Tel Aviv-based Fattal Group continues its expansion in Europe with the announced €165 million (US$168 million) deal to acquire from KKR and Dunas Capital six properties operated under the Alua Hotels & Resorts chain on the islands of Ibiza and Mallorca in Spain. The acquisition of 1,119 rooms marks the first deal with new joint venture partners Harel Insurance Partnership, Menorah Mivtachim, and Leumi Partners.
The partnership will finance the transaction from its own resources, in addition to a loan of approximately €95 million from a banking entity.
After a €20 million investment in the new portfolio, the properties are expected to be rebranded and managed under Fattal’s European brands such as Leonardo, Leonardo Royal and NYX.
“We have been working on this for the past six months. If all goes well, we close in September, shut down at the end of the season (November), renovate and reopen for the spring 2023,” Ronen Nissenbaum, CEO of Fattal Hotels in the UK, The Netherlands, and Spain, told HOTELS on Monday.
In April, Fattal Europe raised €336 million for the purchase of international hotels as part of a plan to expand its portfolio and brand presence internationally, giving it the ability to undertake up to €1 billion of transactions. Menora, Harel and Fattal each have a €100 million stake and Leumi has a minority stake, according to Nissenbaum. Its property expansion program is managed by Fattal and its new partners. This is the second partnership raised by Fattal after the first fund, established back in 2007, with institutional bodies as well. Today, Fattal has some 44,000 rooms in its system and this deal grows its Spanish portfolio to 16 properties.
“We envisage using up the close to €1 billion fund by end of 2022. Europe is the focus, but I am specifically responsible to find opportunities in the United States,” Nissenbaum added.
The purchased hotels – Alua Hawaii Ibiza (209 rooms), Alua Miami Ibiza (360 rooms), Aluasun Miami Ibiza apartment hotel (82 apartments), Alua Hawaii Mallorca & Suites (230 rooms and 68 Hawaii Mallorca Suites), and Alua Palmanova Bay (170 rooms) – have in recent years benefitted from more than €14 million of investment. KKR acquired the portfolio in 2017.
Generally speaking, Nissenbaum said Fattal has had two hotels in this specific fund portfolio since April, and they are performing well. “The rest of our hotels (230 hotels) are performing very well,” he said. “Revenue wise, our second quarter is forecasted (not official as we report in August to the stock exchange) with revenues that are higher than the second quarter of 2019. Most of our hotels are either close to, at, or higher than the peak occupancies we experienced in 2019. ADR is higher in almost all of our locations. On the negative side, operational costs are higher with energy costs and like for like labor increases. Having said that, due to labor shortages, our overall labor cost is lower. Inflationary cost of F&B and cost of goods is also putting pressure, but we are all dealing with the same issues.”