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McClatchy-Tribune  08/18/2014 12:01 AM ET
Hotel revenue hit by Gaza operation [Globes, Tel Aviv, Israel :: ]

Aug. 18--The effect of Operation Protective Edge and the prolonged fighting against Hamas in the Gaza Strip on the local hotel industry was revealed today in reports by the three hotel chains listed on the Tel Aviv Stock Exchange (TASE): Dan Hotels Corp. Ltd. (TASE: DANH), Israel Land Development Company (TASE: ILDC) unit Rimonim Hotels, and Africa-Israel Investments Ltd. (TASE:AFIL) unit Africa Israel Hotels. All three reported that there will be a steep fall in revenue in the third quarter of the year.

Dan Hotels, controlled by the Federman family, reported today, "Following Operation Protective Edge, the company's orders began to decline, with cancellations of reservations. As of the date of this report, these developments are liable to result in a 30% drop in the company's revenue in the third quarter of 2014." The Dan chain added that as of now, "The company is unable to estimate the effect of these events on its profit in the third quarter of the year." The company reported a NIS 319 million profit in the third quarter of 2013; it appears that the damage absorbed by the chain is estimated at NIS 90 million.

Israel Land Development, controlled by the Nimrod family, reported today, "From the beginning of Operation Protective Edge, the company has received cancellations of reservations by both foreign tourists and Israelis. The company believes that this will have a substantial effect on its results for the third quarter of 2014.

Following the company's initial assessment, it said it would report a steep drop amounting to NIS 5-6 million in its net profit, compared with the third quarter of 2013, leaving it with little or no profit at all in the quarter.

The company also stated that to the best of its knowledge, "The Israel Hotel Association is taking determined measures to make sure that state will provide assistance to the hotel industry following the severe damage suffered by hotels in almost all regions in Israel."

Rimonim Hotels posted a NIS 6.5 million net profit on NIS 88 million in revenue in the third quarter of 2013.

Africa Israel Hotels, whose results are attached to those of Netz Hotels, which owns 50% of Africa Israel Hotels' shares and operates the Crowne Plaza and Holiday Inn hotel chains, also reported, "Many reservations were canceled by foreign and Israeli tourists, in addition to a significant drop in new reservations attributable to Operation Protective Edge." The company therefore expects a 12-17% decline in revenues in the third quarter of the year, compared with the corresponding quarter last year, and a negative effect on its results.

In addition to these companies, there is another recognized public hotel chain: Isrotel, owned by the Lewis family, which has not yet reported the expected effect of Operation Protective Edge on its results.

In addition to the hotel chains, several TASE-listed civil aviation, tourism, and retail companies have already reported on the expected negative impact of Operation Protective Edge on their third quarter results, including El Al Israel Airlines Ltd. (TASE: ELAL), ISSTA Lines (TASE: ISTA), Aviation Links Ltd. (TASE: AVIA) and Fox-Weizel Ltd. (TASE: FOX).


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