- The Washington Times - Sunday, June 4, 2006

NEW YORK

From a sail-shaped hotel taller than the Eiffel Tower to two soaring towers coated in dark mirrored glass, the images of hotels that the new management showed the staff of the Essex House left employees awe-struck.

“It’s like a transition from Ford to Ferrari, from McDonald’s to Alain Ducasse,” said Emanuele Bartolini, a food and beverage manager at the New York hotel, of the new management style Dubai-based company Jumeirah has shown to the staff.

The hotel was rebranded Jumeirah Essex House in January, the United Arab Emirate company’s first entry into the U.S. lodging market — an ambitious step in Dubai’s aggressive campaign to position itself as a business and tourism hub.

Government-owned Jumeirah, which runs developments like Burj Al Arab — the world’s most luxurious hotel, built on a man-made island in the Persian Gulf — took over management of the Essex House after the government of Dubai purchased it in September.

But running the 75-year-old Central Park South hotel might pose many challenges, including repositioning a relatively less-than-lux hotel. Also at stake is whether the Dubai investors can make an adequate return on their $500 million acquisition.

The price at which the hotel sold was a “record deal,” says John Corgel, a real estate specialist who teaches at Cornell University School of Hotel administration. Based on the 515 rooms and suites, the price per room nears $1 million. The second-highest price paid for a hotel in the region would be that of Georgetown’s Four Seasons, which was about $800,000 a room, according to Mr. Corgel.

Jumeirah would not comment on the acquisition because they were appointed to manage the hotel only. The property was acquired by the main investment arm of the emirate’s government, Dubai Investment Group.

Jumeirah started operating in Dubai in 1997 and established a strong presence among its competition there. The company, whose financial results are not public, plans to quadruple its portfolio of 10 hotels in the coming four years.

In Dubai, Jumeirah runs six hotels and other projects such as the Wild Wadi water-theme park and the Emirates Academy of Hospitality Management. Developments outside Dubai include the Carlton Tower and the Lowndes Hotel in London. The company was recently chosen to manage a new luxury hotel in downtown Shanghai.

Bill Walshe, Jumeirah’s chief sales and marketing officer, would not specify what other cities are considered for international expansion; however, he stressed that North America tops the list.

“North America is definitely one of our key target markets for international expansion, and we look forward to expanding further into other key cities and resort destinations in the USA,” he said in an e-mail.

Donna Scott, Middle East general manager of ProMark Strategies, a company that specializes in marketing for the hotel and hospitality industry, sees promise in the strategy.

“The American market can do with fresh blood. They [Jumeirah] will bring in competition; they’ve got experience in a very competitive market, and they know what they’re doing,” she said in a telephone interview from Dubai.

But whether that will translate into an adequate profit on the steep price paid for the Essex House is another question.

“When you’re talking about buying a hotel at Central Park South, the reality is you’re not going to make much of return,” said Sean Hennessey, an analyst with Lodging Investment Advisers. “There’s so much competition that raises the prices up and the return down — you have to be able to accept lower-than-usual return.”

Miss Scott and Mr. Hennessey agree that the goal behind the Essex House deal might not be all about profits. The purpose is more likely establishing a flagship in the United States.

Jumeirah took a similar approach with Burj Al Arab, which was built not for profit, but to make a statement, Miss Scott said. That hotel offers only suites with rates starting at $1,000 a night and features an underwater restaurant, gold-plated decor and a helipad, where Tiger Woods teed golf balls into the Persian Gulf and Andre Agassi and Roger Federer played tennis.

Although the Essex House’s Art Deco design has always made it stand out as an example of raw elegance, its architecture is far more humble than Jumeirah’s Dubai hotels, which feature colossal marble halls, atrium lobbies, and larger-than-life chandeliers.

Under its new management, the hotel will undergo a $50 million renovation that will involve extensive redesign of the lobby, rooms and restaurants. But analysts don’t expect Jumeirah to risk alienating the Essex House’s existing clientele with major changes in its ambiance.

“They utilize the over-the-top theme in Dubai because that’s what sells in this region and is expected by travelers,” said Miss Scott. “Most likely they will upgrade the facilities in keeping with the current image.”

Unlike the Jumeirah Lowndes in London, which was closed in December to undergo a $14.2 million renovation, the Essex House will remain open.

Since the new management took over the Essex House in January, it has already started training and orientation for the 600 staffers it intends to keep.

“There is a lot of commitment,” said Mohammed Shafiq, a waiter who’s worked at the Essex House for nine years and has witnessed three different management companies. “It’s always ‘We have to be the first, the best.’ ”

When asked whether he knew what the new brand, Jumeirah, stood for, Mr. Shafiq said, “Of course. It’s this neighborhood by the beach [in Dubai] where fishermen used to live in the old days, but now is a place for this huge hotel industry, a place for the creme de la creme, just like Central Park South.”


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