Dubai ups its stake in InterConti
Meanwhile, other hotel execs ask “What financial crisis?” as Jumeirah expansion proceeds apace.
September 28, 2008 1:22 by kippreport
Dubai’s purchase of additional shares in InterContinental Group is likely to catch the attention not only of investors in the world’s biggest hotel company, but anybody following Dubai’s multi-pronged aggressive foray into the hospitality sector.
Jumeirah Group, the main hospitality subsidiary of the Dubai government’s Dubai Holding group of companies, is expanding rapidly, especially in Asia. The executive chairman said recently the company plans to have 60 hotels either in operation or under development by 2012, adding significantly to the 11 it now manages in Dubai and elsewhere. The company is aiming for 10 hotels in mainland China after opening its first venue there, the HanTang Jumeirah Shanghai, early next year.
Separately, the Dubai government raised its stake in InterContinental to above 4 percent. With the largest InterConti shareholders, the Barclay brothers, having just 10 percent, that makes Dubai a pretty big shareholder. A company spokesman told Reuters, “We regard them as long-term investors.”
The purchase takes place under a different ownership hierarchy than Jumeirah. While the latter is a part of the Dubai Holding conglomerate, the InterConti purchase took place via Diyafa World Limited, which is under Istithmar, part of another government conglomerate, Dubai World.
Still, the backing comes from the same place and the chain of command for both meets at the top of the Dubai government’s power structure.
The share purchase was barely noted by the UAE press. In addition to Reuters, the UK’s Financial Times carried an item on it.
Meanwhile, Jumeriah expansion proceeds apace. Executive chairman Gerald Lawless, reiterating a line taken earlier this year when speaking to Trends magazine at the World Economic Forum, told Reuters on Friday that the global financial crisis has had no impact on the company’s plans. “We haven’t seen any fallout whatsoever,” he told the news agency.
A possible conflict of interest between Dubai’s Jumeirah ownership and its InterContinental investment, or even the appearance thereof, appears not to be an issue – yet.
After all, Istithmar itself also has stakes in Sol Kerzner’s Atlantis, whose recent Dubai opening is the talk of the town, and the One and Only, which already has Dubai’s chic Royal Mirage hotel. And fellow investors in InterContinental don’t seem to be alarmed, with the company’s share price edging up a penny on the news.
Still, as Jumeirah bids to become a major player in the global luxury hotel market – competing with the likes of Four Seasons, Starwood, and, yes, InterContinental – people might start to ask questions at some point. Especially if Dubai continues to seek more and greater stakes in competing companies.