Israeli real estate and holding company Azrieli Group has decided to acquire the Mount Zion Hotel in Jerusalem for NIS 275 million. The company plans to invest NIS 500 million more in expanding and renovating the hotel.
The Mount Zion Hotel is located on the outskirts of the Old City in a historic building constructed as a hospital in 1882. According to Michal Raz Chaimovitch at Globes, “the Israel Lands Authority bought the property in 1972, and sold it to a developer who planned to demolish the building, and did in fact partially demolish it. A campaign against the demolition of a building designated for preservation was successful, however, and it was converted into a hotel. The hotel was renovated in 2006, and currently has 137 rooms, plus conference and event halls.”
Raz-Chaimovitch also explains that the deal includes 22,400 square meters of above-ground construction rights as well as rights to construction of a 15,200-square meter underground parking lot. Azrieli Group plans to continue operating the hotel in its current format, while renovating it and using the additional construction rights to expand it to 400 rooms and build an underground parking lot with 380 parking spaces. Renovations will include restoration and preservation of some of the existing buildings on the site. Azrieli plans to manage the hotel itself.
Israel currently has 431 hotels and approximately 55,735 hotel rooms, 2% more than last year.
“The hotel sector interfaces the group’s core income-producing real estate activity,” Azrieli Group says. “Among other things, it will enable Azrieli Group to take advantage of its unique development capabilities, and to widen the mix of its activity for the creation of a new growth engine in a large and important field.”
Last year, Azrieli bought a lot in Modi’in, on which it will build a project containing an 84-room boutique hotel that will have the great advantage of being close to Ben Gurion Airport, as will other hotels slated for construction in the area. Azrieli is also planning the construction of a 91-storey spiral tower in Tel Aviv, with rights for 250 hotel rooms on the upper floors.
Following new legislation and a renewed push to create more tourist accommodations in Israel, several real estate groups are buying hotels, converting existing buildings to hotels, or constructing hotels from scratch.