Israeli grant prompts over US$1.2 billion of national hotel investment

Pictured: rendering of Swissotel South Beach Tel Aviv.
At least US$1.2 billion of investment is boosting the Israeli high end hotel portfolio over the coming years, according to data from THP.

This is in part due to Israel’s Ministry of Tourism implementing procedures to facilitate new hotel construction or existing site expansion which gives priority to high tourist demand areas.

Investor attraction

In 2021 the governmental body introduced a programme to encourage foreign hotel investors, with grants valued at 20% of the investment for newbuilds, extensions or conversions.

This initiative is underway while the country aims to surpass the record tourist numbers it attracted in 2019. In 2022, incoming tourism was still 41% lower than pre-pandemic, with 2.675 million tourist entries recorded last year. However, this was obviously significantly more than the restricted operation of 2020 and 2021, with 831,000 and 397,000 arrivals, respectively.

Strong premium pipeline

THP currently records at least 61 projects in the country’s premium hotel pipeline, totalling nearly 11,000 keys.

Four star sites form the vast majority, with 46 under development – 76% of the high end slate. The remaining 15 hotels/24% are five star properties.

Top Tel Aviv

Next year looks to be the present peak for openings, with 21 on the books. This represents a fair increase from 2023’s prospective 15 deliveries. The rate slows again in 2025, with 10 completions scheduled, and another three in 2026, followed by two in 2027. The remaining 10 have yet to be designated a delivery date.

In terms of geographical spread, Tel Aviv is far and away the top national city for hotel developments, with at least 26 forthcoming. Jerusalem comes second on 10, while Eilat and Ein Bokek share third spot on five apiece.

Independent Israel

The lion’s share of upcoming sites are independent, with 39 hotels, forming 64% of the pipeline, while the remaining 22 properties will be branded.

Of the chain hotels, local group Isrotel heads the list, with nine developments underway. Hilton Worldwide’s Curio Collection is another brand with multiple sites, with two on the slate.

Accor acceleration

Accor is a further group with big Israeli plans, with four hotels slated for the next two years – two under the MGallery brand, one under Swissotel and another under Pullman Hotels & Resorts.

During summer this year, the 273-room Swissotel South Beach Tel Aviv  will open as the largest luxury hotel in Israel, covering approximately 68,000 sq m. This Israeli debut for the brand will contain cutting edge facilities including a swimming pool filled with water from the Dead Sea as well as a spa complex with numerous treatment rooms and various saunas.

Pullman Mavassert Zion will follow in Q1 2024 with 308 keys. The site will overlook Jerusalem with a panoramic view of the nearby mountains.