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.
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?
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