The reopening of the Israeli economy in the second half of 2021 has led to a recovery of local hotel companies, and growth in their activity compared to the year of closures of 2020. Some have already broken the 2019 records in the past year, while others will try to do so in 2022. Of the entire sector.
From data ShpListed the three largest hotel companies in Israel, Fattal Holdings, Isrotel andDan Hotels, Shows that all three showed revenue growth in 2021. Two of them, Isrotel and Dan, returned to profitability last year, thanks to the high exposure to the Israeli market, which is characterized by keen demand and high prices paid by local vacationers, in the shadow of aviation restrictions that hurt competition from hotels abroad. Return to routine in Europe as well.
Has grown to make Isrotel, which has shown record results in the past year, despite the closure imposed between December 2020 and February 2021. According to the company, it recorded “exceptional results, stemming from high demand from Israeli tourists, due to both the high quality of the chain hotels and the high level of service offered. “. The company further notes that the results of the activity in 2021 “indicate its ability to adapt quickly to the changing conditions, and that it will even emerge from the corona crisis stronger with its long-awaited end.”
Isrotel: Eilat is responsible for 61% of the EBITDAR margin
Isrotel, which is controlled by the Lewis family, is traded on the stock exchange at a value of NIS 6 billion. The company is engaged in the management and operation of a hotel chain in Israel, and owns and / or manages 21 hotels in Israel, eight of them in Eilat and the rest in various areas in the country. Isrotel Hotels has a total of 4,614 rooms, of which 3,735 are owned (fully or partially), and the rest are managed.
Currently, all Isrotel hotels are open and have insignificant regulatory restrictions. The removal of restrictions on the departure of Israelis abroad may increase competition for local hotels in the current year, but on the other hand, Isrotel expects a gradual increase in inbound tourism in 2022.
Isrotel ended 2021 with revenues of NIS 1.6 billion, reflecting a growth of 116% compared to 2020 and 10% compared to 2019. The chain’s revenues from hotel operations (accommodation services and others) amounted to NIS 1.58 billion in 2021, compared to NIS 744 million in 2020 And NIS 1.46 billion in 2019.
According to the chain, it holds a 22% share of the Israeli hotel market, and in 2021 it enjoyed an average occupancy rate of 66%, compared to a national average of only 39%. As mentioned, Isrotel has a wide spread in Eilat, which last year enjoyed higher occupancy rates than all hotels in Israel.
In 2021, the hotel activity presented an operating profit before depreciation, amortization, other and rental expenses (EBITDAR) of NIS 493 million, reflecting a growth of 369% compared to 2020 and 38% compared to 2019.
According to the company, operations in Eilat were responsible for 61% of total EBITDAR. The net profit for Isrotel shareholders amounted to NIS 250 million in 2021, compared with a loss of NIS 25 million in 2020 and a net profit of NIS 142 million in 2019.
Isrotel’s CEO, Lior Raviv, received a package of benefits worth a total of NIS 8 million in 2021, half for a grant and NIS 1 million of it in capital compensation.
Lior Raviv, CEO of Isrotel / Photo: Eyal Yitzhar
Dan Hotels: Profitability gaps between different regions
The Dan hotel chain, which is controlled by the Federman family, is traded on the stock exchange at a value of NIS 3.4 billion. The chain generated revenues of NIS 971 million in 2021, reflecting a growth of 30% compared to 2020, but a decrease of 35% compared to 2019. The chain’s hotel activity is measured according to the operating profit before depreciation and financing (EBITDA), which amounted to NIS 96 million in 2021, compared with NIS 23.3 million in 2020 and NIS 294.1 million in 2019.
Among other things, the company’s data reveal the profitability gaps recorded in the past year between the various regions in Israel. For example, operations in Eilat in 2021 generated EBITDA of NIS 82.5 million, while operations in Tel Aviv and Jerusalem together generated an operating loss before depreciation and financing of NIS 31.4 million.
In the bottom line, the Dan hotel chain recorded a net profit of NIS 18 million in 2021, compared to a loss of NIS 129 million in 2020 and a net profit of NIS 119 million in 2019. The chain currently operates 18 hotels, 17 of them in Israel and another in the city of Bangalore, India. The company’s rooms stand at 4,597, of which 226 are in India and the rest in Israel.
Currently, the chain’s hotels are open to the general public, with the exception of the Maayan Hotel in Nazareth. Also, the Dan Panorama Hotel is used for sandy and secluded accommodation in Corona, and these days it is also used as a housing alternative for new immigrants coming from Ukraine. The company’s CEO, Ronen Nissenbaum, who retired last January, received an annual salary of NIS 1.6 million in 2021.
Fattal: Less exposure to Israel, more damage to results
The third and largest chain of all is Fattal Holdings, which is controlled by David Fattal. Fattal has operations in Israel and European countries, including holding, renting and managing 227 hotels (of which 195 are active hotels and the rest are under construction or at the stage of management agreements), which include about 43,000 rooms, of which about 18,000 are hotels (wholly or partially) and another 25,000 In hotels that the company rents or manages.
David Fattal, controlling shareholder in Fattal Holdings / Photo: Kadia Levy
Fattal’s operations are spread over 19 countries, and Israel’s share is 57 hotels, which include 9,962 rooms (23% of the total hotel rooms in the chain), so it is less exposed to the situation in Israel, compared to Isrotel and Dan. In 2021, this was to hurt Fattal’s financial results, as revenues and profits from hotel operations in Israel grew at sharper rates compared to the growth rates recorded in the chain’s hotels in Europe.
Fattal ended 2021 with a loss to shareholders of NIS 226 million, which reflects a significant improvement compared to a huge loss of NIS 1.31 billion, which the company recorded in 2020. In 2019, by the way, Fattal recorded a net profit for shareholders of NIS 38 million.
The company also states in its reports that during 2021 it received government assistance in Israel and Europe in the amount of NIS 560 million, of which grants in Europe in the amount of NIS 420 million. In addition, in 2021 the company received a waiver of rent in the amount of NIS 178 million, and all of these actions led to a significant decrease in the volume of current expenses, in a way that reduced to some extent the direct effect of the significant decrease in revenue (compared to 2019).
Fattal’s revenues from hospitality and other services amounted to NIS 3.44 billion in 2021, reflecting a growth of 60% compared to 2020, but a decrease of 43% compared to 2019. The main change between 2021 and 2020 was due to the opening of the Israeli economy to activity in February 2021, along with a recovery in Europe (Including the UK and Ireland) mainly during the third quarter of 2021. After deducting hotel rental expenses, Fattal’s EBITDAR in 2021 amounted to NIS 1.22 billion, compared with NIS 240 million in 2020 and NIS 1.84 billion in 2019.
Fattal is currently traded on the stock exchange at a value of NIS 7.4 billion, having already repaid most of the decline it recorded in 2020. The controlling shareholder, David Fattal, currently serves as chairman and CEO of the company. In 2021, it won a compensation package worth NIS 8.8 million, and it holds about 56% of the company’s shares worth NIS 4.1 billion.