By John Arlidge 

THEY partied like it was 2007. Giorgio Armani flew in with half the blonde models in Ukraine. Guests wore couture dresses that cost up to £60,000.

Burj Khalifa
Burj Khalifa

There was Bollinger on tap. The event? The opening last week of the first Armani hotel. The location? Don’t laugh — Dubai.

No matter how mired in debt you may be, if you have spent £1billion building the world’s tallest skyscraper and hundreds of millions more persuading Italy’s wealthiest designer to use it to make his first foray into the haute hotel business, you cannot back out.

Sitting in the majlis — formal Arab meeting room — of his hotel in the 2,700ft tall Burj Khalifa in downtown Dubai, Armani praised the “strong nerves” of Mohammed Alabbar, the boss of Emaar, the developer. He pushed through the completion of the Burj in spite of a financial crisis that has left Dubai sinking under the weight of $150billion (£100billion) of debt.

Armani has good reason to be relieved. His deal with Emaar is molto bello.

Alabbar has agreed to build or lease properties around the world and to run up to a dozen hotels for Armani at a cost of up to £1billion. Work is already under way on hotels in Milan, Marrakech and Marassi in Egypt. Properties in London, New York, Tokyo, Shanghai and the Caribbean will follow.

Each hotel will be a vast, real-life advertisement for the Armani brand but one that guests will pay to see. Not only will the hotel showcase Armani’s casa (homewares) range, and branded cosmetics, spa products, fragrances, flowers and chocolates. There will also be cafes and nightclubs. Boutiques will sell his clothing and accessories — branded bags, sunglasses, mobile phones, pens, watches and jewellery.

Although Emaar is taking on most of the risk, “it is Mr Armani who is the boss”, said Alabbar. “I don’t allow anyone to change whatever Mr Armani is doing.”

All Armani has to do is design the hotels, using his own team and products — for which Alabbar pays him a tidy fee. The designer also gets a share of the profits from the hotels and has the right to buy into Emaar’s management company.

Armani’s move into hotels is the ultimate brand extension for the man dubbed the “divo of diversification”.

Over four decades he has pushed his £2billion brand off the catwalk and into uncharted territory to create an entire designer lifestyle.

“I’ve always wanted to create a hotel. It’s a big commitment. It’s permanent. You can’t change it, whereas in fashion you have to renew yourself every six months. It will outlive me — unless there is an earthquake or something,” he told The Sunday Times.

He brushes aside claims that he is stretching his brand to breaking point. “It’s totally natural for me to do a hotel. I design casa. That’s not just furniture — it’s structure and interiors as a whole. Yes, a hotel is on a bigger physical scale but it is the same application of style.”

Developers agree. John Hitchcox, co-founder of the ultra-urban Manhattan Loft Corporation who created the upscale Yoo brand with the designer Philippe Starck, said: “People are prepared to pay more for a designer’s quality statement. Call it branding or adding a lifestyle element — it works.”

However, industry analysts are sceptical. It’s not just that snazzy hotels are faring badly thanks to the recession, especially in Dubai where there are so many self-styled seven-star properties that operators are giving away free nights just to fill rooms. They point out that moving into hotels is a much bigger risk than diversifying into a new clothing line.

“Running a luxury hotel is art and science,” said Nick van Marken of Deloitte, the consultant. “Good hoteliers provide lots of subtle experiences that blend seamlessly to create an overall positive impression. From the doorman to the check-in and check-out, the bar to the breakfast, the bedroom to the bathroom, there are countless things that have to be delivered faultlessly, consistently and apparently effortlessly.

“It takes years to perfect. Fashion brands are going fresh into the business and are trying to do it at the top of the market.” Rooms at the Armani hotel start at £800 a night and rise to £8,000 for the Armani Dubai suite.

What’s more, Armani has stiff competition. Boutique hoteliers have already created their own chic properties around the world, notably Ian Schrager, who invented the modern hip hotel with developments in New York, Miami and Los Angeles. He is about to roll out a new global chain of stylish but affordable hotels in a £500m joint venture with Bill Marriott, boss of the giant American chain.

Design-led brands with properties in choice locations, such as Aman Resorts, Morgans Hotels and Park Hyatt, also have a loyal following.

Armani has fashion rivals, too. Ferragamo, Missoni, Fendi and Bulgari all think hotels are the new handbags and they will soon be joined by LVMH, the biggest and most profitable luxury-goods conglomerate.

If all that were not enough, in Dubai he has a fearsome adversary. Later this year Donatella Versace will open Palazzo Versace on Dubai Creek. She has spent five years designing her palazzo and has even developed bespoke interiors for jets and helicopters to give guests the chance to get in the Versace mood as they fly to her hotel.

She echoes the approach of her late brother, Gianni, who founded the label. “I don’t want to dress people, I want to dress the environment people live in,” he once declared.

At the Armani party last week guests wondered: who will win Dubai’s seven-star smackdown? Will more people sleep with Giorgio or Donatella?

Armani has the most prestigious address. Last week, his guests soared even higher than the cheekbones of the models to the top of the Burj Khalifa and looked down on Versace’s low-rise hotel, taking shape on Dubai Creek.

All 160 rooms at what locals are already calling “the Armani” are a tasteful mix of Asia and Arabia — all “greiges”, dark woods and soft curves. Guests can buy any item in their room and have it shipped home. There are restaurants by top Japanese and Italian chefs, including Milan’s Peck family.

Some 144 Armani apartments, also decked out in casa, are for sale in the Burj Khalifa, enabling fashion victims to live in and go on holiday in the same building. About half have been sold with prices ranging from £1m to £5m.

Asked why guests should stay with him and not his Milanese rival, Armani said: “Because Armani is piu bello [more beautiful].”

He may have the cash and the flash — but he has not got the splash. Being on a creek, Donatella Versace has a beach. And not just any patch of sand. A cooling system below the sand will ensure it never gets so hot that guests risk singeing their perfectly pedicured feet as they totter from their lounger to the water and back.

Inside, the 213-room hotel will blow a bright red Italian raspberry at Armani’s muted aesthetic. The look will be pure Donatella-goes-to-Vegas, with cream and gold marble mosaic floors, lime green and gold banquettes, glass-floored terraces and Roman obelisks adorning the lagoons and waterfalls.

As at Armani, 170 “couture condos”, decorated with Versace furniture and homewares, will be for sale from £1m. The biggest will have their own, private mosaic-lined swimming pool.

“The Versace” is likely to appeal to fashionistas who want to primp and preen and show off their new “abroadrobe”, while business travellers who want to avoid the “more is never enough” al-bling style of the Versace and many Gulf brands will opt for the Armani.

Whoever wins, Armani will claim one result. After creating dozens of brands-within-a-brand, his expansion into hotels marks the end of his 40-year diversification. “Hotels close the circle on our unique multi-brand approach and on the Armani world,” he said last week as he stepped out of his Maserati and on to his private plane to head for home.

“I have invented an entire story. Now the story is complete.”