Jaffa becomes focus for new boutique hotels

Isrotel hotel renovation Jaffa Photo: Yossi Cohen

Tourism in Tel Aviv-Jaffa is moving from the seafront towards more historic areas.

Jerusalem Boulevard in Jaffa is changing. With massive encouragement for developers from the hotel-hungry Tel Aviv Municipality and major progress in laying the tracks for the Tel Aviv light rail, more and more developers are taking a good look at the hotel business. Sources inform "Globes" that the philatelic service building at 12 Jerusalem Boulevard, owned by Israel Postal Company, will become a boutique hotel. Isrotel is building its own boutique hotel nearby.

"In the entire city of Tel Aviv-Jaffa, the place most desired by tourists is Jaffa," says Eytan Schwartz, CEO of the Association for Tel Aviv-Jaffa Tourism in the Tel Aviv Municipality. He told "Globes," "Jaffa is an important anchor in the master plan for tourism that the municipality is now preparing, among other things because of its weekend entertainment. Most entertainment places in Tel Aviv are closed on the Sabbath, while entire areas in Jaffa are open. Over the past three years, the strength of the boutique hotels in Jaffa has increased, because tourism is moving from the sea towards the historic areas. Jaffa itself has become a focus of tourism, which it never was before."

At the same time, Schwartz says that the municipality is having difficulty providing enough incentives for developers to build cheap hotels. "We are working very hard to fill the need for cheap rooms. Almost all the rooms in the city are expensive. A city needs both cheap overnight options of €10 a night and options of €80 a night. There is a shortage of such solutions everywhere in Israel, but the shortage in Tel Aviv is stark. The market dictates a very high level of prices. In the master plan, we prioritize small rooms, but small rooms aren't necessarily cheap rooms, so we're having a very hard time," he says.

Schwartz nevertheless hopes that putting Tel Aviv-Jaffa on the government incentives map will bolster all types of hotel development in the city: "The Ministry of Tourism approved adding Tel Aviv to the plan granting the developer a 10% rebate of the cost of converting an office room to a hotel room, in the realization that this is the fastest way of adding hotel rooms. We hope it helps. It can be translated into millions of shekels for developers converting office buildings into hotels. In Jaffa, especially on Jerusalem Boulevard, there are architectural treasures that have been waiting for 100 years for this time, which has now come."

It also appears that the progress in laying the tracks for the light rail, scheduled to begin operating in 2021, is making a significant contribution to the interest in hotels, especially in the area of Jerusalem Boulevard in Jaffa, where the light rail tracks pass through. Tel Aviv District Planning and Building Commission chairperson Daniela Posek says that progress in laying the tracks, including on Jerusalem Boulevard, is something that beckons to developers. "Access to the Red Line, already under construction, the historical and architectural values, and the proximity to the flea market, the beach, Jaffa Port, and the Old City of Jaffa are making Jerusalem Boulevard into a major tourist focus. In the past, we saw mainly hostels and low-rated hotels. In recent years, we see development of hotels and the entry of the major chains into this area."

A NIS 31 million deal

In recent days, Africa-Israel Hotels, owned by the Dayan family, signed a huge rental deal with Israel Postal Company. Estimates are that the company will invest NIS 20 million in converting the stamp service building on Jerusalem Boulevard into a hotel. Under the 23-year agreement, the hotel company will pay management of the postal company NIS 1.4 million in annual rent - a total of NIS 31 million. The building, marked for preservation, has four floors with 2,500 square meters of space. It was constructed during the British Mandate period and served as the postal company's stamp center until the 1990s.

The second floor of the building was later used as a stamp center museum and housed collections of stamps and short films. It was designed by architect Austen St. Barbe Harrison, who worked as chief architect in the British Mandate Department of Public Works. The building has European-style facades. Its ground floor is twice the normal height, and has large curved windows. The building's zoning classification has been "special" since 1997. A year ago, the postal company's management published an auction to rent it out. The Tel Aviv municipality made it clear to all potential bidders that any other use of the building would have to be of a public nature. The winning developer in the auction turned it down after reassessing the preservation costs. The auction was reopened three months ago, with the Dayan family coming out winner and signing a lease with the postal company. The Dayan family will renovate the building completely in accordance with the preservation restrictions applying to it.

A solution for the growing demand for hotels in the city

The Dayan family has been reinforcing its dominance in the hotel sphere since 2016. In July 2017, the family completed its acquisition of Africa-Israel Hotels in two payments totaling NIS 908 million. The hotel on Jerusalem Boulevard will become the family's second boutique hotel in Tel Aviv, after it inaugurated the Poli House Tel Aviv boutique hotel at the corner of Allenby Street and Nahalat Binyamin Street a year ago. The deal was led by Itzik Dayan on behalf of his family. Adv. Tal Benenson and Adv. Yuval Tilinger represented the Dayan family in the deal. Postal company VP logistics Dani Botvin led the deal for his company, while the Steinmetz, Haring, Gurman & Co. law firm represented the company.

At the same time, a plan for construction of a boutique hotel at 8 Jerusalem Boulevard was deposited last Wednesday. The Isrotel chain initiated the plan, after buying half of the Shekem building, also marked for preservation, two years ago. The Tel Aviv District Planning and Building Commission, under Posek's leadership, decided to deposit the plan for construction of a boutique hotel with 140 rooms and commerce on the street-level floor. The plan originally included only 120 rooms, but the plan allows Isrotel to transfer its rights to 720 square meters to the building at 8 Jerusalem Boulevard, thereby enlarging the hotel to 140 rooms. The rights were transferred from another building marked for preservation at 26 Rosh Pina Street.

The building at 8 Jerusalem Boulevard also has a respectable history. It previously served as headquarters for the Lod District during the British Mandate period. It was then abandoned and given to Shekem in the 1950s. The plan adds four floors, a partial floor, and a floor for a swimming pool to the existing building, thereby facilitating its renovation and use as a hotel. The hotel will have 5,500 square meters of main space, plus underground space. The District Planning and Building Commission said, "The plan contributes to a mixture of uses along Jerusalem Boulevard by requiring use as a hotel and commercial use, which provides a solution to the growing demand for hotels in the city." The hotel to be established by the Dayan family at 12 Jerusalem Boulevard will be very close to the Isrotel hotel at 8 Jerusalem Boulevard; between them at 10 Jerusalem Boulevard is a theater club.

The boom in boutique hotels in Tel Aviv has been taking place for several years. Up until now, many boutique hotels have been built in the city center, especially in the area of Rothschild Boulevard. At the same time, a number of boutique hotels were built in Jaffa itself, including the Setai Tel Aviv Hotel by the Nakash group built on the ruins of the Kishle jail near the Clock Tower, the Jaffa Hotel near Jaffa Port, and the Drisco Hotel in the American Colony.

"Safe to stroll in Jaffa at night"

Israel Hotel Association chairperson Jimmy Zohar believes that the two hotels on Jerusalem Boulevard in Jaffa are the first signs on the street. "Once upon a time, the only hotels in Tel Aviv were along the beach. In recent years, urbane Tel Aviv has become fashionable. Jaffa, which was thought to be neglected in recent years, has become a tourism pearl, as shown by the first boutique hotel - the Atlas chain's Market House Hotel, built near the flea market. It's happening because the open skies policy has put Tel Aviv in competition with cities in Europe. Tourists aren't looking only for the sea, and no one dreamed that the Carmel Market and the Levinsky Market would become pilgrimage sites for tourists. The same thing is true about Jaffa; in contrast with the past, it is now very safe to stroll there after dark," Zohar said.

At the same time, Zohar added that anyone looking for opportunities in Jaffa would find it necessary to put out quite a bit of money: "Prices have risen, and Jaffa is no longer cheap, but land prices there are cheaper than in Tel Aviv, and I believe that within five years, prices will catch up to the rest of the city."

Published by Globes, Israel business news - en.globes.co.il - on December 10, 2018

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

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Isrotel hotel renovation Jaffa Photo: Yossi Cohen
Isrotel hotel renovation Jaffa Photo: Yossi Cohen
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