Amid construction boom, Israel’s hotel sector optimistic about 2022

Isrotel hotel chain will invest $1 billion in new construction, as the industry hopes for a strong springtime recovery with Israel reopening its borders.

 THE ISROTEL Dead Sea Hotel (photo credit: ISROTEL)
THE ISROTEL Dead Sea Hotel
(photo credit: ISROTEL)

After two years of low occupancy rates due to the corona pandemic, industry leaders in Israel’s hotel sector are optimistic that the new year will bring about a reversal of fortune.

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Hotel construction is at a five-year high, the Real Estate Appraisers Association in Israel revealed earlier this week in a report based on data taken from the country’s Central Bureau of Statistics. According to the report, in the first three-quarters of 2021 hotel construction began on roughly 1.5 million square feet of real estate, compared with 505,000 square feet a year earlier.

The majority of the new construction is taking place in Tel Aviv. Hotels in the coastal city, heavily reliant on incoming tourism, have been among the hardest hit by corona travel restrictions.

Despite these hardships, Nahum Kara, director of sales and marketing at the Isrotel hotel chain, believes that tourists will return in the coming year in even greater numbers than pre-pandemic times, especially given that Israel has reopened its borders once more.

“To build up real tourism it takes approximately six months,” said Kara. “This is for group business [travelers]. Individual tourists are more adventurous and they do come earlier. Let’s hope that we’ll continue to open the borders and by Passover this year we’ll be full again.”

Travelers seen at the Ben Gurion International Airport, on December 22, 2021. (credit: FLASH90)Travelers seen at the Ben Gurion International Airport, on December 22, 2021. (credit: FLASH90)

The Isrotel hotel chain, which currently owns 20 establishments across the country, is investing $1 billion, or NIS 3 billion, for the purchase or construction of 12 additional hotels in Israel over the next five years, including eight in Tel Aviv alone.

In 2022, Isrotel plans to open three new hotels: one near Lake Kinneret (the Sea of Galilee) called the Goma Hotel, and two others in Tel Aviv called the Port Tower Hotel and the Alberto Hotel.

“We have two new hotels in Tel Aviv that we are going to open in the months of May and June,” said Kara. “The first one is at the entrance of the Tel Aviv Port, which is the entertainment area of the city, and the second one is in the business center of Tel Aviv. It’s a boutique hotel with 92 rooms and a rooftop swimming pool.”

Kara and others in the hotel industry are hoping for a strong recovery from tourism, which they believe is inevitable once the pandemic situation improves. In 2019, a record-breaking 4.5 million people visited the Holy Land.

Hotels that are reliant on incoming tourism, like the five-star, Isrotel-owned Royal Beach Hotel in Tel Aviv, have been particularly affected by corona. Nevertheless, according to Kara, the hotel chain has emerged relatively unscathed thanks to its diverse property portfolio.

“We have a mix of locations,” he said. “Most of our business is local Israeli business. We did not suffer as much, but specifically hotels in Tel Aviv and Jerusalem did suffer a lot.”

Once Isrotel launches its eight hotels in Tel Aviv, it will own 20% of all the guest rooms in the city.

The decision to build several new hotels was taken several years ago.

“To build a hotel in this country, from the time you decide to build it, takes between four and 10 years,” Kara said. “So the decisions were taken well in advance. Now we’re at the last stage.”

Others in the hotel sector are also confident about the future.

The Margoa Hotel, a boutique three-star hotel in the nearby coastal city of Netanya, is preparing for rooms to fill up come April.

“We are very optimistic because we’re going to get over that COVID situation,” said Richard Ammar, marketing and reservations manager at the Margoa Hotel. “We believe in it. I think it’s a question of one or two months, and then we’ll get back all the reservations of the people who missed us in the past two years.”

While real-estate companies continue to bank on a strong recovery in the hotel sector, whether bookings return to pre-pandemic levels this year will only become clear in the months to come.