The hospitality unit of Abu Dhabi’s LuLu Group plans to open a five-star hotel in Dubai’s Business Bay area in October.
The 365-room property will be operated by Germany’s Steigenberger Hotels.
Twenty14 Holdings will own the property. This will also be its first foray into the hotels sector.
The LuLu unit has more than Dh1 billion worth of assets under management in the Middle East, the UK and India.
The Frankfurt-headquartered Steigenberger said it would manage a second property in Dubai for another developer, InterCityHotel Culture Village, in 2017 as well as the Steigenberger Hotel Doha Airport Road set to open in Qatar next year.
Despite the fluctuations in the hotel sector, with falling average daily room rates across Dubai and a decline in tourists from traditional source markets such as Russia, the emirate is still an attractive destination in the long run, analysts say.
“Dubai continues to attract active interest for entrants into the Middle East, and that is unlikely to change any time soon,” said John Podaras, a partner at Hotel Development Resources, a consultancy in Dubai.
While the retail industry has been at the core of LuLu Group’s expansions into emerging markets such as Malaysia, Indonesia and India, it has realised that retail and hospitality services complement each other, said Adeeb Ahamed, the managing director of Twenty14 Holdings.
The LuLu Mall campus in Kochi, India, for instance, partnered with Marriott Group to open a 274-room hotel.
“While the mall-hotel model will be replicated wherever it is feasible, Twenty14 Holdings is looking at partnering with leading hotel groups to introduce world-class properties in key markets like the [Arabian Gulf], Europe and South East Asia,” Mr Ahamed said. “The financial model and investment opportunities in this sector are in line with our capabilities, and we look forward to making key acquisitions in cities across the globe.”
The hospitality investment arm of LuLu recently acquired a share in the Sheraton Oman in Muscat, a 230-room, five-star hotel under renovation.
Steigenberger, which has a presence in Hurghada on Egypt’s Red Sea Coast, Beijing and Berlin, is also expanding to Istanbul, Munich, Cairo and Mallorca, according to Puneet Chhatwal, the chief executive. While much of its new openings are focused on China, next year it expects a property in Cairo’s Tahrir Square. In 2013, it reported revenue of €502.5 million (Dh2.02bn).
In 2009, Egyptian hotel and tour operator Travco Group acquired a 99.6 per cent stake in the 1930-founded Steigenberger Hotels for an undisclosed sum.