Also thanks to the hotel in New York: improvement in the revenue line of Dan Hotels
The acquisition of the NOMO SOHO hotel in New York has boosted Dan Hotels' performance. Revenues from the hotel sector rose by 13% in the second quarter to 318 million shekels.
The acquisition of the hotel in New York provided a boost to the performance of the Dan Hotels chain, which is summarizing the second quarter of the year today. Following the inclusion of the results of the NOMO SOHO hotel in lower Manhattan, which has 264 rooms and whose acquisition the company completed in February, its revenues from the hotel sector - its main area of business - rose by 13% compared to the corresponding quarter last year to 318 million shekels.
Since the first war with Iran took place in the corresponding quarter - which led to the departure of the few tourists who had returned to Israel and the closure of hotels during it - the operating profit before depreciation and financing (EBITDA) from hotel operations in the second quarter of this year (in which the second war with Iran was no longer being waged), rose by 49% compared to the corresponding quarter to 58 million shekels. The bottom line was negatively affected by financing expenses, which jumped from 10 million shekels to 26 million shekels, partly due to the financing that Dan Hotels took for the purchase of the hotel and the effect of the strengthening of the shekel against the dollar on dollar loans it had taken. To this was added the effect of a grant of 5.1 million shekels for the "Iron Swords" period, which was included in the results of the corresponding quarter. As a result, Dan Hotels concluded the quarter with a loss of 2.3 million shekels, compared to a profit of 5.4 million shekels in the corresponding quarter.
The chain, controlled by the Federman family, has 16 hotels in Israel, one of which in Nazareth has not been active since October 7, and two others, in Safed and Jerusalem, have been closed intermittently due to the unstable security situation since then. The hotel in New York is its second hotel abroad, alongside a hotel in India that it has been operating since 2017. Hotel operations were responsible for 76% of quarterly revenues, and alongside it, the company is also engaged in the catering sector for various institutions and bodies. This activity generated revenues of 101 million shekels, an improvement of 4% compared to the corresponding quarter. However, the profitability there is significantly lower: while the EBITDA rate in hotels reached 18% of revenues, in catering it stood at 4%.
The improvement in the performance of Dan's hotels in the second quarter appears to be a mirror image of their performance in the first quarter of the year, during which the second war with Iran took place, and in which revenues fell compared to the corresponding period and the loss in EBITDA deepened. As a result, in the summary of the first half of the year, the improvement in revenues from the chain's hotel operations is moderate compared to that recorded in the second quarter, and they rose by 7% to 508 million shekels. On the bottom line, Dan Hotels lost 63 million shekels in the half-year, compared to a loss of 47 million shekels in the corresponding period last year.
While Isrotel and Fattal, in their operations in Israel, have a large number of resort hotels, and therefore rely mainly on Israeli vacationers, Dan has turned more to foreign tourists and therefore its vulnerability to the ongoing problematic security situation is more severe. The acquisition of the hotel in New York was Dan's first expansion move abroad in recent years. A move that other Israeli companies, Isrotel and Israel Canada Hotels, have also begun to implement, with the goal of creating, similar to Fattal's conduct for years, a revenue base that is not dependent only on the situation in Israel. Similar to Dan Hotels, Fattal has also recently turned to the American market for the first time and also purchased a hotel in Manhattan.
Dan Hotels is traded at a value of 3.1 billion shekels, after its stock has fallen by 22% since the beginning of the year, while the TA-125 index, the representative index of the stock exchange, has risen by 11%. Similar to it, the stocks of other hotel companies also showed underperformance relative to the index: Isrotel's stock fell by 24% during this period, Israel Canada Hotels rose by 3%, and Fattal rose by 5%.
