FIVE hotel group chief keeps watch on risk of MidEast flare-up as it eyes IPO

Dubai party hotel operator FIVE Holdings is concerned about escalating tensions in the Middle East but has not seen disruptions from the weekend's Iran attack, its chairman told Reuters on Monday, as the company works toward an IPO in 2025.

Dubai party hotel operator FIVE Holdings is concerned about escalating tensions in the Middle East but has not seen disruptions from the weekend's Iran attack, its chairman told Reuters on Monday, as the company works toward an IPO in 2025. During this weekend's major flare-up, Iran launched more than 300 missiles and drones at Israel, the first such direct attack between the two foes.

Chairman Kabir Mulchandani told Reuters that the company has continued to grow despite a drop in customers from Israel since the Hamas attacks inside Israel in October. "But it remains to be seen how much this escalates and only then we will know," he added, in one of the first comments from the hospitality industry since Saturday night's attack.

FIVE owns one of Dubai's biggest party hotels, where guests can park their supercars inside a nightclub for 10,000 dirhams ($2,723). It also offers an even more exclusive party in the sky for the super-rich on its own 16-passenger private jet for $14,000 an hour. Dubai is the biggest tourism and trade hub in the Middle East, attracting a record 17.15 million international overnight visitors last year.

The United Arab Emirates became the most prominent Arab nation to establish diplomatic ties with Israel in 30 years under the U.S.-brokered Abraham Accords in 2020 and forged partnerships that saw an influx of Israeli tourists to Dubai. That changed with Israel's invasion and bombardment of Gaza in response to the Hamas attacks of Oct. 7.

"Obviously we had a strong Israel market customer, 8% of our business was from Israel. So that definitely impacted us because that became practically zero," said Mulchandani, who is also FIVE's founder. The company, which operates party hotels in Dubai, Ibiza and Zurich, was also hit by a drop in U.S. citizens of Jewish origin travelling to the Middle East, he added.

BOOMING BUSINESS But the loss of Israeli business has not put a damper on growth. FIVE said on Monday it was rolling out a stock-based compensation plan to reward top workers as it looks ahead to a potential public listing.

Mulchandani said the company, which estimates it could be worth $2.5 billion to $3.0 billion, is planning to list in Dubai and is in talks with advisers about a potential dual listing, without elaborating on specific locations. Dubai was quick to reopen after the pandemic. That, along with an influx of Russians and business professionals as well as relaxed social and visa rules, helped fuel an economic recovery that has also seen property prices and rents balloon.

"We're now at 155,000 hotel rooms in Dubai, which is bigger than Vegas," Mulchandani said of overall sector numbers for the city. "What we're seeing is a massive shift in spending patterns on entertainment", he said, adding that FIVE sells about 40,000 bottles of champagne a year in Dubai and Ibiza.

Last weekend's opening party at its FIVE LUXE venue in Dubai generated gross revenue of 5.9 million dirhams ($1.6 million), higher than the best night at Ibiza's Pacha, he said. "It's something we've never seen ... So there's an explosion in the sector," Mulchandani said.

Gulf governments have been trying to encourage more family-owned companies to list in a bid to deepen their capital markets, with Saudi Arabia so far seeing the most success. Last year, the company scored a top ESG (environmental, social and governance) rating for a green bond that helped purchase Spanish group Pacha, in a deal worth 303 million euros ($321.9 million). The transaction, which involved buying Pacha's hotel and nightclub businesses, also helped widen FIVE's offerings of star DJs at its venues.

($1 = 3.6723 UAE dirham) ($1 = 0.9413 euros)

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