Fattal continues fast-paced growth in Europe

AMSTERDAM – Owner-operator Fattal Hotel Group, Tel Aviv, has entered into a purchase agreement reportedly for close to €400 million to acquire the Zien Group and its 12 hotels (1,522 rooms) in the Netherlands from affiliates of KSL Capital Partners and its partner, Garden Capital Group, whose shareholders founded the business. The transaction is scheduled to close in the second quarter of 2024.

The properties will be added to Fattal’s European portfolio, Leonardo Hotels, increasing the brand's hotel count in the Benelux to 28 hotels and its room count in the Netherlands and Belgium to 4,161. The deal adds five hotels in Amsterdam, including Eden Hotel, The Lancaster Hotel, and The Manor, and several in major cities such as Rotterdam, The Hague, Eindhoven, Groningen, and Maastricht.

Ronen Nissenbaum, CEO of Leonardo Hotels in UK, Ireland, Benelux, Spain, and Portugal, told Hotel Investment Today that the competitive deal started taking shape more than six months ago with the jewel in the deal crown being The Eden in a prime Amsterdam location, especially considering the recently announced moratorium on new development there.

Nissenbaum added that with Fattal/Leonardo already having 18 hotels in the Benelux, the deal made great sense synergy wise. “It also gives us dots on the map where we didn’t have hotels in The Netherlands,” he said. “It makes us a much more significant player in the market and makes us look different to corporate accounts.”

North American development would be my dream and I’ve been working on a few deals, but they are far from being close. I’m hoping that in the coming 12 months we will have good news.

Ronen Nissenbaum

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Nissenbaum added that several of the new properties will get significant CapEx investment above and beyond the purchase price. “Our hotels are already performing very strong in the market,” he said. “When we looked at the portfolio, we thought we could do better on the top line and profitability before even spending the money to reposition and rebrand the properties. We also operate similarly as organizations and have no doubt we will find the synergies, too.”

Nissenbaum further stated that more deals for the group are coming within weeks. Single asset deals have already been signed in Spain and Ireland and should close shortly. Another couple of deals in Spain are expected to be signed soon, too, he added.

In total, within the last two-plus years through two fund raises of about $400 million each, Fattal has added about $1.5 billion in asset value to its portfolio in Europe, growing from 220 hotels to now more than 300 (50,000-plus rooms) in 21 countries, including some 20 hotels having come online in the last six months.

Nissenbaum said he is comfortable with managing the growth, particularly because the properties are spread out across three regions. “We have a strong and experienced team used to managing exceptional growth and providing good returns,” he said. “The regional expertise we have makes us comfortable with our size.”

Looking further afield, Nissenbaum said Fattal will continue to grow in Europe, including France and maybe Luxembourg, and he has his eyes on the U.S. with feelers out in markets like New York City and Miami. “North American development would be my dream and I’ve been working on a few deals, but they are far from being close,” he said. “I’m hoping that in the coming 12 months we will have good news.”

Back to the KSL deal, Zien Group’s portfolio was assembled by the Dijkstra family over 75 years. KSL acquired a majority interest in the business in December 2021. Leonardo said that through agreed refurbishments and operational initiatives under CEO Billy Skelli-Cohen, the group’s performance has steadily improved and now well surpasses pre-COVID performance.