Fattal used its third-quarter results to reaffirm its commitment to expanding in both its domestic market and in Europe.
Ahead of the results announcement, the company acquired a site in Manchester, on which it planned to build its second property in the city.
The company reported a 41% growth in revenue in the third quarter, reaching NIS1.07bn (EUR250m) with operating profit growing by 25% to NIS160m and net profit up 37% to NIS111.7m.
Fattal said that it had benefitted from growth in domestic and international tourism and from its ongoing acquisitions strategy. The chain had 40 hotels in Israel, of which it owned 24 fully or partially, rented 10, and managed six. The hotels in Israel were under the Leonardo, U, Herod’s, Nyx, and Rothschild 22 brands.
In Europe, the company had a total of 150 hotels, of which it owned 52 fully or partially, rented 92, and managed six. Most of Fattal hotels were located in Germany, the UK, and Ireland.
Fattal CFO Shahar Aka said: “During the past quarter, we acquired a hotel and two nearby lots in Edinburgh in Scotland on which we plan to expand the existing hotel and build a new NYX hotel. In addition, we completed the acquisition of 13 Apollo hotels in the Netherlands and made the chain prominent in the country and the largest chain in Amsterdam. Together with the Pandox hotel chain, we also acquired the luxury Midland Manchester Hotel.
“We will continue our strategic plan to enhance our presence in Europe and Israel, and add value for investors and our partners by expanding and bolstering the company’s activity to new instruments. and by improving revenue and profits.”
Fattal underwent a partial flotation in February, raising NIS500m. In its IPO prospectus it said it intended to “continue to develop in the hotel sector in Europe and to seek opportunities for acquisition, signing lease agreements or entering into management agreements” for business hotels at a level of three to four-plus stars in major cities throughout Western and Central Europe, especially in city centres and close to airports.
The group said that it would also look to strengthen the brands Leonardo, Nyx and Jurys in Europe.
In the Mediterranean, around Cyprus and Greece, the group said it planned to expand its holiday hotel business by entering into joint purchase agreements.
In contrast, the company said that would grow “more slowly and narrowly than in the past with respect to operations in Israel”, with a view to achieving “similar profitability rates” that characterised its operations in Europe.
The group’s latest purchase saw it acquire a site on Adair Street, Manchester, marking the group’s second deal in the city following its recent purchase of the Midland Hotel in October.
Scheduled to be completed in early 2021, the new hotel will be operated by Jurys Inn and Leonardo Hotels UK and Ireland, and will be branded as a Leonardo Hotel.
Earlier this year Manchester City Council approved a Strategic Regeneration Framework for the area around the proposed hotel, with the intention of transforming the corner of the city into a new urban quarter, providing a mix of commercial and residential uses.
In October, Fattal announced that it had partnered with Pandox in the acquisition of the iconic Midland Hotel in Manchester, and the Four Star Grand Harbour Hotel in Southampton, which both joined the expanding portfolio of Leonardo Hotels in the UK.
Jason Carruthers, managing director, Leonardo and Jurys Inn Hotels UK and Ireland, said: “We are delighted to have secured this prime new location as we continue to increase our offering in the UK. The opportunity to expand into a vibrant and growing city like Manchester is a great one, and this move serves to strengthen our portfolio and network enormously. We look forward to beginning works as soon as possible, and welcoming our first guests to the hotel.”
HA Perspective [by Katherine Doggrell]: Around this time last year we were all enjoying the Jurys Inn deal and, since then, have been wondering out loud what would become of the brand name. Pandox CEO Anders Nissen was no fan – bad connotations around the word ‘Inn’ – and it was generally felt to be on the ropes.
One year on and Fattal and Leonardo are even busier in Europe and there are no signs that the name is going to be moving into the mainland, set to remain in this Brexited isle and on that theme probably wise to end there.
The company retains a faith in the UK and in the regions which other investors also seem to share, with transactions levels still showing enthusiasm. General feeling amongst the brokers is that Brexit can largely do what it wants – but if it comes with a side of visa issues, then we’ll have problems. So far the UK is as far from an agreement as it has ever been, so business as usual on that front.