ISSTA Lines (TASE: ISTA) is jumping on the bandwagon of buying European hotels. Through subsidiary Issta Hotels Ltd. the company has bought a one-third stake in a German company that owns seven three and four-star hotels with 700 room altogether for €43 million.
Four hotels are located in Stuttgart suburbs, and one each are in Weimar and Wessel. Another hotel is under construction in downtown Dusseldorf, and the German company expects to close its acquisition this month. Issta Hotels will transfer a hotel in Budapest, which it acquired earlier this year, at a premium to be determined by the parties. Issta will also acquire a one-third stake in the management company of the some of the hotels.
Issta has recently closed three hotel transactions. It has bought land for the construction of a business hotel in Herzliya Pituah, the hotel in Budapest that is part of the new German deal, and is it planning to build student dormitories for the Netanya Academic College. The dormitories will be built under a BOT (build, operate, transfer) deal.
Issta chairman Shimon Siboni said that was the first time that would become a major shareholder in a hotel management company and would receive profits from management. He added that that the deal would create a critical mass of hotels for the company at a low investment of shareholders' equity. He said that the company wants hotels to become a primary source of revenue in the coming years. He said that the return on investment in the present deal should be high as the properties are upgraded.
A growing number of Israeli companies have been investing in European hotels. Fattal Hotel Management CEO David Fattal predicts that the company would own 50 European hotels by the end of 2008 and 90 hotels by the end of 2009. Africa-Israel Investments Ltd. (TASE:AFIL; Pink Sheets:AFIVY) is also expanding its hotel business on the continent. Igal Ahouvi’s Blenheim Properties Ltd. and Delek Real Estate Ltd. (TASE: DLKR) are partners in Marriott and Hilton hotels in the UK.
Published by Globes [online], Israel business news - www.globes-online.com - on November 8, 2007
© Copyright of Globes Publisher Itonut (1983) Ltd. 2007