Dan transforms Tel Aviv office building into hotel

Ami Federmann Photo: Eyal Izhar

Dan Hotels deputy chairman Ami Federmann: Link is for tourists who want the city rather than the beach.

A short while ago, the board of directors of public housing company Amidar was invited, as a one-time event, to hold its regular board meeting in the company's old offices in Shaul Hamelech Street in Tel Aviv. This was after Dan Hotels had rented the old building from Amidar and had finished the work of converting it to a hotel.

Three years ago, the two sides reached a deal, after Amidar decided to let the building and move its headquarters to the business park constructed by Azrieli Group in Holon.

When the board members entered the building, they hardly recognized it. The basement had been a dusty archive full of documents. The archive was demolished and the basement floor was opened up to create a huge space without walls featuring a café with small tables, tables for groups, work stations, and meeting rooms with transparent windows. The walls were hung with huge street-art paintings, which are a feature throughout the hotel.

"When the Amidar directors came here for their meeting, they were astonished. They said that only now did they realize how big the basement was," recalls Ami Federmann, one of the controlling shareholders and deputy chairman in the publicly traded Dan Hotels chain and a former president of the Israel Hotel Association, who recently inaugurated the new hotel together with his son Ron.

"As much as 10 years ago, we decided that we wanted to open a hotel inspired by hostels," Federmann explains. By "we", he refers to the new generation, his children Ron and Daniella. "Four years ago, we said we would look around the world for the concept we wanted, and that at the same time we would look for a suitable building. We traveled to Amsterdam, Berlin, Madrid, Barcelona, and put together the concept there. We held a design competition between interior designers and I chose Dana Leitersdorf, who understood exactly what we wanted.

"We looked for suitable buildings, from small buildings suitable for 20 rooms to large ones suitable for 200 rooms. We were looking for an existing building to convert, and it wasn't simple. Residential buildings are too expensive, and the office buildings were constructed in such a way that the outer shell and the windows weren't appropriate for hotel windows. Three years ago, we found out that Amidar's building was to let because Amidar had decided to move to Holon.

"Although the project was one that Ron and Daniella wanted to manage themselves, since Dan is a public company we were obliged to offer the deal to Dan first of all. Had the board decided not to go ahead with the deal, the family could have taken it on privately, and also given the hotel a new brand name. Unfortunately for Ron and Daniella," says Federmann humorously, "the board wanted the deal, and we came to the conclusion that the right thing to do was to give the hotel the Dan name.

"We conducted swift and intensive negotiations, and leased the building for 25 years. We received it in December 2016. Within two years we did the planning and the conversion of the building to a hotel."

The Link Hotel, constructed in a style very different from the typical style of a Dan hotel, has 94 rooms, each 17-40 square meters in area, on eight floors.

Is there an advantage in time and money in converting an existing building to a hotel, as opposed to building a hotel from scratch?

Federmann's answer is surprising. "As president of the Hotel Association I promoted the initiative to encourage the conversion of existing buildings to hotels as a solution to the need to add hotel rooms quickly, and it was implemented on a large scale. Today, I can say from our experience that there is indeed an advantage in time, but not in cost. Building a new hotel would not have cost more than converting this building into a hotel. The conversion cost about NIS 45-50 million, and had we built it from scratch, it would have cost about the same. On the other hand, the fact that the building existed made construction very difficult, with many limitations, and expensive. I built the Dan Eilat Hotel from scratch 25 year ago, and it was easier to build than this one."

What is happening in this context around the world?

"Conversion of buildings is an essential process, because the center of gravity in tourism is moving to town centers. Conversion of old buildings to new uses is therefor very suitable for tourism. Banks, for example, were located in European city centers, and the large bank buildings have all now become less relevant. A bank can now be in Ramat Gan or Petah Tikva, and no longer has to be on Rothschild Blvd., while Amidar left the Tel Aviv center and moved all of its offices to Holon. I also assume that the rent they get from this building is covering all of the rent it pays in Holon and more on top of that."

The hotel is not near the sea, nor is it in the boutique hotels area on Rothschild Blvd. There is a hotel in the Azrieli Towers less than one kilometer away from you. Who will go to you?

"Were there an algorithm you could put data into about what people want within a one-kilometer radius of a hotel in order to find an optimal location, the algorithm would give you this place. We are a few meters away from a hospital, a courthouse, a military headquarters, a cultural center with a museum and an opera house, and hundreds of thousands of square meters of offices, with very few hotels. There is a leisure area only a 10-minute walk away, so the location is ideal. We have an agreement with the opera to host artists. For example, I know that a patient from overseas who came for treatment to the Tel Aviv Sourasky Medical Center stayed with us for two weeks. The beach used to be the main attraction, but the main attraction now is the life in the city."

"Don't call us boutique"

So what is the difference between your hotel and boutique hotels on Rothschild Blvd.?

"Just don't call us boutique. A boutique hotel usually has less than 60-70 rooms. Treatment there is personal, and it is supposed to offer a relatively high level of rooms, even if they are not large. Today, however, they call a hotel boutique even if it is squeezed between two pictures and has bad food, non-functioning air-conditioning, and cheap towels, and that is nonsense. Unfortunately, many such hotels call themselves boutique just because they are small."

If you are not boutique, what are you?

"There is a new generation now that was born in a technological world and does not use a travel agent to order a flight or a hotel. It is all done with an app. We are aiming at those people. Things that seemed unthinkable three years ago are now taken for granted, for example autonomous cars, which used to be something in science fiction. Now, it is clear that in a few years, we will sit autonomous cars without a driver, so what is special about checking into a hotel by app? When I stayed in a skiing hotel abroad a few years ago, I entered the hotel and asked the reception manager to order me coffee. She said she would, prepared it herself, and served it to me. In the traditional hotels of yesteryear, if coffee was spilled in the lobby, the person responsible for the lobby would call maintenance, maintenance called the hotel cleaning department, and the cleaning department sent a cleaner. A chain of telephone calls was needed to get to the necessary function.

"With us, it is the opposite. When the manager served me coffee in the hotel abroad, I realized the power of a team in which everyone is responsible for everything. The person who does check-in knows how to prepare a room, fix coffee or a cocktail, prepare food, and clean.

"In the hotel aspect, we have gotten rid of everything that is unnecessary and all the superfluous decorations. There is no bellboy and no reception. We have transferred to the guests all of the actions that they can do themselves with an app. The new generation does not want a large room; it wants a comfortable bed and a good shower. It does not use the television, but it can hook up to television from an app, and even control lighting in the room and choose whether it will be pink, blue, yellow, or green. The menu is on the app, the hotel is meatless, and there is no payment in cash anywhere in the hotel, even for a cup of coffee."

There is no check-in or telephones and it is all technology. What about human contact and communicating with people??

"On the one hand, we have gotten rid of unnecessary jobs, but on the other hand, we have created new jobs that traditional hotels do not have, such as a content manager, who knows everything happening in town, from parties for gays to plays at the Habima Theater, and he or she briefs the other employees. It is true that the guest hooks up to the hotel's content and sees this content on his device, but the content manager circulates among the guests in the shared spaces, drinks beer with them if they want him or her to, and tells them what is going on in town.

Is there a community in the hotel?

"There is a community in the hotel, even if it is temporary. The hotel's actual target community is people who want a community, company, but want the high level of a hotel, rather than staying in hostels. Link is the connection between the guest and the city. When people come to a hotel, they are alone. A lot of people want to be alone, but alone with people next to them. That is the difference between what is called a boutique hotel and this hotel. There are almost no shared spaces in a boutique hotel. Here, the key is shared spaces. Guests can choose whether to work on their laptops in the privacy of their rooms or in the shared space on the bottom floor of the hotel, where there is a café and long tables."

Are you looking for buildings for more hotels in Israel or overseas?

"Dan Hotels have no overseas hotels other than one in Bangalore in India. We are always looking for good lots in Tel Aviv, but my real ambition is to open a hotel that is an exact copy of this hotel in Europe. Where effort and investment are concerned, building one hotel in Israel is like building four hotels in Europe."

The Federmann family has wanted to expand the Dan Accadia Hotel in Herzliya from 300 to 1,350 rooms for many years, and got support for it from then-Herzliya Mayor Yael German. The plan was advanced and deposited for objections. In the last elections, however, current Mayor Moshe Fadlon was elected and reversed the municipality's stance to opposing the expansion. The legal proceedings in the matter reached the High Court of Justice, which recently approved the plan. Federmann wonders what developers can do when they are given a promise by the authorities and the promise becomes worthless after the elections, but refused to say whether and when he would take action to carry out the plan.

How do you feel as a father?

"I'm very doubtful about the opportunity to do something in cooperation with the younger generation, and the truth is that I am proud that I have managed to understand what they are thinking, cooperate closely with my son, Ron, and contribute my experience to him. I have no doubt that he will do the next project by himself."

Published by Globes, Israel business news - en.globes.co.il - on October 23, 2018

© Copyright of Globes Publisher Itonut (1983) Ltd. 2018

Ami Federmann Photo: Eyal Izhar
Ami Federmann Photo: Eyal Izhar
Twitter Facebook Linkedin RSS Newsletters גלובס Israel Business Conference 2018