The crown jewel in the portfolio of Emaar Hospitality Group, The Address Downtown Dubai will be closed for renovation which is likely to continue for at least six months, if not until September or even further into 2016.
A fire that broke out just three hours ahead of the New Year’s Eve fireworks destroyed at least half of the building judging from various pictures of the hotel’s exterior.
Thanks to the heroic efforts and impeccable organization of Dubai’s civil authorities during the same night and on the day after, now it seems normality has returned to the Downtown Dubai area. Roads are not blocked anymore and people can freely move around the Old Town Island community buildings and into The Dubai Mall.
It was shocking, saddening and worrisome to watch the tower burn in flames. How the fire erupted and what caused it remains unknown, although judging by the lack of extra security precautions in the area, it seems it was rather an accident due to a negligence.
The Address Downtown has been recently named the ‘Best Individual Hotel in the World’ for the fifth year in a row at the prestigious Global Traveler Awards 2015. The numerous restaurants and bars offered great dining and entertainment experience to visitors, while the one-of-a-kind swimming pool and hotel’s facilities provided enjoyable experience to the city’s guests. A top hot spot in Dubai, the luxurious hotel is very popular and it was fully booked most of the time.
The Address Downtown and the residential part of it is normally serviced by a few hundred people staff, most of whom will be very much likely out of their jobs rather sooner than later. It is possible that Emaar Hospitality Group will transfer some of the already trained and experienced staff to its upcoming properties. However, none of these are due for opening in the coming months and it might not be cost effective to keep a large number of employees on standby, or paid and unpaid holidays. It is possible that some relocation options will be offered to a certain number of employees. After all, good workers is not that easy to find and train.
Not the least, the super luxurious, 63 floors tall five star hotel generated a significant revenue for Emaar Hospitality Group as it is located right in the center of the Downtown Dubai, currently branded as “The Center of Now”. For the company will be hard to compensate the balance sheets and investors’ expectations in a short period of time, while having to come up with funding for unexpected large renovation. It might take a few weeks Emaar to revise operation expences and profitability projections. But for sure, the revenues of the company will be badly affected, along the share price tomorrow. Investors with long term vision may benefit from the current misfortune of the company and accumulate shares at bargain price in the coming days.
On the night of the fire, hotel’s guests and residents have been evacuated in just a few hours most probably to the rest of the hotels from The Address Hotels + Resorts chain. The Address Downtown spread the following message across social media channels:
“We request guests and residents of The Address Downtown Dubai to contact our hotline number +971 4 423 8870 or email:email@example.com.”
Most probably the hotel operator will make arrangements guests to be refunded with the cost of their stays and dining reservations. A night stay in a deluxe room in The Address Downtown Dubai would have easily cost you on average $600, while during public holidays and especially on New year’s Eve the room rates could be much higher according to Booking.com. The price of New Year’s Eve gala dinner was advertised to start from $600 per person onwards.
If for the hotel guests on New year’s Eve this was once-in-a-lifetime horrific experience, for apartment owners will be a nightmare to sort out through the situation. Only a studio in The Address Downtown Dubai Residence costs approximately half million US dollars at present, while one bedroom apartment sells for a million, according to a Downtown Dubai property specialist whom you may contact here. The average rent for a studio was approximately $50,000 per year in December 2015, while two bedroom apartments have been rented out for approximately $120,000. Usually, the apartments undergo renovation every five years, as the units have been sold by the property developer fully furnished and with service contracts. So far there is no announcement by Emaar Properties on how it plans to organize reimbursement for the hotel gusts and property owner, and the renovation of the building in general. Ideally, The Address Downtown Residences home owners association is expected to coordinate the process with Emaar Properties. Surely the interests of property owners and the hotel operator along with the New Year’s Eve guests are guarded by an expensive insurance policy.
From a larger perspective, a single accident in a five star hotel should not affect the tourism industry in Dubai. Many other large luxurious hotels in the Downtown Dubai district will readily accommodate tourists city visitors eager to be as close as possible to The Dubai Mall. According to Booking.com, Dubai has nearly 760 hotels altogether and if one of them is not operational for a few months, there will be hardly any major consequences for the entire tourism industry.