Dubai Hotel Mogul Says ‘Bleeding’ Firms Need Economy to Reopen

(Bloomberg) -- Dubai hotel mogul Khalaf Al Habtoor said his companies are “bleeding” because of the coronavirus pandemic and the economy can't wait for a vaccine to become available before major activity resumes.

The billionaire, who owns seven hotels in Dubai, including the Waldorf Astoria on the man-made island Palm Jumeirah, as well as car dealerships, residential properties and schools, said his group hasn't yet cut jobs in the hope that global lockdowns would be rolled back by July, allowing tourists to return to the Middle East hub.

“Definitely we have to protect our people from the virus” but we have to go back to work, the Al Habtoor Group LLC chairman told Bloomberg TV in an interview. “We can't wait for a vaccine until the end of the year,” he said, citing decisions to begin opening economies in parts of Europe.

Moody's Investors Service last month said Dubai's reliance on real estate, transportation and tourism makes it the most exposed to the impact of coronavirus of the seven sheikhdoms that comprise the United Arab Emirates. Its flagship Emirates airline has grounded passenger flights and the Expo 2020 exhibition scheduled to start in October was delayed by a year

Dubai loosened its virus restrictions at the end of April after three weeks of strict lockdown that required people to apply for permits before visiting pharmacies or grocery stores. The shutdown hit businesses hard and triggered job losses across the U.A.E.

‘No Choice'

Al Habtoor said that, as with many other companies in the U.A.E, some of his employees had been asked to take vacations or unpaid leave while keeping their health insurance and housing benefits.

If the pandemic drags on, Al Habtoor said he would have “no choice but to cut” positions.

“We are bleeding” after demand for hotels and cars evaporated, he said. “The biggest risk is unemployment.” Hoteliers will have to offer discounts and other incentives to win back tourists, he said.

Dubai, where 90% of the population is foreign, could face an exodus as job losses push residents to return to their home countries, further reducing demand for property, schools and other infrastructure. In the U.A.E. most residents' visas are linked to their employment.

Dubai's hotels were already facing a drop in profits as a glut of properties drove down revenue and the 2014 oil price crash sapped the economy. Al Habtoor has hotels in the U.K., Austria, Hungary and Lebanon in addition to several properties in Dubai. His company is also a distributor of Bentley, Bugatti and Mitsubishi cars.