Image credit: FIVE
Dubai hotel operator FIVE Holdings is concerned about escalating tensions in the Middle East but has not seen disruptions from the recent escalation, its chairman told Reuters on Monday, as the company works toward an IPO in 2025.
Chairman Kabir Mulchandani told Reuters the company has continued to grow despite a drop in customers from Israel since October 2023.
“But it remains to be seen how much this escalates and only then we will know,” he added, in one of the first comments from the hospitality industry.
The UAE became the most prominent Arab nation to establish diplomatic ties with Israel in 30 years under the US-brokered Abraham Accords in 2020 and forged partnerships that saw an influx of Israeli tourists to Dubai.
That changed with the Israel-Gaza crisis.
“Obviously we had a strong Israel market customer, 8 per cent of our business was from Israel. That definitely impacted us because that became practically zero,” said Mulchandani, who is also FIVE’s founder.
The company, which operates party hotels in Dubai, Ibiza and Zurich, was also hit by a drop in US citizens of Jewish origin travelling to the Middle East, he added.
FIVE rides Dubai wave
FIVE owns one of Dubai’s biggest party hotels, where guests can park their supercars inside a nightclub for Dhs10,000($2,723). It also offers an even more exclusive party in the sky for the super-rich on its own 16-passenger private jet for $14,000 an hour.
Dubai is the biggest tourism and trade hub in the Middle East, attracting a record 17.15 million international overnight visitors last year.
FIVE marks increase in business
But the drop in this traffic has not put a damper on the hospitality group’s growth. FIVE said on Monday it was rolling out a stock-based compensation plan to reward top workers as it looks ahead to a potential public listing.
Mulchandani said the company, which estimates it could be worth $2.5bn to $3bn, is planning to list in Dubai and is in talks with advisers about a potential dual listing, without elaborating on specific locations.
Dubai was quick to reopen after the pandemic.
That, along with an influx of Russians and business professionals as well as relaxed social and visa rules, helped fuel an economic recovery that has also seen property prices and rents balloon.
“We’re now at 155,000 hotel rooms in Dubai, which is bigger than Vegas,” Mulchandani said of overall sector numbers for the city.
“What we’re seeing is a massive shift in spending patterns on entertainment”, he said, adding that FIVE sells about 40,000 bottles of champagne a year in Dubai and Ibiza.
Last weekend’s opening party at its FIVE LUXE venue in Dubai generated gross revenue of Dhs5.9m($1.6m), higher than the best night at Ibiza’s Pacha, he said.
“It’s something we’ve never seen … So there’s an explosion in the sector,” Mulchandani said.
Governments in the GCC have been trying to encourage more family-owned companies to list in a bid to deepen their capital markets, with Saudi Arabia so far seeing the most success.
Last year, the company scored a top ESG (environmental, social and governance) rating for a green bond that helped purchase Spanish group Pacha, in a deal worth EUR303m ($321.9m).
The transaction, which involved buying Pacha’s hotel and nightclub businesses, also helped widen FIVE‘s offerings of star DJs at its venues.