How much did Azrieli Group invest in renovation of Red Rock Hotel?

This deal also includes the construction rights on the site and all hotel activities.

Eilat. (photo credit: RONY BALAHSAN)
(photo credit: RONY BALAHSAN)

The Azrieli Group is significantly expanding its activities and reported a summary of principles for buying the Red Rock Hotel for NIS 130 million.

The hotel was established by developer Eli Papouchado and the property encompasses an area of one dunam near the beach. Azrieli will finance the transaction from independent sources.

Paying NIS 130 million for the hotel and property is a small change. Azrieli's main investment is NIS 500-600 million to demolish the existing building and build a new hotel in its place.

Until a new hotel is built, the company will continue operating the hotel in its current format. This is, among other things, renting rooms to Club Hotel employees which is located nearby. 
Club Hotel Eilat  (credit: Courtesy)Club Hotel Eilat (credit: Courtesy)

The Red Rock Hotel's site notable advantages

It's possible that such a large investment in a new hotel solely to host guests won't be economically viable. Yet, this site has two notable advantages. 

The first is that it's very close to the waterfront and regulations now prohibit the construction of new hotels near the beach.

Second, the site is near a seafront mall. Azrieli can also use the hotel space for commercial activity to operate a rival shopping mall. This is their area of expertise, and their mall could prove to be a tough competitor for the existing one.