Dan Hotels Boosts Revenue with New York Acquisition Despite Quarterly Loss
Dan Hotels reported improved revenue in the second quarter of the year, driven largely by the inclusion of its newly acquired NOMO SOHO hotel in South Manhattan, which has 264 rooms. The acquisition, completed in February, helped increase the hotel division's revenues by 13% year-over-year to 318 million shekels. Operating profit before depreciation and financing (EBITDA) from hotel operations rose 49% to 58 million shekels compared to the same quarter last year, which was affected by the first Iran conflict that reduced tourism and led to hotel closures.
Despite the operational gains, Dan Hotels recorded a net loss of 2.3 million shekels for the quarter, compared to a 5.4 million shekel profit in the previous year’s quarter. This downturn was due to a sharp rise in financing costs from 10 million to 26 million shekels, partly because of loans taken to finance the New York hotel purchase and the strengthening of the shekel against the dollar. Additionally, a 5.1 million shekel grant related to the "Iron Swords" operation was included in last year’s quarter results but not this one.
The company operates 16 hotels in Israel, including one in Nazareth that has been inactive since October 7, and two others in Safed and Jerusalem that have been intermittently closed due to ongoing security concerns. The New York hotel is Dan’s second international property, alongside a hotel in India operated since 2017. Hotel operations accounted for 76% of quarterly revenues, while the company’s catering services for institutions generated 101 million shekels, a 4% increase, though with significantly lower profitability.
The first half of the year showed a more modest 7% increase in hotel revenues to 508 million shekels, with a net loss widening to 63 million shekels from 47 million shekels the previous year. Unlike Israeli hotel chains like Isrotel and Fattal that rely heavily on domestic tourists, Dan Hotels targets more foreign tourists, making it more vulnerable to Israel’s unstable security situation. The New York acquisition marks Dan’s first recent expansion abroad, a strategy also adopted by other Israeli hotel companies to diversify revenue sources. Dan Hotels is currently valued at 3.1 billion shekels, with its stock down 22% this year, underperforming the Tel Aviv 125 index, which rose 11%. Other hotel stocks showed mixed results, with Isrotel down 24%, Israel Canada Hotels up 3%, and Fattal up 5%.
