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Covid19 hotel development analysis: Emaar Hospitality Group [Infographic]

by | 27 Jun 2020 | Chains

(Picture: MENAFN)

Our exclusive Covid19 hotel development analysis series continues with a look at how Emaar Hospitality Group’s pipeline is shaping up amid the pandemic.

Emaar Hospitality Group, the UAE-based company behind brands like Address Hotels + Resorts, Vida Hotels and Resorts, Rove Hotels and Al Alamein Hotel, has had to deal with an extraordinary few months following the rapid spread of Covid19. Created in 2007, it now owns and manages a portfolio of hospitality assets across Dubai and beyond, including hotels, serviced residences, leisure clubs, restaurants and spas.

The group is a wholly owned subsidiary of Emaar Properties, one of the world’s most valuable real estate development companies, which generated revenues of AED 24.59 billion (US$6.69 billion) in 2019. To put this into perspective, an investor presentation dated April 2020 points out that its hospitality business posted revenues of just AED 1.34 billion in 2019 – incidentally, the same document also reveals that the unit had 23 hotels and more than 5,200 keys in total.

What follows is our analysis of Emaar Hospitality Group’s development pipeline. To get a picture of how the group’s financial position may have been affected, we also take a look at how its parent company’s share price has fluctuated over the course of 2020 as the novel coronavirus spread rapidly around the world.

Emaar Hospitality Group’s hotel development pipeline

While the effects of Covid19 are already being felt by many developers, Emaar Hospitality Group seems to be largely pressing ahead with its expansion plans for now. According to our exclusive look at data from the TOPHOTELCONSTRUCTION database, the company currently has 31 projects in progress and has only put two on hold and cancelled one as of 25 May 2020.

Premium luxury brand Address Hotels + Resorts is leading the way with 13 active projects on the cards, just ahead of upscale lifestyle brand Vida Hotels and Resorts with 11 and contemporary midscale brand Rove Hotels with seven:

There can be no doubt that the full effects of Covid19 on the global hotel development pipeline won’t be known for some time, since management teams need to weigh up so many competing factors when deciding whether to proceed with new schemes. Nevertheless, it may encourage hospitality professionals to learn that currently more than nine out of ten Emaar Hospitality Group projects are continuing as planned.

Emaar Properties’ shares have dipped significantly

The group’s capacity to progress its hotel development pipeline, however, won’t have been helped by the fact that its parent company’s share price has fallen substantially in the first half of 2020.

Shares in Emaar Properties, which are listed on the Dubai Financial Market, were consistently trading at around the AED 4.00 mark (US$1.09) up until 23 February. They then suffered a steep decline, bottoming out at AED 1.99 on 17 March – half their previous value.

Since then, there has been something of a rally, and the share price stood at AED 2.72 as of 18 June. However, we should not overlook the fact that this is still a long way down on where it stood just a few months’ earlier.

What next for Emaar Hospitality Group?

It’s hard to know what the future will look like for Emaar Hospitality Group. On the one hand, the group appears to be largely sticking with its hotel development plans but, on the other, its parent company has undoubtedly experienced significant upheaval in recent months.

As the official hotel and hospitality partner for Expo 2020, the company will also no doubt be banking on the mega-event going ahead as planned between October 2021 and March 2022, following the recent decision by organisers to postpone everything as a result of coronavirus.

Ultimately, the key to finding out what happens next probably lies in understanding how the UAE responds to Covid19 – if the country manages to keep cases down, investor confidence could bounce back relatively quickly, and this ambitious hospitality group would be able to keep moving forward with its bold expansion strategy.

ABOUT THE CHAIN

 

Emaar Hospitality Group LLC, the wholly owned subsidiary of Dubai-based global property developer Emaar Properties PJSC, manages the company’s growing roster of hospitality and leisure projects.

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