Israeli Hotel Chains Bounce Back Financially Amid Domestic Tourism Surge
The Israeli hotel industry has recovered from significant losses in the first quarter of the year, reporting strong financial results in the second quarter according to the earnings reports of the three largest publicly traded hotel chains in Israel: Fattal, Isrotel, and Dan Hotels. Fattal and Isrotel returned to profitability, while Dan Hotels significantly reduced its losses compared to the previous quarter. Fattal posted a profit of 141.6 million shekels in Q2, a sharp turnaround from a 288 million shekel loss in Q1, and a 16.8% increase compared to the same quarter last year. Dan Hotels recorded a loss of 2.3 million shekels in Q2, down from a 60.5 million shekel loss in Q1, but a decline from a 5.4 million shekel profit in Q2 last year. Isrotel showed the highest growth among the three, with revenues of approximately 602 million shekels and profits around 82 million shekels, marking an 11% revenue increase and a 50% profit rise year-over-year.
Despite the slow recovery of inbound tourism to Israel, with only about 611,000 visitors arriving by the end of July 2023, the hotel chains benefited primarily from domestic tourism, which accounted for about 85% of hotel stays amid ongoing regional security tensions. This domestic demand boosted occupancy rates and average room revenue. Additionally, the hotel chains’ international expansion strategies contributed to their financial resilience. Fattal, the largest international player, operates tens of thousands of rooms across Europe, including Germany, the UK, and Spain. Isrotel also expanded both domestically and abroad, managing 26 hotels and developing 13 new projects in Israel, Greece, and Italy.
Isrotel CEO Lior Raviv highlighted the company’s adaptability through periods of uncertainty, including the COVID-19 pandemic and recent conflicts, emphasizing their readiness to meet Israeli demand for local vacations. Financial consultant Guy Meller from BDO noted that while domestic tourism currently sustains the hotels, restoring inbound tourism remains crucial for the Israeli economy and should be a national economic priority involving broad government cooperation. Isrotel expects the strong performance trend to continue into the third quarter, traditionally the best quarter of the year.
