New crop of Tel Aviv boutique hotels cater to evolving clientele

By Danny King
Alma Hotel Tel Aviv When it comes to the cosmopolitan center of a country that's merely double the size of Los Angeles County, smaller has apparently become better.

Tel Aviv, whose lodging industry has long been marked by a wall of large, branded hotels along the Mediterranean, has more recently experienced an influx of small, independent boutique hotels catering to the growing number of younger tourists and business professionals visiting Israel.

During the past three years, about 20 boutique hotels in the 10- to 60-room range have opened on or near Tel Aviv's Rothschild Boulevard in the city's center, spurring last month's launch of the website TelAvivBoutiqueHotels.com.

Many of these design-oriented hotels were converted from apartment buildings in Tel Aviv's White City, a group of about 4,000 buildings built in the Bauhaus style by German-Jewish architects in the 1930s.

Some of the hotels go a step further, with nods to Jewish creative history. The 54-room Diaghilev, which opened in 2010, is named for Russian art critic Sergei Diaghilev, while the 23-room Berdichevsky, which opened last June, is named for Ukrainian-born Hebrew writer Micha Berdichevsky.

The hotels reflect a shift in clientele in recent years. While about 30% of tourists visit Israel for religious purposes, the country's growing technology industry has boosted business travel and shifted the demographic toward a younger group that's drawn to the Tel Aviv nightlife.

Rothschild Hotel Tel Aviv"The overwhelming majority of [boutique hotel] guests are young professionals from overseas," said Ben Julius, founder of TelAvivBoutiqueHotels.com. "Tel Aviv has an economy dominated by high-tech and not the typical corporate business, so there is less obligation toward the chain hotels."

Additionally, the city has become a favorite destination for gay and lesbian travelers. Tel Aviv, in a poll on GayCities.com, got the 2011 award for Best Gay City, easily trumping New York, Toronto and Sao Paulo, Brazil. And late last month, the Visit Tel Aviv/Jaffa website debuted a "Gay Vibe" section to capitalize on Tel Aviv's rising popularity among LGBT travelers.

"In recent years, Tel Aviv has become more than just about great beaches," said Galit Dohan, general manager of the 15-room Alma Hotel & Lounge, which opened last November and has a clientele that's about 60% business and 40% leisure. "Both tourists and local travelers are looking for the personal touch and service."

The newer hotels are a far cry from the properties that have long defined the hotel industry in Tel Aviv, whose population of some 400,000 is about half that of Jerusalem 40 miles to the southeast. The city's five largest hotels, which range from 342 to 583 rooms, are all along the city's coast, and just one, the 555-room InterContinental David Tel Aviv, was built after 1986.
 
Alma Hotel Tel Aviv"It's so difficult to find development sites for larger hotels, so there's a strong tendency for newbuilds based on smaller scales and models," said Israel-based hospitality consultant Ronit Copeland. "It does create an opportunity to convert historic buildings with an interesting story to tell."

Either way, Tel Aviv hotel-room demand is on the rise. The city's RevPAR for 2012 rose 4.5% from a year earlier, with average room rates climbing 7.5%, to 892 shekels ($239), according to STR Global.

In fact, Israel, which during the past decade has poured money into both infrastructure such as highway improvements and beautification efforts along the Mediterranean, attracted a record 3.5 million travelers in 2012, up 5% from 2011, according to the Israel Ministry of Tourism.

And those numbers likely would have been far better had Israel and Gaza not exchanged rocket strikes last November. That month, Tel Aviv recorded an 18% RevPAR plunge from a year earlier.

Israel tourism advocates are hoping such military skirmishes don't interrupt the momentum of growing visitor counts to both the country and to Tel Aviv, which is looking to grow its tech-oriented quotient by installing WiFi citywide by this fall. Israel's tourism ministry has set a goal to boost its annual tourism by more than 40%, to about 5 million inbound travelers by 2015.

Rothschild Hotel Tel AvivWith that in mind, smaller and larger hoteliers alike are counting on more demand. By year's end, the 220-room Kempinski Tel Aviv and the 250-room Herods Herzliya, about 10 miles north of Tel Aviv, are scheduled to open, joining the 110-room Hotel Indigo Tel Aviv and 110-room Ritz-Carlton Herzliya Marina.

Meanwhile, Tel Aviv's new breed of boutique properties appears to be attracting enough business and leisure travelers to keep these small hotels well occupied and their rates high. Late February weekend room rates at the Diaghelev ranged from $358 to $960, while the 25-room Rothschild Hotel, which opened in November, is charging from $210 to $720 a night for its rooms.

"With this new wave of savvy travelers arriving in Tel Aviv comes the need for more city-focused boutique properties," said Ross Belfer, a spokesman for the Israel Ministry of Tourism. "The neighborhoods around Rothschild Boulevard, Florentin, Neve Tzedek and even Jaffa are becoming increasingly desirable and the hotspot for arts, culture and nightlife in the city."
Follow Danny King on Twitter @dktravelweekly. 
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