Fattal Expands in Netherlands With 13 Hotels for €160m

Date: April 2018

Location: The Netherlands

Name: Apollo Hotels

No. of Keys: 1,938

Seller: European Hotel Management BV, whose co-founder is Bas Tolmeijer, and they opened their first hotel in Lelystad in 2006. The organisation’s subsidiary Wellness resort Thermae 2000 in Valkenburg will not be included in the transaction.

Buyer: Fattal Holdings confirmed that it was in talks to acquire a group of 13 hotels in The Netherlands for EUR160m.

The company, which recently saw a partial flotation in Israel, currently leases one hotel in Amsterdam and was in the process of building another.

In the Netherlands, Fattal has exclusive rights until 29 May to conduct due diligence and negotiate a final deal.

The company has 130 hotels in Europe (170 hotels, 33,000 rooms in 17 countries globally), of which it owns 50 in whole or in part, rents 76, and manages the rest.

Its largest concentration of hotels was in Germany, where it holds 60 hotels, followed by the UK where it has the operating platform for 42 hotels currently under the Jurys Inn flag.

The move was in line with the strategy outlined in Fattal’s IPO prospectus, in which it said it intended to “continue to develop in the hotel sector in Europe and to seek opportunities for acquisition, signing lease agreements or entering into management agreements” for business hotels at a level of three to four-plus stars in major cities throughout Western and Central Europe, especially in city centres and close to airports.

The group said that it would also look to strengthen the brands Leonardo, Nyx and Jurys in Europe.

In the Mediterranean, around Cyprus and Greece, the group said it planned to expand its holiday hotel business by entering into joint purchase agreements.

In contrast, the company said that would grow “more slowly and narrowly than in the past with respect to operations in Israel”, with a view to achieving “similar profitability rates” that characterised its operations in Europe.

Fattal entered the Tel Aviv stock exchange in February, listing 10% of its shares and giving it a total market value of NIS3.9bn (EUR890m). It was the largest company on the exchange’s Hotels and Tourism sub sector.

The group raised NIS500m through the offering, having cut the company value for the offering by 15% one week prior to the listing, a move attributed to general upheaval in the public markets.

Fattal’s owner, David Fattal, said: “I would like to thank our management team who have worked together with me in successfully growing the company from a single hotel in 1999 to become a European hotel empire and the largest hotel chain in Israel.

Commenting on the IPO, Russell Kett, chairman, HVS London, told Hotel Analyst: “An IPO in Israel allows Israeli investors the benefit of diversifying their own investment income, benefiting from earnings generated both within and outside Israel.

The funds released to Fattal through this IPO should enable the company to further diversify its interests to other European countries where its goal ought to be to seek out opportunities for improving its hotels’ bottom line earnings through economies of scale and increasing its top line through greater brand recognition.

This may lead the company to acquire single assets but, given its established operating models, the potential of acquiring portfolios either alone or as joint ventures should not be ruled out.”

HA Perspective [by Katherine Doggrell]: Last year’s deal alongside long-term partner Pandox, reminded the sector in Europe that Fattal has ambitions outside its domestic market, with the 2015 rebranding of a tranche Queens Moat Houses under the Leonardo brand not a one-off.

In the UK, eyes are on what will become of the Jurys Inn brand, with Pandox’s Anders Nissen leaving the decision to David Fattal (with, of course, some input from Nissen).

The IPO prospectus suggested that the Jurys name would live on, although, as Nissen has hinted to us in the past, possibly without the Inn – sets a confusing tone in that end of the market, you know.

Fattal used the prospectus to underline its commitment to geographical diversification, looking to spread the focus from Germany and the UK and this deal in The Netherlands should go some way to achieving that. So far the company is ticking off some of the most expensive and competitive territories in the region – it will need to maintain the innovation seen in the Jurys deal.

Price: €160m

Price per Key: €82,559

THPT Comment: They have been somewhat cagey as to who the seller of these 13 hotels are (We now knoe they are Apollo Hotels)…not sure why? good price per key…good analysis and insight from Hotel Analyst. The deal is due to be closed September 2018.

First Seen: Hotel Analyst