Emaar says IPO for hospitality unit remains on hold

Dubai-based Emaar Properties, which announced its intention to list Emaar Misr, its Egyptian subsidiary on Wednesday, has confirmed that an IPO for its hospitality unit remains on hold.

In a statement, the company said: “The timing of the IPO [for Emaar Hospitality Group] will be dependent on the market conditions. We are watching the markets closely and will take a decision to list at the appropriate time.”

Emaar launched an $1.6 billion IPO of its malls and retail subsidiary, EMG, on the Dubai Financial Market (DFM) in September last year, in what was the GCC’s biggest listing since the financial crisis in 2008.

EMG made an annual profit of Dhs1.35 billion in 2014, up 22.7 per cent compared to Dhs1.1 billion in 2013.

The statement added: “Emaar’s strategy is to make its business segments independent listed companies.

“This approach aims to provide the businesses with appropriate financial and operational means to grow faster and become among the most successful companies in their industries.”

Speaking to Gulf Business during the Arabian Travel Market in Dubai, Philippe Zuber, COO of EHG, said that while the IPO would provide the company a “tremendous opportunity”, its current business model has also proved to be “very successful.”

“We had a fantastic 2014, and saw eight per cent growth over 2013. This year has also started positively, and Q1 is still showing growth in terms of occupancy despite problems across the region and internationally,” he said.

“It is clear that the market has softened a bit and we have to work harder to secure business, have to fight a little bit more. It is definitely a fact that Dubai is into a cycle which is more stable, than we were used to. But there is still amazing demand,” he added.

EHG currently operates three hotel brands – The Address Hotels + Resorts, Vida Hotels and Resorts and Rove Hotels, a new mid-market lifestyle hotel brand being developed in collaboration with Meraas.

The company has five Address properties in Dubai, and is also developing the brand in Istanbul, Nigeria, Egypt and Bahrain. While it operates two Vida hotels in Dubai, it has also recently announced one in Nshama’s upcoming Town Square mega project, and another in Bahrain.

The first Rove hotel is set to be opened in Dubai later this year, and 10 more are planned by 2020, Zuber confirmed.

“Six are under construction and we have to secure four additional ones. But they don’t specifically have to be in Dubai, we are open to any place,” he said.

“We have seen strong demand from investors and we have a wide range of brands that we can develop regionally and internationally at any point of time,” he added.

In 2014, issues such as the fall in oil prices and devaluation of the Euro against the dollar saw occupancy in Dubai’s hotels drop 1.8 per cent, although the rate stood at 78.5 per cent on average, according to a recent report by PwC.

Occupancy rates may further be challenged with supply set to increase further – Dubai recently opened 3,000 new rooms, adding to the existing 73,000 and the 15,000 which are currently under construction.

However, Zuber asserted that EHG remains bullish about Dubai.

“In line with Dubai’s plan to attract 20 million visitors by 2020, we are developing hotels here to cater to the additional demand. We believe so much in Dubai – our expertise and knowledge of the market is very high,” he said.