FIVE, a party hotel brand in Dubai, has seen success over the years in the robust tourism sector of the emirate. However, the company is facing challenges as it now has three hotels in Dubai, which has led to a form of “cannibalization” of its own business. The flagship FIVE Palm Jumeirah experienced lower room revenues, with a drop of 8.9%, which was attributed to the opening of FIVE LUXE, located less than 20 minutes away, leading to increased competition on the beachfront.
FIVE Holdings, the parent company of FIVE, has four hotels in Dubai and is now looking to expand internationally to continue its growth. Chairman Kabir Mulchandani has expressed interest in the U.S. market, Saudi Arabia, London, Miami, and Las Vegas. The group has also acquired the Pacha Group in Ibiza, giving them access to the Pacha nightclub brand, the El Hotel in Ibiza, and the Destino hotel, with plans to reflag it as FIVE Ibiza in 2025 with a significant upgrade investment.
Despite the success in Dubai, FIVE is focusing on expanding beyond the emirate, with an emphasis on the U.S. market for potential expansion. Mulchandani believes that the group’s brands would do well in the U.S. and sees it as a priority over Saudi Arabia for now. Additionally, FIVE is targeting the European market, particularly Spain, where it has acquired the Pacha Group. FIVE is looking to establish a presence in international markets to maintain growth and avoid cannibalizing its own business in Dubai.
In terms of financial performance, FIVE reported a gross profit increase of 5.3% in the second quarter, reaching 196 million Dirhams ($53.3 million). Revenue per available room (RevPAR) rose by 11.1% to 887 Dirhams ($241). The group’s hospitality revenue in Q2 2024 increased significantly to 448 million Dirhams ($121.9 million), largely due to the acquisition of the Pacha Group for $350 million. The surge in revenue was also attributed to the opening of FIVE LUXE in March.
FIVE Zurich, the group’s only non-Dubai hotel in Switzerland, is performing well, but Mulchandani stated that they would consider selling it if they received an offer they couldn’t refuse. On the other hand, FIVE is continuing to focus on its expansion plans internationally, with a strong interest in the U.S. market and potential growth opportunities in Saudi Arabia, London, Miami, and Las Vegas. FIVE is looking to establish its presence in key global markets and diversify its portfolio to sustain growth and success in the hospitality sector.
Overall, FIVE is navigating the challenges of operating multiple hotels in Dubai and is looking to expand internationally to maintain growth. The company’s financial performance in the second quarter has been positive, with revenue increases attributed to new hotel openings and acquisitions. With a focus on the U.S. and European markets, FIVE aims to establish a strong presence globally and continue its success in the hospitality sector while exploring opportunities to optimize its portfolio and drive future growth.
