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Although occupancy and room rates remain high in Israel, there is little demand or growth in overseas visitors making Europe a more dependable market for hotel developers.
“Hotels in Israel are in good shape, but tourism is not. We’ve been stagnating for 15 years, and the country is the loser,” says Israel Hotels Association president Ami Federmann.
Despite high occupancy rates and high prices, conditions that ought to draw developers into the hotel industry, Federmann says that, in practice, there is no construction or expansion, and, in the past few years, Israeli hoteliers have been investing more in European cities than in Jerusalem, Tel Aviv, or Haifa. He says that, in the past decade, the number of Israeli-owned hotel rooms in Europe has grown by more than 60,000, compared with 46,000 hotel rooms added in Israel.
The Hotel Association’s figures show growth of just 2% in hotel overnights in 2013 to 22.5 million, mostly by Israelis. The financial results of publicly traded hotel companies show that 2013 was not a particularly good year; even if they improved their revenue, their profits fell.
The results of Rimonim Hotels, owned by Israel Land Development Company, and Africa Israel Hotels, the Israel franchisees of Crowne Plaza Hotels and Resorts and Holiday Inn, were especially bad. Their 2013 profits crashed after one-time profits in 2012.
The net profit of Dan Hotels Corp. Ltd., owned by the Federmann family, was NIS 107 million in 2013, 23% less than in 2012. The net profit of Isrotel Ltd., controlled by the Lewis family, fell 8% to NIS 69 million. The net profit of Rimonim Hotels fell 90% to NIS 6 million, after a one-time profit of NIS 58 million in 2012, following the sale of the Rimonim Galei Hotel at the Kinneret and the purchase of the Hamaayan Hotel in Nazareth.
The net profit of Africa-Israel Hotels fell 86% from its profit of NIS 43 million in 2012, which was due to one-time profits from the sale of property and profits of subsidiaries.
Isrotel’s revenue totaled NIS 1.1 billion in 2013, up 13% over 2012, thanks to the opening of the Royal Beach Hotel in Tel Aviv and the Kramim Hotel in Kiryat Anavim, which contributed half of the company’s revenue growth. Dan Hotels’ revenue rose 3% to NIS 1.14 billion.
(c)2014 the Globes (Tel Aviv, Israel). Distributed by MCT Information Services.