EIH-Oberoi Hotels announces exit from UAE market

New Delhi: EIH Ltd has decided to exit the United Arab Emirates, a key hospitality market, in a surprise move by the operator of the Oberoi chain of luxury hotels and resorts.

On Wednesday, EIH managing director and CEO Vikramjit Singh Oberoi announced the decision before 400 employees at the Oberoi-run Al Zorah property in the UAE’s Ajman city. The local state government owns the Oberoi Beach Resort, Al Zorah . 

Oberoi did not mention any reason for the decision at the emergency meeting.

The 89-room Al Zorah property, mostly suites and villas, is 30 minutes from Dubai, catering to high-end travellers with room rates priced at AED 1,000-8,000, or ₹22,000- ₹1.8 lakh, a night. It also has an attached golf course.

According to two people who spoke with Mint—one of them an employee with direct knowledge of the matter—the announcement was a complete surprise. 

“Business had been outperforming budget expectations in recent months. We were informed that the management would be handed over to another international operator within a few months. The owners of the property reassured us that one of the key terms agreed with the new operator was that all employees would be retained. But we are feeling insecure,” the employee said.

In response toMint’s query, a company spokesperson said, “EIH Holdings Ltd, a subsidiary of EIH Ltd and the operator of The Oberoi Al Zorah, along with Al Zorah Development Private Co. Ltd, the owner of the hotel, jointly informed employees yesterday that both parties have mutually and amicably agreed to terminate the management contract for The Oberoi Al Zorah, effective 28 February 2025. Al Zorah Development Private Co. Ltd has assured employees that they will be retained by the company moving forward. The Oberoi Group remains committed to exploring opportunities in the region.”

Mintalso reached out to Al Zorah representatives but did not receive a response.

Also read: Amid family feud, EIH-owned Oberoi Hotels to develop two hotels in Pune, London

EIH had signed the Ajman lease in 2017. At the time, the company’s late chairperson P.R.S. Oberoi had said the property had been developed by Al Zorah Development Co., a joint venture between the Government of Ajman and Solidere International. 

The potential loss of this property in the next few months comes on the back of an impending loss of EIH’s managed property in Shimla, Wildflower Hall, following a Supreme Court order. Two years ago, the company also exited its partnership in Dubai City Center. That hotel has now become Anantara Downtown Dubai Hotel in the business bay, near Burj Khalifa.

“It seems some of the issues that have happened to them are unconnected. But these are issues nonetheless,” said the second of the two persons cited earlier, both of whom spoke on condition of anonymity. “In Shimla, they have received an eviction notice from the Supreme Court. In Hyderabad, the owners of the Trident Hotel property it manages—Golden Jubilee Hotels—are also booked by the CBI (Central Bureau of Investigation) for financial irregularities since 2021. It is also no longer running its Motor Vessel Vrinda, which it operated in Kerala till two years ago.”

Expansion plans

In 2017, EIH had a total of 32 hotels worldwide, besides two cruises in the Nile in Egypt. The number remains largely the same, with EIH currently operating 31 hotels and two cruises.

EIH announced a strong pipeline of hotels earlier this year. In March, Vikramjit Oberoi said the company would add 50 new hotels across various locations. Across the world and in India, EIH’s hotels operate under two main brands: Oberoi (luxury) and Trident (five-star).

“Currently, 18 properties are underway (7 owned and 11 managed). Additionally, 11 projects are in advanced stages of closure,” said the EIH spokesperson.

Earlier this week, EIH unveiled two major projects in Pune and London. In Pune, it has acquired a majority share in Muttha Towers II, where it plans to invest ₹972 crore to develop a Trident Hotel and commercial spaces for a 175-room hotel. The property will also have adjoining office and retail spaces, which are to be ready by 2029-30. 

For London, EIH announced the creation of a new subsidiary, EIH London Investments Ltd, to build a luxury Oberoi hotel, scheduled for completion by 2027-28.

EIH’s future projects also include a mix of owned and managed properties, such as a palace near Khajuraho—the Rajgir Palace—in Madhya Pradesh, a jungle resort in the same state, and a resort in Goa.

On the international front

In the past two quarters, EIH had given mixed feedback about its international hotel portfolio. 

“For the international hotels, it’s a mixed bag with UAE doing better than in the past. Egypt is slightly off because of the effects of the war. Morocco is more or less at the same levels, but rates are slightly down from last year. And that again has some impact from the Middle East war,” Kallol Kundu, the group’s chief financial officer and chief risk officer, said during the company’s first-quarter earnings call.

“Indonesia is doing much better. The Q1 revenue per available room, if we were to take the entire market, including international, is almost similar to last year. Obviously, in the month of May, the occupancies were down.”

Also read: Indian hotels saw a tepid Q1. Will the next quarter bring cheer?

In an earlier investor call following the March-quarter and full-year results, Kundu had said that the UAE market had “softened a little in terms of the average room rate, but with an increase in occupancies”. Internationally, the company operates in Southeast Asia and Africa, and has a hotel each in Marrakech, Egypt, and Mauritius, and one each in Bali and Lombok. 

In FY24, EIH’s revenue grew nearly a quarter to ₹2,511.2 crore and its profit more than doubled to ₹677.7 crore. But the first quarter of FY25 was not as strong. The group’s profit declined 9% year-on-year to ₹96.8 crore.

Family feud

The EIH management also faces another possible distraction.

Anastasia Oberoi, daughter of the late P.R.S. Oberoi, is contesting her exclusion from the Oberoi family’s inheritance, claiming a larger share of the estate, which includes stakes in EIH. 

The Delhi High Court has issued an interim order preventing the company and its holding firms from transferring their shares. Additionally, Anastasia has been granted protection over her possession of the family’s property, Villa Ashiana, in Delhi.

The dispute revolves around two conflicting wills: One from 2021, which Anastasia supports, and another from 1992 that backs by her cousins Vikramjit and Arjun Oberoi. The court has found merit in Anastasia’s claims, but a final verdict is awaited.