Al Habtoor Group L.L.C.

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Al Habtoor Group L.L.C.

FOUNDING A DUBAI CONSTRUCTION GIANT IN 1970

DIVERSIFYING BUSINESS IN 1983

FOUNDING A DUBAI CONSTRUCTION GIANT IN 1970

The Al Habtoor family was originally one of many involved in Dubai’s pearl trade. For most of the port city’s history, pearling had been the small village’s main industry. Following a crisis in the local pearl industry after the introduction of Japanese cultured pearls in the 1930s, however, the pearling market had gone into a long decline, and the Al Habtoor family’s fortunes remained modest. Yet Khalaf Al Habtoor’s father had greater ambitions for his son, and introduced the boy to then ruler Sheikh Rashid bin Saeed Al Maktoum at the evening majlis, the weekly town meeting held by the royal family. Khalaf Al Habtoor soon became friends with Al Maktoum’s youngest son, Mohammed, and Al Habtoor became a fixture at the royal palace.

Into the 1960s, the Al Maktoum family had begun developing ambitious plans to redevelop the city, largely abandoned by the British government in the waning years of the empire’s control of the region, into a major deepwater port, as well as important tourist destination. In 1967, the government launched construction of Port Rashid, a 16-berth deepwater harbor capable of accommodating even the largest of the world’s oceangoing vessels and oil tankers. The discovery of oil in Dubai further stimulated the city’s construction boom, as Dubai reinvented itself as an independent, sovereign state.

The boom in construction provided a new source of employment for Dubai’s natives, and Khalaf Al Habtoor began working at a construction firm at the age of 15, while still in high school. Before long, Al Habtoor had risen through the ranks, becoming the firm’s youngest manager. By the end of the 1960s, Al Habtoor had recognized that the movement toward the creation of the United Arab Emirates would create a new boom phase in the region’s construction market. Backed by his intimate relationship with the royal family, Al Habtoor decided to go into business on his own, founding Al Habtoor Engineering Enterprises in 1970.

Al Habtoor started out with just 100 employees, and initially focused on the city’s housing market, completing several residential homes. Yet Al Habtoor had higher ambitions, and soon had completed his first movie theater. His continued relationship with the royal family—and his penchant for self-promotion displayed at the majlis, and later in the pages of his Al Shindagah magazine—enabled him to begin competing for larger projects. By 1977, Sheikh Al Maktoum had awarded Al Habtoor the contract to build the country’s second hospital. The contract called for the hospital to be completed in 36 weeks. Instead, Al Habtoor completed the project in just 30 weeks. As a result, the sheikh gave Al Habtoor the contracts to build three more hospitals, as well as the headquarters building for the country’s department of health.

Into the 1980s, Al Habtoor was awarded another high-profile contract, that of building a four-star hotel complex on the outskirts of the city, an important part in Sheikh Maktoum’s goal of transforming Dubai into the region’s primary tourism destination. Government contracts continued to play a prominent role in Al Habtoor’s growth, and into the next century, the company completed nearly 35 major projects for the state. The company’s success in Dubai also enabled expansion elsewhere in the region. In 1980, the company launched construction of Gulf University, in Bahrain. The company also entered Jordan, with the construction of the Zarqa’a Ma’een Spa/Ashtar Hotel complex, starting in 1982.

DIVERSIFYING BUSINESS IN 1983

With growth at his construction and engineering business well underway, Al Habtoor sought new avenues for expansion of his holdings in the 1980s. Automotive sales attracted Al Habtoor’s attention, and in 1983 he established Al Habtoor Motors, based on an exclusive contract to sell Mitsubishi trucks, 4x4s, and other automobiles in Dubai. The rising wealth associated with Dubai’s oil-based economy, coupled with the United Arab Emirates’ highly liberal tax and investment policies, attracted a growing number of the world’s wealthy, which in turn led Al Habtoor to expand its own range of automotive concessions. As such, the company became the exclusive dealer for three of the world’s top luxury automobile brands, Aston Martin, Bentley, and Bugatti.

Hotel operation represented another growth area for Al Habtoor’s holdings. The company owned just one hotel through the 1980s, then launched construction of a second hotel, the Metropolitan Beach Resort, on the then deserted Jumeirah Beach. The growth of that area, following the government’s decision to invest massively in that section of the city, gave Al Habtoor a piece of some of the world’s most expensive real estate at the end of the 20th century.

COMPANY PERSPECTIVES

Al Habtoor Group will seek every business opportunity that matches our values and growth demands and provides world class service ensuring world class returns.

The family’s hotel operations also helped introduce the next generation into the company, when son Mohammed Al Habtoor, who had studied hotel management in the United States during the 1980s, returned to Dubai. Yet the younger Al Habtoor found himself forced to work his way from the ground up, starting his career as a porter at the original Metropolitan Hotel. Later, Khalaf Al Habtoor fired his son, twice, for making decisions without consulting him first. Nonetheless, the younger Al Habtoor rapidly ascended the company’s ranks, taking over the managing director’s position from his father in the 2000s. Another son, Rashid, joined the family business in 1990, but left after only three years to found his own construction company.

Other, less profit-driven Al Habtoor operations were developed at the beginning of the 1990s. In 1991, the company founded the Emirates International School. The first of its kind in the United Arab Emirates, the new school provided a kindergarten to high school education tailored to the needs of the internationally focused local population as well as the fast-growing expatriate community in Dubai. On a more personal scale, Khalaf Al Habtoor, who had developed a reputation for his outspoken nature, founded a new company, Al Habtoor Publishing, in 1993. That company launched a new magazine, Al Shindagah, which served as a corporate magazine, showcasing the company’s varied high-profile construction projects, such as the massive Burj Al Arab hotel complex launched in 1994. The magazine also served as Khalaf Al Habtoor’s mouthpiece for his often highly critical views of the West and Middle Eastern politics.

In another diversification move, Al Habtoor expanded its automotive business in the mid-1990s, adding a new leasing subsidiary, Diamondlease, in 1996. That business built a fleet of more than 2,000 vehicles, offering prestige automobiles, including Rolls-Royce, Bentley, BMW, Mercedes, and others, as well as a fleet of chauffeur-driven vehicles.

INTERNATIONAL FOCUS IN THE NEW CENTURY

Increasingly, Al Habtoor sought to expand its operations, and especially its core construction and engineering business, beyond Dubai. The company began competing for contracts elsewhere in the region, successfully entering the Abu Dhabi and Bahrain markets, then winning contracts as far away as Egypt and Jordan. The company hoped to fuel its expansion, as well as resolve potential future succession conflicts, by listing its stock on the United Arab Emirates stock exchange. Yet the exchange’s restrictive nature, especially toward the region’s large, family-owned conglomerates such as Al Habtoor, prevented the company from making its public offering for the near future.

Instead, the company focused on winning construction contracts and expanding its hotel operations. In 1999, the company bought the Monkey Island Hotel, located on an island in the Thames River. Closer to home, the company looked toward Lebanon following the withdrawal of Israeli troops from the south Lebanese border in 2000. Al Habtoor took the decision to enter that country’s hotel market, acquiring a 183-room hotel renamed as the Metropolitan Palace Hotel. The company also began construction of the Habtoor Grand Hotel Convention Centre & Spa Beirut, featuring Beirut’s tallest building amid a complex totaling more than 115,000 square meters, which opened in 2005. Also in Beirut the company launched construction of a theme park, Habtoorland. In all, Al Habtoor invested some $400 million in Lebanon, before the outbreak of the August 2006 war cast a pall over the country’s tourism sector.

KEY DATES

1970:: Khalaf Al Habtoor founds construction and engineering business in Dubai.
1977:: Company wins contract to build second Dubai hospital.
1983:: Automobile sales subsidiary Al Habtoor Motors is formed.
1996:: Company launches automotive leasing subsidiary Diamondlease.
1999:: Al Habtoor acquires Monkey Island Hotel on Thames River in England.
2000:: Company enters Lebanon with acquisition of Metropolitan Palace Hotel.
2007:: Al Habtoor wins contract to build Landmark tower on Abu Dhabi island.

The United Arab Emirates remained the group’s bread-and-butter market into the second half of the decade. In 2005, the company won in its joint venture bid with Aljaber Engineering for the primary contract to build the Dubai Tower. The company completed construction of its Metropolitan Suites complex, marking the company’s entry into the fast-growing furnished apartment market in Dubai. In early 2007, the company had scored another high-profile contract, to build the Landmark tower on Abu Dhabi island. Yet Al Habtoor had not renounced its further international expansion, acknowledging plans to enter the European market in the new century.

M. L. Cohen

PRINCIPAL SUBSIDIARIES

Al Habtoor Engineering Enterprises; Al Habtoor Motors; Al Habtoor Publishing; Al Habtoor Real Estate; Diamondlease; Emirates International School; Habtoor Hospitality L.L.C.

PRINCIPAL COMPETITORS

Dubai World; Arabtec Construction; Arabian Construction Company; Al-Hamad Contracting Company; Saudi Oger; Dubai Contracting Company; Al Naboodah General Enterprises Holding Company L.L.C.; Al-Shafar General Contracting.