Visitor growth drives Tel Aviv development

Nakash has teamed up with Leading Hotels to develop Israel's second Setai-brand hotel by early 2018.
The Setai, Tel Aviv, Israel

As we reported last week, Nakash Holdings is bringing its Setai hotel brand to Tel Aviv, with a new hotel to open in early 2018.  

The company's decision makes sense. The city's hotels recently reported a 4.5-percent increase in occupancy, as the destination grows in popularity for businesses and leisure travelers alike.  

The Setai, Tel Aviv will be the hospitality group's second Setai in Israel, following the opening of its Sea of Galilee property in May this year, and third globally, joining The Setai, Miami Beach.  

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The property, which will be part of The Leading Hotels of the World, was announced in the same week as a new site by Dan Hotels. The group is bringing its tech-heavy Link brand to the city, with a 94-room hotels featuring shared workspaces in a converted government building, also due to open in 2018. 

Tel Aviv's Appeal 

During the first six months of 2017, more than 1.7 million tourists entered Israel, up 26 percent from the first half of last year, according to the country's Central Bureau of Statistics, with hotel occupancy reaching 73.4 percent in Tel Aviv (vs. 68.9 percent in the first half of 2016). 

According to HVS, Tel Aviv saw 3 million bed nights in 2016, or 14 percent of Israel’s total. While the resort destinations of Eilat and the Dead Sea were dominated by international visitors, the split between domestic and overseas was more equal for Tel Aviv.  

Possibly speaking to the city’s role as a tech hub, Tel Aviv has proven popular for Airbnb, with more than 10,000 listings (against 7,757 hotel rooms) compared with 3,000 in Jerusalem and 800 in Eilat. Overall hotel room supply grew by 3.5 percent per year since 2013 as is expected to continue in this way in the near future, with the W Tel Aviv - Jaffa due to open in March 2018. HVS said that both domestic and international operators were expected to increase their presence.  

Seeking to take advantage of Tel Aviv’s skill set, in October Booking announced a new innovation lab in the city. “Things like chatbots, machine learning tools, natural language processing, or sentiment analysis are applications of Artificial Intelligence that may one day profoundly change how we think about and transact in travel and local experiences," Gillian Tans, the company’s CEO, said. "It is still in the very early days and there is a lot of work to do, but we want to be at the forefront of these technologies, which is why we are opening a new innovation center in one of the most tech-forward markets in the world: Tel Aviv. 

“So why Tel Aviv? More than 980,000 Internet users rated Tel Aviv as the 'world’s second-most innovative city,' according to a Wall Street Journal poll. As Tel Aviv enters its second golden age of startups, the world has taken note of the city’s opportunity. It is becoming increasingly recognized in the tech industry that Tel Aviv has become home to some of the best talent and innovation when it comes to artificial intelligence applications.” 

With both leisure and business, Tel Aviv is establishing itself as a work, rest and play destination. As yet it has not followed other jurisdictions into attempting to restrict Airbnb, which may have an impact on the development aspirations of the hotel sector.  

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The company expects to open more than 30 new Comfort properties in the market by 2033 via its existing franchising agreement with Choice Hotels Japan.

While consolidated revenue for the quarter was up 10.9 percent as reported, it was up 4.1 percent on a like-for-like basis compared to Q3 2018.

Sam Schwartz has spent more than four years with First Hospitality, including most recently as a general manager.