Israel's tourism boom a boon for local Dan Hotels

Tel Aviv at sunset. Photo by Rudy Balasko.

NEW YORK — Tourism to Israel continues to grow, a boon for local hotel company Dan Hotels. Luxury-focused and one year older than the State of Israel itself, the company has remained steady in turbulent times by knowing its niche and targeting key demographics. Dan Hotels caters to the international luxury traveler, and is the chain of choice for visiting dignitaries and celebrities, alike.

And it's non-Israelis who are becoming a larger target for Dan Hotels, mentioned Rafi Baeri, Dan Hotels’ VP of marketing and sales, when we sat down with him in our office. "Only 40 percent of the chain’s guests are Israeli," Baeri said. The remainder are international, and the company is focusing on attracting the U.S. market. 

Next Steps

Renovations and upgrades are the game plan for 2017, Baeri continued. In their Herzliya hotel, for example, the rooms and public areas will be renovated; at the Panorama hotel, in Tel Aviv, the executive suites are getting a new look; the Dan hotel in Eilat is getting room upgrades in "chunks" of 25-30 rooms at a time; while The Dan Caesarea will get a full renovation in late 2017 that is slated for completion by Passover/Easter 2018.

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Dan Hotels is a public company and, as such, Baeri explained, new developments cannot be announced before the shareholders are made aware of plans. He did, however, acknowledge that the company is “looking at opportunities” for additional development and acquisition. In Tel Aviv, he said, the company is looking to convert an office building into a millennial-focused hotel with small rooms and a large lobby for socializing. Street art will be a key component of the property, he said, so every floor will have unique artwork, and the prototype will only be licensed for cities with strong street art scenes.  

The main areas for development are in Jerusalem and Tel Aviv, but other notable cities where the company already has a presence—including Haifa, Eilat and Caesarea—can also prove lucrative. Notably, Dan Hotels is also planning its first hotel outside of Israel, which it will call The Den Hotel and slated to open in Bangalore during the second quarter of 2017.

 

A photo posted by Dan Hotels (@danhotels) on

And while major brands have consistently been eyeing Israel, Baeri said that local companies—like Dan—are still strong. Hilton and Marriott, for example, each have only two hotels in the country, and one of Dan’s biggest properties (the Dan Jerusalem) is a former Hyatt that was acquired in 2010 for $47 million. (According to the company’s website, Hyatt now has only one hotel in all of Israel, in Caesarea.) Dan has 13 hotels and 4,000 rooms open around the country—not an overwhelming number, but the company is very much a big fish in an ever-growing pond. “We’re not looking at size,” Baeri insisted. “We just want to be the best.”

One advantage that Dan has over global brands making headway in the country is that it both owns and operates all of its hotels, and does not follow the franchise model. “It means we’re more committed to the hotels’ upkeep and the quality of service,” Baeri said, estimating the company spends $30 million each year on renovations and maintenance of its hotels.

Israel’s Hotels

Dan’s growth plans may be easier in 2017 than they were in previous years. Yariv Levin, the country’s minister of tourism, announced a plan to open more hotel rooms to accommodate the expected influx of visitors, bringing Israel’s room count up from 48,000 to more than 60,000. 

Earlier this year, Israel’s Knesset approved a legal amendment that will allow local and international contractors alike to build hotels at a “vastly expedited” rate. Up until recently, a hotel project in Israel could reportedly take 10 years to develop from the time the land is acquired. The fast-track approvals would only be open to developers building four or more hotel projects simultaneously or a single property of 500 or more rooms.

In spite of protests from environmental groups, Levin heavily promoted “Amendment 107 for the Law of Planning and Construction” to promote development, particularly in the midscale and economy sector—not Dan’s target demographic, to be sure, but a rising tide floats all boats.

“For the first time, we created a nationwide committee that deals with all the permits in order to build hotels,” the Minister said over the fall. “That means that if in the past you wanted to build a chain of hotels and had to get a permit from each district committee, now you can get approval for a nationwide project from one committee that will issue all the permits very fast.”

In addition, grants will cover up to 33 percent of the costs to build three-star-and-lower hotels, and 20 percent of the cost for four-star-and-higher hotels.

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