Until 2010, the 21-floor skyscraper at the entrance to Jerusalem, certainly one of its land marks for arriving visitors, was the highest in the capital. When built in the early 1970s, it was branded as a Hilton hotel. A source of pride for the city. In the 1990s, the owners changed and the building was rebranded to the Crowne Plaza hotel. Maybe not as prestigious, but surely a source of pride. Last summer, when the epidemic dominated our lives, a new, unfamiliar brand appeared on the building roof: Vert. A new name, created by owners Africa Israel Hotels, a local brand. Is it still prestigious?
This brand’s transformation is a microcosm of Israel’s hotel industry. International hotel brands disappear right in front of our eyes in the blink of an eye. Eye brows should be raised, as these very same branded mega-chains announce a very successful 2021 globally. Global Hyatt (Hyatt hotels) reported that as of March 31, 2021, it had executed management or franchise contracts for approximately 490 hotels or approximately 100,000 rooms. Hilton Worldwide Holdings (Hilton hotels) is proud of opening 414 new hotels around the world and extending its presence in new and growing markets. Marriott International (Marriott hotels) signed 599 agreements during 2021, representing approximately 92,000 rooms. Impressive numbers, while in Israel, nothing.
Why are these brands doing great elsewhere? Why are they losing their charm here?
Names like Hyatt, Sheraton and Crowne Plaza have disappeared from Jerusalem. Radison, Sheraton, Hyatt, Le Méridien, Golden Tulip and Crowne Plaza have exited from the Dead Sea hotel scene. Hilton, Sheraton, Le Méridien and Crowne Plaza have vanished from Eilat. However, a blossom of Israeli brands has been recorded: Dan, Isrotel, Fattal with the Leonardo brand, Prima, Atlas, Brown, Herbert Samuel and Africa Israel with their Vert.
One must understand that in most cases the international brands do not own the hotels. They manage them or grant entrepreneurs and builders a license to franchise the names. Investors in Israel seek brands to feel secure and to ensure profitability. Global chains are reputed for their professional standards, mega global marketing capabilities and their enormous loyalty clubs, which include millions of members. These benefits carry high costs, sometimes up to 20-25% of the profits will be the fee for the international hotel chains. The developers and hotel owners in Israel stay puzzled if this joint venture is indeed a win-win situation for both sides. Over the years, this became the reason for the huge erosion in the cooperation of international brands in Israel, outside metropolitan Tel Aviv.
Assaf Ben Dov, Africa Israel’s hotels vice president for sales and marketing, explains the change in his corporation, “We decided to establish our own brand: VERT, which means green in French and reflects values cherishing the environment, health and lifestyle. This brand replaced the Crowne Plaza brand in Eilat, the Dead Sea, Netanya and Jerusalem; however, we do continue with the powerful Crowne Plaza and Indigo international brands in metropolitan Tel Aviv, as it secures business income from international corporations and companies.”
Ron Yariv, International hotels management consultant, explains that Israel has a very small market that can translate a business into a success without a global brand. He agrees that Tel Aviv is an exception. Other hotels in Israel rely on a small group of leading travel agents, domestic tourism and pilgrimages. Yariv states that Israeli entrepreneurs are strong enough to receive loans and support from Israeli banks, without international brand backing. “Overseas the situation is different. In emerging markets the brand is the main stronghold for developers to receive support for their hotel investments for financial leverage from banks.”
Strategic Hotels consultant, Ronit Copeland points out that Israeli brands show more generosity and flexibility towards entrepreneurs, while international brands are more strict. The Israeli brands showed strength over the years and in our small market it is a significant factor. The International brands find Tel Aviv beach promenade as the main attraction, but opportunities are scarce. Overseas in countries like China, UAE and Germany enormous options around industrial suburbs, airports and business parks arise constantly. These opportunities are a main reason for the growth of the global chains in 2021.”
The analysis made by Israeli tourism expert Joseph Fischer, with 40 years of lodging experience working for leading International brands, provides a different perspective. “International lodging brands are unable to grasp the Israeli Guest DNA. They focus on the corporate market, loyalty membership, cooperation with airlines and rental car companies. The Israeli customer just wants to get a big bang for his NIS: Free Entertainment, a big breakfast, and lunch and dinner buffets. Israeli guests care more about the star rating and wow factor, and a bit less about quality standards. The Israeli brands deciphered that code better than the international ones.”
The evolving technology allows almost any entrepreneur to offer globally accommodation facilities, from tzimmers (simple, private bed and breakfasts) and guest houses to boutique hotels, via online agencies. How does that affect the mega brands? The renowned hotel chains are in fact getting stronger. They offer a quality product, provide reliable security, confidentiality and tempting points for benefits from their mega loyalty clubs. Furthermore, they learned how to offer different accommodation choices to fit almost every pocket, with an additional maze of brands. Business people who come to Tel Aviv will not give up on them so fast.
However, did they give up on the rest of the destinations in Israel that focus on leisure travel? It seems that in that arena the local chains can claim a landslide victory.
The writer was, until recently, the spokesperson for Hilton Hotels in Israel.