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Earning more, worth less: what is happening to the hotels in Israel? - Walla! Of money


After the great Corona crisis, came an explosion that brought the Israeli hotel chains to excellent occupancy figures and profits. So why did the networks lose value?

More overnight stays by Israelis, improvement in tourist accommodations and profits, all these did not attract the investors (Photo: ShutterStock, bbernard)

The Israeli hotel industry is racing forward and the financial reports of the three largest hotel chains in the country reveal that some of them even surpassed the results of 2019, before the corona virus, and also show which is the most favorite resort among Israelis.

Data from the Israel Hotel Association show that even though the skies were open during 2022, more Israelis preferred to vacation in Israel.

For example, the number of overnight stays registered from domestic tourism stood at 15.9 million in 2022, compared to approximately 13.7 million in 2019.

The number of overnight stays by tourists (foreign tourism) also increased and stood at 7.1 million overnight stays during the previous year, but did not fully recover compared to approximately 12.1 million overnight stays by foreign tourists in 2019.

This, however, went unnoticed by investors, who led the shares of the sector to an average decline of 12.8% during 2022, slightly more than the decline experienced by the Tel Aviv 125 index which fell by 12.53% for the same period, and less than the Tel Aviv index 90 which decreased by about 19.5% that year.

Shares of hotel chains in Israel.

Profits rise, shares fall (photo: Walla! system, no)

The results of the three hotel chains reviewed in the table illustrate the change.

For example, the Isrotel hotel chain, which owns and manages 23 hotels in Israel, including approximately 4.9 thousand rooms, reported in its financial statements for 2022 revenues of approximately NIS 1.8 billion, which is an increase of approximately 27% compared to its revenues in 2019, before Corona.

The increase in income was due to both the recovery of incoming tourism, which constituted about 12% of the company's activity and mainly strengthened the city hotels, and the start of the company's 3 new hotels.

The efficiency measures that have been partially maintained since the corona virus, along with the increase in the company's activity, led Isrotel to a profit attributable to the shareholders of approximately NIS 262 million, which is an increase of approximately 89% compared to approximately NIS 138 million profit in 2019.

The chain, which makes up about 8% of the Israeli hotel market and owns about a third of its hotels in Eilat, and about half of them in the entire southern region, reported that the majority of Israeli vacationers were in these areas, alongside the chain's resort hotels such as the Carmel Forests, Vineyards, and Berashit.

The hotel giant Fatal, on the other hand, which owns and manages 60 hotels in Israel and 195 other hotels worldwide, in which (together) approximately 47.1 thousand rooms worldwide (10,496 of them in Israel), ended the year with a loss of approximately NIS 78 million, compared to a profit of approximately NIS 38 million in 2019.

This is despite the company reporting that all of its hotels were open in 2022 with relatively high occupancy, and the income was approximately NIS 5.4 billion in 2022 - an increase of approximately 2.4% over its revenues in 2019. Despite this, an increase in financing expenses, However, alongside the company's investment in the purchase of 17 hotels in Europe along with institutional factors, there were some things that contributed to the loss.

The company states that this is an accounting loss and that by neutralizing IFRS 16 (related to the lease) the company ended the year 2022 with a net profit of approximately NIS 114.2 million.

We will note that the standard was implemented already in the first quarter of 2019, which, as mentioned, the company ended with a profit of NIS 38 million.

Along with this, it should be noted that investor confidence in it was the highest, and that the company's stock showed the lowest drop among the hotel companies, a drop of about 8%, along with the recovery of the company's value, which stood at about NIS 5.3 billion at the time of the stock review (see table ).

The chain that summarizes the table of hotels is Dan, whose revenues were about NIS 1.46 billion in 2022, their results were similar to those of 2019, when the income was about NIS 1.49 billion.

The company's net profit last year was NIS 99.4 million, which represents a decrease of about 16.11% compared to the profit in 2019, which was NIS 118.5 million.

Dan, owns and manages 18 hotels, one of which is in India, in which, together, about 4,600 rooms, and owns half of the ownership of several lounges in Israel, as well as half of the Hotel and Culinary School that operates in collaboration with the Ort education network.

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Isrotel Sport-Club Hotel in Eilat.

The network builds on the Israeli audience and enjoys excellent occupancy rates (photo: official website, official website)

In a broad view of the hotel sector, the companies in the field show a considerable improvement since the corona virus, led mainly as a result of domestic tourism, along with the return of tourists to visit Israel.

Of the big three, the company that mainly addresses the Israeli audience is Isrotel, which also continues to rely on the local audience for its growth.

The upcoming Passover is one of the busiest seasons for Israeli hotels, and one that contributes significantly to both their quarterly and annual reports, and the growing demand for a vacation among Israelis increases the pace of opening new hotels in Israel.

For example, Yisrotel plans to open about 15 new hotels throughout Israel by 2030.

Now the hotels can only hope that the cost of living and the recession that is coming to Israel, as well as the rest of the world, will not keep vacationers away from them in the coming holidays.

  • Of money

  • consumption

  • financial decisions


  • hotel

  • Hotels

  • Yisrotel

  • Dan

  • Dan hotels

  • Fatal

  • The Stock Exchange in Tel Aviv

Source: walla

All business articles on 2023-03-30

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