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Isrotel CEO Lior Raviv wanted to see what the hype about soft brand collections is all about, and he’s discovering it firsthand with a new millennial-minded lifestyle hotel, the Publica Isrotel that also has its own members-only club.
The 159-room Publica Isrotel, which had a soft opening a few months ago in Herzliya, near Tel Aviv, is a member of Marriott’s Autograph Collection of independent hotels.
As the leader of one of Israel’s biggest hotel companies for the past eight years, and someone who has been with the company for 25 years, Raviv has seen Isrotel transform into a regional hospitality giant.
He has designs on expanding the company’s reach to a global audience. To do that, Raviv is enlisting Marriott’s help.
Isrotel, founded 34 years ago, has a wide-ranging portfolio of properties, from five-star resorts to more budget- and value-driven hotels. With Publica Isrotel, however, Raviv is experimenting with this new boutique and lifestyle concept to see if it’s a hotel brand Isrotel can expand, not only within Israel, but beyond, too. Isrotel hopes its growth plans will work primarily because Publica Isrotel represents the type of hotel experience that many younger and more millennially minded travelers desire today.
“Publica is a very non-typical hotel in the Isrotel brand,” Raviv said. “When we did Publica, we wanted to aim for the younger clientele. We understand that they want different kinds of hotels; they don’t want to come to a hotel, which is just rooms and a nice lounge and maybe a nice breakfast. People want an experience. With Publica, we’re trying to meet this growing demand.”
Raviv has confidence he’s on the right track.
“When we developed this new brand, we wanted to continue opening more of these hotels in and outside of Israel,” he said. “The investment is relatively higher than a regular hotel, but we do believe that it will pay off.”
That Isrotel is experimenting with a soft brand like Marriott’s makes solid business sense, said Makarand Mody, assistant professor of hospitality marketing at the Boston University School of Hospitality Administration.
“With Publica, Isrotel appears to be aligning itself with the global trend for lifestyle hotels with an emphasis on cutting-edge design, modern food-and-beverage offerings and local experiences,” Mody said. “This latter aspect of local experiences is critical, with many hotel companies across the world making it a focal point in new brand development. As such, the brand’s features are consistent with what we are seeing in the midscale to upscale lifestyle space globally, so it makes sense to associate with the Autograph Collection.”
One of the hotel’s most defining characteristics is its members-only City Club, which is only accessible to hotel guests and paying locals (monthly membership costs $115). Membership includes access to fitness classes, live entertainment, and other special events. The hotel also has its own co-working space, a rooftop pool and a ground-floor stage for entertainment.
Mody thinks this members-only club concept is a “smart move.”
“Herzliya is one of Israel’s most affluent cities, and with a large older millennial population that would value a sense of exclusivity and personalization, a club concept can readily enable Publica to emerge as the social gathering spot in the city,” he said. “More than the hotel guests, locals may particularly value such a concept, and the hotel benefits by having a stream of customers who engage with the brand on a more regular basis than a hotel guest who may stay only a few nights a year, be it for a fitness class or to enjoy the latest music.”
One potential challenge of marketing the Publica brand, however, may be the fact that renowned hotelier Ian Schrager has a boutique hotel brand in the U.S. called Public. Raviv said he and his team have been working on developing the brand for the past three to four years, and that he had not heard of Schrager’s Public until very recently.
“This was something new to me, and I didn’t know about this,” he said. “We wanted to use the name Publica because we do see that we want the public to be a part of this property.”
The Benefits of Being in a Soft Brand Collection
Are Raviv and his team seeing any returns from being a part of Marriott’s Autograph Collection? It’s too early to tell, he said, but he hopes that Marriott’s distribution channels will eventually account for at least 30 percent of the Publica’s business.
“It’s very early stages, but we do appreciate the marketing power of Marriott. We do understand that the potential is there,” Raviv said.
Soft brand collections have become an increasingly popular new brand option for major chains such as Marriott and its peers, all of whom have released new soft-brand collections in recent years, and show no signs of stopping anytime soon. Brands like Marriott love them because they’re a relatively cost-effective way for them to bypass existing areas of protection rules regarding having too many of one hotel brand in a certain market, in addition to giving them a healthy revenue stream. They also allow brands to gain a larger share of an often fragmented independent hotel market in regions where brands aren’t nearly as strong as they may be in the U.S.
Independent hoteliers, and even smaller chains such as Isrotel, are looking to these types of soft brand collections primarily as a way to improve their distribution strength, and to gain access to loyalty members, without having to formally adopt a branded name such as Marriott or Hilton and the like. But, as Skift has noted before, the costs of being a part of a soft brand collection is nearly as much as buying into a brand flag, and some hoteliers are wondering whether or not it’s a worthwhile investment. For Raviv, it’s clear that hitting that 30 percent occupancy goal is a major objective as part of Isrotel’s three-year experiment in buying into a soft brand.
At Publica Isrotel, Raviv said that currently, the hotel has occupancy rates of 70 percent, and introductory rates range from about $180 to $200 per night. “It’s a very accessible product,” Raviv said. “We’ll never be an expensive hotel. It will never be a Ritz-Carlton. Although we’re getting an upmarket clientele, the rates are not going to be over five-star deluxe property rates.”
Raviv also said that as more and more global brands enter the local Israeli hospitality market, the more convinced he became of launching a brand like Publica.
“We, as a local company, we are following the international brands operating Israel such as InterContinental, Ritz-Carlton, Sheraton, Holiday Inn, and so on,” Raviv said. “The world is changing. The world is changing with booking, Expedia and so on, you probably know that the marketing world is evolving as we speak. We felt it in a place such as Herzilya where usually the occupancy is not as high as Tel Aviv. Being surrounded by a lot of American high-tech companies, and searching for the American clientele, but also the European clientele, we wanted to make an experiment of how valuable a joint venture between our marketing powers of these hotels and the Marriott, which is now doubly sized, purchasing Starwood.”
He added, “We wanted to understand, what is the value of making a joint venture with a major International brand. Now, it’s an interesting concept. We are managing the hotel. We are marketing the hotel. We are selling the hotel, and they are doing it also via their reservation system.”
Bigger Plans for Publica and Isrotel
Raviv hopes to have seven to 10 Publica properties within the next 10 years, and to have a 1,500 rooms in Tel Aviv alone. Today, Isrotel has approximately 17 properties throughout Israel, with some 3,300 rooms.
The current strength of the Israeli tourism market is helping create a bright future for Isrotel, too, he added.
“The last seven years have been very good, very steady, and growing,” he noted. “The amount of tourists we’ve had actually grew from 2016 to 2017 by probably around 700,000 tourists. The Israeli market is very, very strong market. Big hotel consumers, so we do have a prosperity incentive with tourism to Israel and the local tourism. Tel Aviv has become a very, very desired location for locals and international chains.”
Raviv hopes he can develop the Publica brand in major European gateway cities.
“Once we are ready, and once we stabilize the product, I believe Publica can definitely be a possibility or an idea to develop this unique brand outside of Israel, especially in Europe,” he said.
And in the grander scheme of things, he envisions Isrotel remaining as one of Israel’s leading hotel companies, with a portfolio of brands and properties.
“Each one of our brands is unique,” Raviv said. “Each one has a story and is unique in its own terms. This is what we’ve always been and this is what we’re looking for. We’re looking for exclusive collections of properties, as it is in our DNA to run hotels like this, but Isrotel is a company that can run anything.”
Does Raviv see Isrotel becoming the Marriott of Israel eventually?
“No, not at all,” he said. “We’re aimed at quality and not size. We’re developing carefully, slowly, with products that are suitable for the portfolio rather than just growing for the sake of growing. We’re really nourishing our brands.”