The Radisson-SAS hotel chain is pulling out of Israel, with the termination of its agreement with Moriah Hotels. This follows notice served on Radisson-SAS, by Koor-Sheraton, which acquired the Moriah Hotels, of the termination of the agreement and the suspension of the use of the Radisson chain’s brand name and global reservations set-up.
The agreement between Moriah Hotels and Radisson-SAS was signed in December 1995, and included the conversion of all Moriah hotels in Israel to the brand name Radisson, and linkage of the chain to Radisson-SAS’s global reservations and marketing set-up. Radisson-SAS undertook to supply a quota of overnight stays to Moriah in exchange for royalties.
In January, the Moriah hotel chain was sold to Koor-Sheraton. Several months later, on the deal’s formal completion in April, Koor leaders advised Radisson-SAS headquarters in Brussels of its intention to terminate the agreement in three months.
The termination date of the agreement is July 15, 1999, and early next week, the hotels’ names will be changed from Radisson-SAS to Sheraton-Moriah.
According to Koor-Sheraton, Radisson-SAS did not meet its commitments under the agreement with Moriah regarding the number of overnight stays it was expected to supply the hotels in Israel, and it planned to invoke the exit clause in the agreement regarding insufficient overnights, which allows for an exit from the agreement in January (three years after signing.
Radisson-SAS will claim the exit clauses are not relevant to the termination of the current agreement, since Sheraton seeks to manage the hotels under its brand name, after it acquired the chain. It also alleged that the inability to meet overnight commitments stemmed from the objective difficulty in marketing Israel throughout the world in the past three years.
Published by Israel's Business Arena July 13, 1999