Two weeks ago, President of the European division of thel Hilton International chain Yurgen Fisher, and vice president of the Middle East region Peter Van den-Fleet, visited Israel. They wished to tour the advanced stage building site of the Intercontinental hotel, on the southern end of the Tel Aviv promenade, a hotel under different ownership than the Hilton Tel Aviv.
On the surface, there is nothing simpler. But to their astonishment and to the astonishment of Hilton Tel Aviv managers, the two met with a blank refusal. They would be happy to host them in the hotel when it opens, and even to exempt them from payment, but for the time being - no entry.
This was the first sign of all out war between the two hotels, a war so far being waged by the Hilton Tel Aviv owners and the courts. From now on, it seems that the gloves have been removed: there will not only be legitimate commercial competition between the two hotels in the narrow Tel Aviv market, but a personal struggle between their owners - David Teik, who holds 40% of Hilton Tel Aviv and 100% of the Intercontinental, and Harry Liss, Moshe Koren and Meir Rosenthal, his partners (60%) in the Hilton ownership.
The new David Intercontinental hotel is due to open for running in this November. In the first stage, 100 rooms will be open; on the lower floors of the hotel,
a luxurious atrium will be open, together with reception areas and convention centers. By the end of January 1999, the Intercontinental promises, the hotel will be fully operational.
Even without the struggle against the Hilton, the hotel opening is causing shock waves in the tight Tel Aviv luxury hotel sector, which maintained a freeze in recent years in terms of number of rooms, and is a real blow to the convention hall market, mainly to the Dan Panorama congress center, adjacent to the Intercontinental.
The new hotel, designed in the unique and extravagant style of Intercontinental hotels worldwide, is offering the largest function and congress hall in the country - 2,015 sq.m.of open space with no support pillars, suitable for hosting 3,000 people.
The functions hall lobby is also huge - 810 sq.m. for 1,200 people, and is surrounded by smaller halls for functions and meetings. The main hall can be divided up into seven smaller ones.
In addition, the hotel offers a significant number of rooms for Tel Aviv - 600 rooms and suites, a massive reception counter, and a separate one for groups - to which group coaches will arrive using a separate entrance. There will be a health club and spa, a park and an outdoor swimming pool, and a massive atrium-lobby containing a 100-seat Middle Eastern restaurant, a large dairy diner seating 280 people and a central bar, to include a sushi restaurant.
Two weeks ago, the hotel's new general manager, Yurgen Baumhof, 46, until recently the manager of the Intercontinental Hotel in Munich, arrived in Israel. This is Baumhof's first post in Israel. He was a previously a hotel manager in Sydney Australia, and worked for many years for the Hyatt and Holiday Inn chains in the Far East.
Baumhof chose the hotel's marketing slogan - "The Place to Meet" - a slogan which is also targeted at the soft belly of the Hilton's, which until now was considered the preferred location for business and other meetings.
"Globes": Why did you refuse the Hilton chain heads' wish to visit the site?
"The time was not right. The hotel is currently under construction, and the site is not prepared for visits, but when the hotel opens - anyone can come and we will be happy to host them, even the Hilton Tel Aviv general manager, and we won't even charge him."
Oh, really....
"There are no secrets in the hotel business. If the Intercontinental president was in Israel - he would invite the Hilton president. We rejected the visit of the Sheraton-Europe President, Bob Cutter, who was in Israel. We already received several guests, but we decided at this stage with Teik not to accept any more visitors. This is competition."
Here the issue is more than just commercial competition between two chains.
"I know the history of the hotels and their interests here, but I don't anticipate problems nor a conflict here. I want to be professional. It's clear that we'll compete with the hotel, that's what we do all over the world. The Intercontinental chain competes with the Hilton and Sheraton chains."
The competition won't be easy. For years, the Tel Aviv Hilton has enjoyed the strong market position of a leading hotel. It has a regular and loyal clientele, and a preferable location because of its proximity to the sea and the city center. The owners have overcome the disadvantage of its being an old-fashioned hotel by a long series of renovations.
The Intercontinental has all the advantages of a new, refreshing hotel in the city. It has the possibility of hiring a young, dynamic team, and to establish all the sector's latest services and products. Its great disadvantage is that its location is on the margins of the city center, near the Carmel Market, and with no adjacent beach.
Competition between the two hotels did not start, naturally, with the hotel's opening. In the early '90s, as soon as it learned of Teik's decision to build. the Intercontinental Hotel in Tel Aviv, the Hilton Tel Aviv went on high alert.
The hotel owners, together with the international management network, decided to get ready for competition, and drafted a massive $70 million renovations plan.
Teik, who encountered a real conflict of interests because of his cross-ownership, did not like the large investment, and using all his power tried to put a stop to it. At the beginning of April '98, he applied to the courts with a request to appoint a liquidator for the hotel, and to conduct a "by me by you" procedure between the owners. Teik claimed that the three hotel owners conspired against him as a minority, and that illegalities were involved in the hotel's renovation. The remaining owners argued that Teik was delaying the renovation approval because he wished to invest in the Intercontinental and Hyatt Dead Sea, owned entirely by him.
Today it's clear that even if the hotel owners go their separate ways, the competition between the two hotels will only get fiercer. Incoming tourism is in the deepest, most prolonged crisis in the State's history - each guest checking into one hotel will simply reduce occupation at the other.
Published by Israel's Business Arena September 3, 1998