Friday, January 22, 2021

Cover Story


Nakheel’s $600m hotel development plan
May 2006 156

HAVING developed more than $30 billion in real estate in Dubai such as The Palm and The World, Nakheel has diversified into hospitality, with the creation of an investment company, Nakheel Hotels & Resorts.

Besides investing in several properties on its own island developments, including the 800-unit condo-hotel Trump Hotel & Tower Palm Jumeirah – the company is looking outside the UAE. It has already invested in Djibouti and has substantial plans to acquire and develop properties around the world, including the Middle East, Africa, Asia, Russia and the CIS.  KEITH J FERNANDEZ catches up with James Wilson, president, Nakheel Hotels & Resorts. Excerpts: 

What kind of investment is Nakheel making in its hotels arm? What is its scope of work?
Our initial investment is $600 million; our first key market is Dubai, and 30 per cent of this initial investment will be in the emirate, whose hotel market has huge potential. Obviously having such detailed knowledge of the Dubai market, it was the logical place to launch Nakheel Hotels & Resorts developments. And there is currently no better location in Dubai – or probably the whole of the Middle East – than The Palm Jumeirah.

So outside the UAE, what markets are you looking at?
Beginning with Djibouti, we’re looking into Morocco and Tanzania in Africa, into Asia – in particularly emerging markets such as India and Vietnam, and then Russia and the CIS countries, as well as other Middle Eastern countries like Oman.

Will Nakheel own properties or go into management?
Nakheel Hotels & Resorts will be developing and acquiring hotels – we will however not be working on the hotel management side, and will be looking for operators to partner with. We have already announced partnerships with operators such as Kempinski and The Trump Organisation – and are currently looking at working with a number of similar market leaders such as Marriott, Hilton, and Hyatt.

How many hotels do you expect to own by the end of 2006?
The first phase of our Djibouti hotel development will open by the end of 2006 – and Nakheel Hotels & Resorts is looking to develop eight hotels over the next two years.

Are these necessarily in the luxury sector?
We are primarily looking at the luxury market, this is where we have particular experience. However, we are also looking at the business and limited service sector and will take each case on its own merits.

What then, are your long term aims? What will drive your expansion?
Solid, consistent growth through franchising, acquisitions and development; financing investments through private equity and debt finance sources – evenly weighted – and by working with other partners and investors. When looking to acquire existing assets we will concentrate on the short- to medium-term upside potential, whereas clearly with new developments on green-field sites we are concentrating more so on the long term potential of the location, which is absolutely key. We are looking at projects where we can get an internal rate of return of 15 to 20 per cent and not just by acquiring or developing hotels and resorts; we envision a strong element of integrated residential development within this.

What attributes will distinguish Nakheel Hotels and Resorts from the competition?
Nakheel has particular experience in the hotel sector – on The Palm Jumeirah alone there are more than 30 hotels, and 25 different international hotel brands, being developed. We will be able to capitalise on our expertise and the brand value of the group's existing assets.

When will the first Nakheel hotel on The Palm be ready?
That will be the Trump International Hotel & Tower, which we are looking to open in 2008.

How will the projects like the 800-unit Trump tower and 1500-unit Atlantis property impact the hotel scene in UAE?
The most recent figures for hotel occupancy in Dubai have been very encouraging. The number of tourists has now risen to more than six million, and the hotel revenues are up 41 per cent. It is not an exaggeration to say that there is nowhere else in the world at the moment where demand for hotel rooms is higher, given occupancy rates of 85 per cent between January and September last year. Projects such as the Trump Tower and Atlantis will help meet this demand – as well as creating additional demand due to the high profile of these developments.




Similar Stories




Digital Edition




©Copyright Al Hilal Group 2017. Designed and Developed by Northstar Technologies.