2007, making it the first Japanese company to manage hotels in the region. The Hotel JAL Tower Dubai, a five-star establishment on Sheikh Zayed Road, is aimed at business travellers.
Both hotels are owned by ACICO International Real Estate Development, a property and development company, which is a subsidiary of Kuwait's ACICO Industries. JAL Hotels said its "brand expansion in the UAE and in the region remains prosperous and promising for more openings to come". But, JAL Hotels' parent company has faced a tough time amid a global downturn in travel. JAL, which is Asia's largest carrier by revenue, has been bailed out four times by the Japanese government.
This year alone, JAL's market value has fallen by half. In October, JAL applied to a state-backed turnaround fund for help, while recent reports have suggested that the carrier could be put through bankruptcy court as part of a restructuring. Meanwhile, Delta Air Lines and American Airlines have been locked in a bidding war for a minority stake in JAL as they seek to gain access to its Asia network. JAL has liabilities totalling Y1.5 trillion (Dh60.06bn). There has been some speculation that restructuring options could include the sale of the hotel business.
For JAL Hotels, the operating environment in Dubai could prove to be challenging. Hotels in the emirate have experienced sharp falls in revenue this year after being forced to cut prices to lure customers amid declining demand and an increasing number of rooms. Other five-star hotels due to open in Dubai next year include the Royal Amwaj and the Ottoman Palace Dubai, while the four-star Rotana Rose Rayhaan hotel opened on Sheikh Zayed Road this month.
"Expanding the footprint of JAL Hotels brand in the market has always been one of our objectives, and certainly Dubai has proven to be the destination with the highest potential," said Chiyuki Fujimoto, the executive officer and project director of Hotel JAL Tower Dubai. JAL Hotels, which is based in Tokyo, operates 59 hotels worldwide and has also signed an agreement for a Hotel JAL Bahrain Resort and Spa.
@Email:rbundhun@thenational.ae
