ITT Sheraton will enter into a strategic partnership with Koor Resorts and Recreation, and will hold acquire 50% of the company. A memorandum of understanding was signed today (Thursday) between the president of Sheraton Hotels Europe and Koor CEO Benny Gaon.
Koor Resorts and Recreation, a subsidiary of Koor Tourism Enterprises, will change its name to Sheraton Israel, and will be connected to ITT Sheraton’s reservation system. The joint company will hold exclusive license to manage Sheraton and Sheraton 4 Points brand name hotels in Israel. A market penetration of the Luxury Collection brand name is planned for the future.
The agreement will be signed by January 1st.
In response to a question put by "Globes" as to the cost of the deal, Gaon said "We are still working on the subject." Today’s announcement to the TASE also did not make mention of the cost of shares.
The new company will operate the Tel Aviv Sheraton, the Jerusalem Sheraton Plaza and five Paradise hotels - two in Eilat, two in Tiberias and one in Jerusalem. In addition, Sheraton Israel will manage the Rhodes hotel in Eilat, in which Koor holds a management agreement. The Rhodes, which is still under construction, will be a 5 star hotel.
The Paradise hotels will be 3 and 4 star, and will be managed by Koor according to an agreement signed with Paradise controlling shareholder Yitzhak Teshuva. According to the agreement with Teshuva, Koor has a three year option on the purchase of the hotels. Until now, the option has been exercised on the hotels in Tiberias and Jerusalem, which were purchased several months ago for $23.5 million.
Koor is in advanced negotiations for purchase of the two Paradise hotels in Eilat. At the same time, Koor has exited negotiations with Teshuva for a hotel in Ein Bokek and a resort in Tiberias.
Future investment in hotels will be made through a jointly held fund, to be established by Koor and Sheraton, which will be invested in on a dollar for dollar basis.
"Koor has invested $100 million in the area of hotels and tourism. We entered the field three years ago, but we needed to establish and organize ourselves. There is no better anchor than an affiliation with an international chain. We are climbing out of the 4-star niche," Gaon said.