The move by Al Habtoor Group to franchising by Hilton Worldwide from management by Marriott was likened to a divorce by its chief executive and vice-chairman on Tuesday, but an amicable one.

An upbeat press conference, held at the newly renamed Habtoor Palace, formerly the St Regis Dubai, focused on the future of Al Habtoor City hotels under Hilton Worldwide, rather than the past under Marriott, although Mohammed Al Habtoor pointed out that that his organisation would ‘continue to work with everyone’ as Marriott still manages around half of Al Habtoor’s hotels globally.

“There were lots of rumours happening in the last couple of months about Habtoor City and the future of Habtoor City. When you are married, you can divorce from your wife, and get rid of your wife, or she gets rid of you, so we ended our relationship with Marriott amicably, and we still have Marriott  managing some of our properties around the world,” he said.

Under the agreement with Hilton, effective from today, August 1, the St Regis will be named the Habtoor Palace, and will be one of the first hotels franchised under Hilton Worldwide’s newly launched LXR Hotels & Resorts. The W Hotel becomes V Hotel, Curio Collection by Hilton, of which there are currently 50 around the world, and the Westin becomes Hilton Dubai Al Habtoor City.

Ian R Carter, Hilton’s president of global development, architecture, design and construction, described the new agreement as a “very, very important day” for the company.

“First of all, to have a 1,000-room Hilton in this location is phenomenal. We are extremely pleased that we have reached agreement to franchise our Hilton brand here in this location. Likewise, Curio, of which we now have 50 or so hotels around the world, that the V hotel will join that family of hotels is again, a fabulous addition to the team. Probably most importantly, as we sit here in the Al Habtoor Palace, to become one of the first hotels to join our newly formed and launched LXR brand is phenomenal.”

Al Habtoor said that Al Habtoor City was a landmark not just for the company, but for Dubai, and confirmed that the vast majority of the hotels’ staff had kept their jobs, with just four of the 1,020 employed there let go under the changes.

The press conference heard that under the agreement, Al Habtoor would have ultimate responsibility for the resort’s bottom line, while having access to Hilton’s ‘commercial engines’ for sales, marketing, and staff training, and access to the one million-plus membership of the company’s loyalty scheme, Hilton Honours.

Speaking in a phone interview on Tuesday, Christopher Hewett, associate director of hotel consultancy TRI Consulting, said the new franchise agreement was an indication of a growing trend in the region, as hotel owners become more experienced in managing their own locations.

“Al Habtoor Group have deep experience in managing their own hotels,” he said. “The Metropolitan which used to be on the site was managed by them, and they have a franchise agreement with Marriott for the Habtoor Grand in Dubai Marina.”

Hewett said major hotel brands are becoming increasingly confident that owners in the region can manage their own hotels effectively. There are now more franchise deals, which are often at a lower cost structure for owners, but under which more of the revenue risk is weighted towards the owner, he said.

“The owner needs to have the experience to manage a franchise structure. And we are seeing a shift towards franchises in the region as the market has matured,” he said.

Mr Al Habtoor confirmed that the group would bear more of the revenue risk under the new deal, saying: “We are responsible for our bottom line. Hilton will help us as if we are managed by them, all the facilities, services, all the bookings revenue management everything, but we control our expenses and costs. Our team are experienced in providing the best services, we don’t compromises on quality. We have been managing this property (the Habtoor Palace) ourselves for the last three months directly.”

He confirmed that the three hotels’ restaurants and bars would ‘change for the better’ in the coming months, with announcements on what that would mean expected soon.

According to a press release issued announcing the new agreement, the deal will bring the total number of hotel rooms in Hilton Hotels’ portfolio in Dubai to more than 5,000 by the end of the year.

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(Reporting by Imogen Lillywhite; Editing by Michael Fahy)

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