Emaar Properties

Introduction

Emaar properties is a Hotels and Resorts owned property within the United Arab Emirates, which currently runs and operates major hotel operations with a 100% focus on attracting tourists worldwide. It was established in 2005 with a main business objective of developing, owning and operating the best hotels, resorts and residences located in those cities most known for tourist attractions. (Hotels & Resorts, 2010). The company's mission is to offer world wide a one stop solution to lifestyle, leisure, work, living etc. (Corporate mission, 2010). They cover a wide range of needs to satisfy the standard of living for consumers in today's modern world in the Middle East. The company has so far been so successful that in 2009 they made a total net profit of AED 2,051 Million at the year end. (Financial Results, 2010). By the end of 2009 Emaar Properties signed an agreement with a major well known Fashion Designer Giorgio Armani to build a Hotel wholly owned by Emaar. This Hotel was to be located in the Burj Khalifa (The Tallest tower in the world – tourist icon), and was to be fully designed by Mr. Armani himself. Every Aspect and service provided by the Hotel from the bedrooms, spa and even restaurant menus are designed by Giorgio Armani. (Armani Hotel Dubai, 2010). Emaar Properties was to own and control this hotel by abiding with the UAE laws and company policies with regards to the Labour Law. The hotel was officially opened on 27th April 2010 and till date has been very successful opening it's doors to tourists world wide and bringing into life the "Stay with Armani" hotel Signature.(Armani Hotels & Resorts, 2010). Although Emaar offers a wide range of services in different industry sectors such as education, residences, hotels etc in this report we will focus on the hotel sector and mainly on the success of Armani Hotel Dubai. Since the agreement with Mr. Armani has led to a very successful hotel operation with a wide number of tourists, Emaar has decided to go international for the first time and work with Mr. Armani again to set up an Armani hotel Milano, to be located in Italy, Milan. Although the headquarters will be in UAE, Dubai the hotel will follow the same policies as it does in Dubai with little adjustments to be made in accordance with the Italy Labour Law. Henceforth the Armani Hotel Milano will infact be a subsidiary of the Armani Hotel Dubai. Looking into this what exactly is a Subsidiary?

A subsidiary is a company whose voting stock more than 50% is controlled by the Parent Company, a Parent Company is usually the company that operates and builds the subsidiary company and applies its own policies and objectives into it. (Subsidiary, 2010). So going further into the report we will discuss about the international project of operating a subsidiary Hotel in Italy, Milan.

Reasons for expansion

First we must ask ourselves why companies go global. According to Edward William there are four simple reasons for expansion, these are:

• To gain more brand and shareholder value

• Increase revenue and growth market

• Reducing the dependence in home country

• To Leverage the existing corporate technology, supply chain, and intellectual property

• Lastly to award more franchises in the home country. (Why go global, 2006)

The case is not very different with Emaar Hotels & Resorts. The chairman made a business decision to make a major well known Designer Hotel in the UAE's most Iconic and recent tourist attraction – the tallest tower in the world the Burj Khalifa.