Al Habtoor Palace, a member of Hilton LXR, has just left the brand and gone independent. I find this to be worth examining on a couple of levels.
In this post:
The first Hilton LXR property leaves the brand
As of May 1, 2024, Al Habtoor Palace Dubai has cut ties with the Hilton LXR brand, and has gone independent. For some background, the 235-room hotel joined Hilton LXR back in 2018, with LXR being Hilton’s portfolio of independent luxury hotels.
What makes this pretty noteworthy is that Al Habtoor Palace was actually the property that launched the LXR brand — it was the brand’s first property in the world, and opened the way for more properties to undergo a “soft” conversion. So it’s perhaps surprising to see that hotel now leaving the brand just six years later.
Al Habtoor Palace is part of a larger Al Habtoor City development, so for some context on that:
- Al Habtoor Palace actually opened in 2015 as the St. Regis Dubai Al Habtoor City, before switching brands
- The same complex contains two other hotels, which were initially branded as the W Hotel Al Habtoor City and the Westin Al Habtoor City, and these rebranded as the V Hotel Al Habtoor City, Curio Collection by Hilton (W to V, lol), and the Hilton Al Habtoor City
- The V Hotel and Hilton continue to operate as part of the Hilton portfolio, which management describes as “ensuring that we maintain diverse offerings within our complex to meet all our guests’ needs”
As you can see, there’s quite a bit going on here…
Being an independent hotel in Dubai can’t be easy
Dubai is an absurdly competitive hotel market, with virtually every global brand represented. Heck, many brands even have multiple properties in the city, given how sprawling the city is.
This entire Al Habtoor City development is owned by Al Habtoor Group, and they own a variety of other projects as well. This isn’t the first time that the firm has taken some of its properties independent. For example, the Al Habtoor Polo Resort initially opened as a St. Regis, before going independent.
I’d be fascinated to know what the thought process is, given how consumers have an overwhelming number of hotels to choose from, and that’s where being associated with a major hotel group (and loyalty program) can help.
Maybe the hotel owners weren’t getting the amount of business they were hoping for by being associated with a major brand, but do they think they’ll have better luck being independent? Sure, they don’t have to pay the fees of being associated with one of the hotel groups, but surely they’ll now increasingly be scraping the bottom of the barrel for bookings through online travel agencies, which are subjected to much higher distribution costs than direct bookings.
I also find it curious that the owners are keeping the two other hotels as part of Hilton, but just not the most premium. Is that because they’re finding Hilton participation is working better there, or are they just not at a point in the contract where they can terminate that agreement yet?
Bottom line
Al Habtoor Palace Dubai has now gone independent, after being the launch property for the Hilton LXR concept. Prior to that, the hotel belonged to St. Regis. This isn’t the first time that Al Habtoor Group has taken its properties independent, so I can’t help but be curious about what the economics of this decision making process look like.
What do you make of Al Habtoor Palace cutting ties with Hilton LXR?
The Habtoor Palace is a dark and sad building.
I often stay at the V Hotel and also like to Hilton al Habtoor for its large, high quality rooms. The lounge is also great (enormous, but not busy, and with a good happy hour offering). The (much more expensive) Habtoor Palace next door seems like the neglected sibling. Habtoor Group is known for “squeezing the lemon” and I can see some differences in ‘renovation budget’ for causing the exit.
Better this way…
I stayed at this hotel while it was associated with St Regis and LXR both. With hilton association, I remember they even provided a complimentary beach access and (a bit worn-out Bently) car transporation to Waldorf Jumeiradh. At that time, I thought it'd be more appropriate to be branded as Waldorf The City. In any case, its interior design now feels outdated, out-of-trend and heavy compared to that of modern luxury, really a time to...
I stayed at this hotel while it was associated with St Regis and LXR both. With hilton association, I remember they even provided a complimentary beach access and (a bit worn-out Bently) car transporation to Waldorf Jumeiradh. At that time, I thought it'd be more appropriate to be branded as Waldorf The City. In any case, its interior design now feels outdated, out-of-trend and heavy compared to that of modern luxury, really a time to renovate and update rooms and furniture whether it goes independent or not.
I can't imagine caring about the branding of a hotel in Dubai.
The hotel had half its front "garden" taken out for a huge tower residential development. And it's being surrounded from most side by more towers now. Its just not in character with its neighbouring buildings now. Al Habtoor has obviously seen how much money there is to be made by building upwards given the rising Dubai property prices. I'd go so far as to speculate that this leaving of Hilton only for this specific property...
The hotel had half its front "garden" taken out for a huge tower residential development. And it's being surrounded from most side by more towers now. Its just not in character with its neighbouring buildings now. Al Habtoor has obviously seen how much money there is to be made by building upwards given the rising Dubai property prices. I'd go so far as to speculate that this leaving of Hilton only for this specific property may preclude this relatively small low rise building being knocked down and replaced with another tower within 5 to 10 years. Whether that will have a hotel in it or not, who knows!
Younger people are not really interested in brand loyalty anymore, instead looking for unique boutique style stays. I think we will see a lot more de-flagging of properties in destinations that have large numbers of chain luxury hotels and destinations with high tourist traffic.
@ Creditcrunch -- I'm curious what you're basing that on, because loyalty program engagement is just about at an all-time high, for better or worse. You're right, a lot of young people do like more boutique experiences, but whether this is branded as an LXR or not, it's the same mega-luxury hotel regardless, so that doesn't seem to solve that issue. I'd say younger people do like more of the boutique and lifestyle concept, but...
@ Creditcrunch -- I'm curious what you're basing that on, because loyalty program engagement is just about at an all-time high, for better or worse. You're right, a lot of young people do like more boutique experiences, but whether this is branded as an LXR or not, it's the same mega-luxury hotel regardless, so that doesn't seem to solve that issue. I'd say younger people do like more of the boutique and lifestyle concept, but we've also seen the major hotel groups integrate these types of brands into their portfolios.
@Ben..Nothing other than talking with people at work our TMC and friends, of course travellers on business will seek out chain hotels in order to progress through the tiers and the perks that come along with it but with so many corporate cutbacks I don’t know many that book its employees into 5* these days unless it’s board level or all the 4* are booked up so the need for clusters of luxury hotels in...
@Ben..Nothing other than talking with people at work our TMC and friends, of course travellers on business will seek out chain hotels in order to progress through the tiers and the perks that come along with it but with so many corporate cutbacks I don’t know many that book its employees into 5* these days unless it’s board level or all the 4* are booked up so the need for clusters of luxury hotels in business districts is just not economically viable. I agree brand engagement is certainly maintaining a healthy momentum as is premium air travel but people on holidays are looking for more personalised service with most of these small and independent luxury hotel groups offering better deals if you book direct, there will be a welcome amenity, free super fast Wi-Fi, they are able to deliver individualised service and shun the same same business hotel model.
Yeah Lucky, there seems to be a bigger story with some of the recent luxury hotel deals Hilton has done. Both this hotel and the Biltmore in London are leaving the LXR Brand. In addition, the Conrad Midtown is leaving Hilton in June. If I recall, all of these hotels joined these luxury brands around the same time as Hilton was pushing to add more luxury hotels. I count one 12 LXR properties on the Hilton website.
My assumption here is that the LXR brand is the failure - it’s just not attracting the rates they expected for the franchise payments to Hilton and therefore they’ve decided to go it alone instead. The LXR brand seems to be going nowhere to me.
To your point, properties can and do change branding. This started out as a St. Regis. Three years later, it was LXR. Six years later, it's independent. But, could have been yet another brand. In the end, a property has its own reputation.
I agree, it just doesn't have the same recognition as something like a Conrad, Waldorf, Ritz Carlton, Park Hyatt does.
To me LXR sounds like something trendy, cool, leaning high end, but not in the same level of elevated luxury like those brands above.
The same happened with the Biltmore Grosvenor Square in London. Early LXR property gone independent.
Good luck, Al Abtoor, you’re going to need it.