Skift Take
Party hotel brand FIVE has seen years of success in Dubai, but after putting three hotels in one city, the group is starting to “cannibalize” its own business.
Local Dubai hotel group FIVE reported financial results Monday that show the company has continued to benefit from the emirate’s robust tourism sector, but also that it will need to look elsewhere for growth.
FIVE chairman Kabir Mulchandani pointed to lower room revenues at the flagship FIVE Palm Jumeirah, and attributed to the dip to “cannibalization” â it now has three hotels in Dubai.
“There have been some challenges we’re facing at FIVE Palm Jumeirah,” Mulchandani said, adding: “It’s primarily driven by a form of potential cannibalization. When FIVE LUXE opened, we have two hotels on the beach.”
Room revenues at FIVE Palm Jumeirah fell 8.9%. FIVE LUXE is located less than 20 minutes away from FIVE Palm Jumeirah.
FIVE Holdings has four hotels: Its original FIVE Palm Jumeirah; FIVE JVC, and the recently-opened FIVE LUXE also in Dubai; and FIVE Zurich, which is a reflagged property. The group also has a private jet that its chairman uses and charters to guests in a venture called FLY FIVE.
In a Dubai radio interview last December, Mulchandani said FIVE was focused on expanding overseas and out of Dubai. âFor us, the U.S. market is very interesting, Saudi is very interesting. London would be interesting, Miami, Las Vegas.â
Moving Out of Dubai
In a call Monday discussing results, Mulchandani emphasized the potential of U.S. expansion. “The goal was always… Our brands would do exceptionally well in the U.S. We won’t overstress ourselves right now. The U.S. would be a priority over Saudi Arabia for now, given that Saudi needs to open up a bit more for our kind of product.”
FIVE also is focused heavily on the European market, particularly Spain, after it acquired Ibizaâs Pacha Group. This deal gives FIVE the Pacha nightclub brand, the El Hotel in Ibiza, and the Destino hotel, which will reflag as FIVE Ibiza in 2025. FIVE will spend around $26.9 upgrading the Destino to make it FIVE-worthy.
Speaking about FIVE’s only non-Dubai hotel, located in Switzerland, Mulchandani said FIVE Zurich is doing well, but he wouldn’t turn down a chance to sell it.
He said: “We’ve been debating internally [selling FIVE Zurich]. For now, while it is generating positive EBITA, we’re not actively looking to dispose of it. But if we received an offer we can’t refuse, we would take it.”
A Look at The Numbers
In the second quarter, FIVE reported a gross profit of 196 million Dirhams ($53.3 million), up 5.3% from 186 million Dirhams ($50.6 million) at the same point last year.
Here are some of the key figures in the quarter:
- Revenue per available room (RevPAR) in the quarter rose 11.1% to 887 Dirhams ($241)
- Hospitality revenue in Q2 2024 reached 448 million Dirhams ($121.9 million), a 99% increase from 225 million Dirhams ($61.2 million) in Q2 2023
- The group completed its acquisition of Pacha, a deal which saw FIVE acquire long-standing Spanish entertainment group Pacha for $350 million
FIVE’s surge in revenue can be attributed to the opening of its fourth hotel, FIVE LUXE in March.
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