Emaar to sell five luxury hotels to Abu Dhabi National Hotels

Emaar's The Address Boulevard in Dubai. (Supplied)
Updated 27 November 2018
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Emaar to sell five luxury hotels to Abu Dhabi National Hotels

  • 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.


BMW picks insider Zipse as CEO to catch up with rivals

Oliver Zipse
Updated 19 July 2019
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BMW picks insider Zipse as CEO to catch up with rivals

  • German giant has lost ground to Mercedes-Benz and Tesla as tech steps up

FRANKFURT: BMW has named Oliver Zipse as its new CEO, continuing the German carmaker’s tradition of promoting production chiefs to the top job even as the auto industry expands into new areas such as technology and services.
Hailing Zipse’s “decisive” leadership style, BMW hopes the 55-year-old can help it win back its edge in electric cars and the premium market  from rival Mercedes-Benz.
But some analysts questioned whether Zipse was the right choice with new fields such as software and services like car-sharing becoming increasingly important.
“What is intriguing is the cultural bias to appoint the head of production. It works sometimes but ... being good at building cars is not a defining edge the way it was 20 years ago,” said Jefferies analyst Philippe Houchois.
Current CEO Harald Krueger, and former chiefs Norbert Reithofer, Bernd Pischetsrieder and Joachim Milberg were all former production heads.
Zipse joined BMW as a trainee in 1991 and served as head of brand and product strategies and boss of BMW’s Oxford plant in England before joining the board.
He will become chief executive on Aug. 16, taking over from Krueger who said he would not be available for a second term.
“With Oliver Zipse, a decisive strategic and analytical leader will assume the Chair of the Board of Management of BMW. He will provide fresh momentum in shaping  the future,” said Reithofer.
Zipse helped expand BMW’s efficient production network in Hungary, China and the US, in a move that delivered industry-leading profit margins.
Under Krueger, BMW was overtaken in 2016 by Mercedes-Benz as the best-selling luxury car brand.
It also had an early lead over US  rival Tesla in electric cars, but scaled back ambitions after its i3 model failed to sell large numbers.
Reithofer initially championed Krueger’s low-key consensus-seeking leadership, but pressured him to roll out electric vehicles more aggressively, forcing Krueger to skip the Paris Motor Show in 2016 to reevaluate BMW’s electric strategy.
Krueger’s reluctance to push low-margin electric vehicles led to an exodus of talented electric vehicle experts, including Christian Senger, now Volkswagen’s (VW) board member responsible for software, and Audi’s Markus Duesmann, who is seen as a future CEO of the company.
Both were poached by VW CEO Herbert Diess, a former BMW board member responsible for research who was himself passed over for BMW’s top job in 2015.
VW has since pushed a radical 80 billion euro ($90 billion) electric car mass production strategy, and a sweeping alliance with Ford.

Other skills
“A CEO needs to have an idea for how mobility will evolve in the future. This goes far beyond optimising an existing business,” said Carsten Breitfeld, chief executive of China-based ICONIQ motors, and former BMW engineer. “He needs to build teams, attract talent, and promote a culture oriented along consumer electronics and internet dynamics.”
German manufacturers have dominated the high-performance market for decades, but analysts warn shifts towards sophisticated technology and software is opening the door to new challengers.
“Tesla has a lead of three to four years in areas like software and electronics. There is a risk that the Germans can’t catch up,” UBS analyst Patrick Hummel said.
Germany’s Auto Motor und Sport car magazine, normally quick to champion German manufacturers, this week ran a cover questioning BMW’s future.
“Production expertise is important, but if you want to avoid ending up being a hardware provider for Google or Apple, you need to have the ability to move up the food chain into data and software,” a former BMW board member said.