Business | Tourism
Jumeirah to expand its US presence
luxury hotelier Jumeirah plans a larger presence in the US as part of an ambitious global expansion reflected in its recent takeover of Essex House, the landmark New York hotel overlooking Central Park.
- By Amy Yee, Financial Times
- Published: 00:00 April 22, 2006
Dubai: luxury hotelier Jumeirah plans a larger presence in the US as part of an ambitious global expansion reflected in its recent takeover of Essex House, the landmark New York hotel overlooking Central Park.
The company, best known for its opulent sail-shaped Burj Al Arab hotel in Dubai, is preparing to compete with the likes of the Four Seasons, Ritz-Carlton and Mandarin Oriental by increasing its worldwide portfolio of hotels from nine to 40 within five years.
Recent controversy over Dubai Ports World's purchase of some US port terminals has not deterred Jumeirah's plans in the US or created a backlash for the company, said Frank van der Post, the new head of Jumeirah's operations in the Americas. "Now everyone knows where Dubai is," he joked.
The US hotel industry is booming due to an increase in travel and little new supply. Luxury hotels is one of the most profitable categories and upscale brands are expanding into the US, including Shangri-La, Mandarin Oriental and Hilton's Conrad brand.
Jumeirah has about 15 hotels currently in contract or under construction set to open by 2008 in locations such as Jordan, Dubai and Doha. The company wants to expand beyond the Middle East to the Americas, Asia and Europe.
It is looking to build hotels in major cities such as Los Angeles, Chicago and Boston, in addition to resort destinations in the Caribbean and Mexico. In Europe it is eyeing cities such as Paris, London, and Rome.
Most hoteliers are avoiding building new hotels in the US because of soaring construction costs.
Instead, they are paying record prices for coveted hotel properties and renovating them.
Unlike peers, Jumeirah plans to build about 70 per cent of its new US hotels in order to accommodate larger rooms and have greater control over layout and design.
While this strategy to build rather than buy runs contrary to current trends, Van der Post points out that hotels are easily selling for $400,000 to $500,000 per room in key US cities.
"New builds" are logical for Jumeirah given that "the variance is minor between converting [existing hotels] and new construction," Van der Post added. Jumeirah replaced Starwood as manager of the Essex House in January, marking its first venture in the US.
Dubai Investment Group, owned by Jumeirah's parent Dubai Holdings, bought the Essex House property for about $400 million last year from Strategic Hotels & Resorts.
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