Fattal Adds To Portfolio In Israel
Purchase of Azorim Tourism includes nine Sheraton hotels.
By Derek Gale, Senior Editor -- Hotels, 8/31/2009 11:00:00 PM
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David Fattal, owner and managing director, Fattal Hotels |
Fattal Hotel Management Co. has purchased the hotel assets of Azorim Tourism—including the ownership of 10 properties as well as the lease for one additional hotel and the management rights to another—for about US$70 million cash and the assumption of about US$260 million in debt. The deal solidifies Fattal's position as the largest hotel company in Israel, with about 30 properties.
Nine of the twelve hotels involved are Sheraton-branded, two are ex-Novotels, and one is a Mercure.
Fattal owner and managing director David Fattal says the deal was a good opportunity “because here in Israel you can't really find so many good hotels in one piece.”
As for the large debt load, “We believe that after renovating some of the hotels, and after let's say the first year of adjusting those hotels to our company, the hotels can carry the debt,” he says.
He notes that transitioning the hotels into the Fattal portfolio will take time and meanwhile might influence EBITDA, but says “in general, I believe we'll be able to serve the debt and have a very good result.”
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| The 150-room Leonardo Hotel Hamburg-Stillhorn. |
Fattal's plan is to rebrand the majority of the acquired properties, along with the company's existing Golden Tulip-branded hotels in Israel, as Leonardo Hotels—Fattal's established 3- to 4-star brand in Western Europe. The Leonardo brand already has a presence in Israel with four properties, and thanks to early marketing efforts, has some familiarity. Fattal expects word of mouth to carry through to the additional Leonardo hotels, he says.
Meanwhile, Fattal is also expanding the Leonardo brand in Germany, with the takeover of a small hotel at the Hamburg airport and the recently opened Leonardo Hotel Berlin and Leonardo Royal Hotel Berlin. Further projects in Berlin and Munich are expected to follow in the coming year.
Ultimately, Fattal's goal is to go from slightly more than 60 hotels now to 80 hotels two years from now, primarily via growth in Europe. “I think we've reached our saturation point in Israel,” he says. “This is enough for our country, but hopefully we'll do more in Europe.”
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