Best of US-style resort luxury for Dubai

The Metropolitan hotel in Dubai is to be demolished to make way for a Las Vegas inspired hotel and entertainment project.

Khalaf Al Habtoor, the chairman of Al Habtoor Group.

The Metropolitan Hotel in Dubai is to be knocked down to make way for a Las Vegas-inspired luxury hotel project.

The US$1.33 billion (Dh4.8bn) development on Sheikh Zayed Road is to include three luxury hotels with a total of 1,616 rooms and a theatre big enough to seat more than 1,000, Al Habtoor Group announced yesterday.

"The tourism industry in the United Arab Emirates and Dubai in particular is constantly and steadily growing, and we have to be prepared to cater for the growing needs of its visitors and residents alike," said Khalaf Al Habtoor,the group's chairman.

The timing of the announcement is linked to the fact that Dubai's hotels have enjoyed an influx of tourists in the past year, helped by unrest elsewhere in the region. This month, a combination of factors including good weather and the Dubai Shopping Festival have helped many properties to achieve 100 per cent occupancy.

Mr Al Habtoor said the UAE had become a "haven" for investment and companies to base themselves in the Middle East.

The theatre would have shows similar to productions staged in Las Vegas, the company said. It is considering shows in line with high-grossing productions such as Cirque du Soleil and David Copperfield. A five-year run of shows by the Canadian singer Celine Dion at Las Vegas grossed about $400 million.

Al Habtoor said it was in talks with the company founded by Franco Dragone, who had been behind many Cirque du Soleil productions, about shows for the theatre.

"If you go to the hotels in Dubai, they're very traditional," said Mohammed Al Habtoor, the group's chief executive. "Hotels in Las Vegas and Macau are the best hotels in the world. When you go to hotels in Vegas, your jaw drops when you look at the interiors, the chandeliers, and the colours they use are amazing."

Al Habtoor Group described the project as one of the region's biggest luxury hotel and entertainment developments.

The 34-year-old Metropolitan is one of Dubai's oldest hotels and is famed for its nightspot, Rattlesnake, and the British-style pub, The Red Lion. The hotel is scheduled to be demolished in April, with work on the new project expected to start in June and take about 40 months to complete.

Analysts said that the announcement raised questions about other old hotels in Dubai.

"Strategic decisions will need to be made over the next few years about their next phase," said Chiheb ben Mahmoud, the head of hotel advisory at Jones Lang LaSalle Hotels Middle East and Africa. "As new hotels are entering the market, the obsolescence pace is likely to increase. The Metropolitan complex is now dwarfed by its neighbouring mega-developments Business Bay and Downtown Burj Khalifa."

The new project is to include shopping arcades, several restaurants, and a tennis and sports academy.

The group expects to fund the project through its own cash flow, as lending from banks remains tight, Khalaf Al Habtoor said.

His company announced plans in the fourth quarter of last year to restart work on a Dh1bn hotel on the Palm Jumeirah in Dubai, which will be managed under Hilton's Waldorf Astoria brand.

Operators for the three hotels on Sheikh Zayed Road are expected to be announced soon.