Dan Hotels: Eilat Funds The Group While Jerusalem And Tel Aviv Drag
The main article identified the margin squeeze. This follow-up shows where it sits: Eilat generated 73% of hotel EBITDA, while Jerusalem and Tel Aviv together produced negative EBITDA on almost the same revenue weight.
Where The Profit Really Sits
The main article already established that Dan Hotels returned to revenue growth without a real earnings recovery. This follow-up isolates where that margin problem actually sits. The answer is sharp: in 2025 Eilat was not just the strongest region in the portfolio. It was the earnings layer holding up the hotel business, while Jerusalem and Tel Aviv stayed in negative territory.
It is worth being precise about what "Eilat funds the group" means here. This is an EBITDA description, not a cash-flow one. Dan's three Eilat hotels generated NIS 423.8 million of revenue and NIS 104.2 million of EBITDA in 2025. That was 36.9% of hotel revenue, but 73.1% of hotel EBITDA. Jerusalem and Tel Aviv together generated NIS 421.3 million of revenue, almost the same revenue weight, but combined negative EBITDA of NIS 8.0 million. In other words, almost the same revenue mass produced the opposite economics.
The same sharpness shows up in concentration. Four hotels, each contributing more than 10% of total company EBITDA, generated NIS 118.8 million of EBITDA, 83.3% of hotel EBITDA, versus 56.4% in 2024. At the same time, the other 13 hotels generated only NIS 23.8 million of EBITDA, but absorbed NIS 117.0 million of CAPEX versus just NIS 24.4 million in the four strongest hotels. So the problem is not only that most of the profit sits in very few assets. It is also that most of the capital bill sits outside the assets that are carrying earnings.
| Group | Number of hotels | 2025 revenue | 2025 EBITDA | 2025 CAPEX | What it means |
|---|---|---|---|---|---|
| Hotels where each property contributes more than 10% of company EBITDA | 4 | NIS 453.0 million | NIS 118.8 million | NIS 24.4 million | Most of the earnings sit in a relatively narrow layer |
| Remaining hotels | 13 | NIS 694.4 million | NIS 23.8 million | NIS 117.0 million | Most of the investment, very little EBITDA |
That chart is the core of the story. Eilat is not just the most profitable region. It is the only region generating a real earnings cushion. Jerusalem and Tel Aviv, by contrast, are no longer a small distortion. Together they represent 36.7% of hotel revenue, yet they did not merely fail to add profit. They subtracted from it.
Jerusalem And Tel Aviv Did Not Weaken In The Same Way
The headline "the city hotels are weak" is true, but too flat. Jerusalem and Tel Aviv are not suffering from exactly the same problem, and that matters because the recovery path is not identical either.
Jerusalem shows the more interesting contradiction. Revenue was broadly stable, rising to NIS 241.7 million from NIS 239.6 million, and REVPAR even improved to NIS 398 from NIS 366, but occupancy fell to 38% from 51%, and EBITDA flipped to negative NIS 2.1 million from positive NIS 24.5 million in 2024. So even stronger revenue per available room was not enough to offset the lost volume and the city's cost base.
Tel Aviv is simpler, and weaker. Revenue fell to NIS 179.6 million from NIS 194.7 million, REVPAR slipped to NIS 418 from NIS 425, occupancy fell to 51% from 59%, and EBITDA moved to negative NIS 5.8 million from positive NIS 10.5 million in 2024. Here both demand and the economic outcome moved in the wrong direction.
Put together, the two cities create the real yellow flag. In 2024 they generated NIS 35.1 million of EBITDA. In 2025 they fell to negative NIS 8.0 million. That is a swing of more than NIS 43 million in one year, right in the urban core of the portfolio.
What really matters here is that the cities are not only weak versus Eilat. They are weak versus their own 2024 base, a year that was not a clean normalization year to begin with. That matters because a move back from negative territory to the 2024 level still would not mean the portfolio is fully balanced. It would only mean the cities had stopped eating into the earnings generated elsewhere in the chain.
What Needs To Happen For The Mix To Rebalance
The first recovery threshold is the modest one: Jerusalem and Tel Aviv need to stop being negative. That requires roughly NIS 8 million of combined EBITDA improvement just to get back to zero. But that is not a real rebalance. It is only damage control.
The second threshold is the more meaningful operating one: the cities need to get back at least to their 2024 EBITDA base. That requires about NIS 43.1 million of improvement versus 2025. Even here one caveat matters. In 2024 the hotel segment still had one material customer, the Ministry of Tourism, which represented 25% of segment revenue. So even 2024 is not a clean base of normal demand. It is only a partial minimum threshold.
Demand mix matters here as well. In 2025 the group no longer had a material customer, and the mix of overnight stays in the chain's Israeli hotels improved versus 2024: the Israeli share fell to 82% from 92%, while North America, Europe, and other countries together rose to 18% from 8%. But that is still far below 2023, when foreign tourists were 36% of all overnight stays. This is an indication, not full proof, because the filing does not disclose city-level guest mix. Still, the combination of a still-low foreign-tourist share and the regional profitability map suggests that the inbound recovery is not yet broad enough to rebalance the city hotels.
That is also why the fourth-quarter improvement is not enough on its own. In the fourth quarter of 2025 hotel EBITDA rose to NIS 53.4 million from NIS 19.1 million, and hotel revenue rose to NIS 311.6 million from NIS 244.1 million. The company attributes the revenue increase mainly to higher tourist overnight stays in the group hotels. That is a positive datapoint. But the full-year regional disclosure shows that the improvement still has not filtered through at a level that returns the cities to profitability, let alone rebalances the full portfolio.
Put more simply, Dan does not need one more strong Eilat year. It needs the city portfolio to stop consuming what Eilat generates.
Conclusion
This follow-up frames Dan less as one uniform hotel chain and more as a split portfolio of very strong hotels against hotels that are recovering too slowly. Eilat is not just a bright spot. In 2025 it was the earnings engine that effectively covered, at the EBITDA level, for the weakness in Jerusalem and Tel Aviv.
The most important number here is not only Eilat's NIS 104.2 million of EBITDA. It is the fact that almost the same revenue weight in the cities produced the opposite result. So the key question for 2026 is not simply whether revenue keeps rising. It is whether Jerusalem and Tel Aviv can get back at least into positive territory without the segment leaning again on an abnormal anchor customer.
If this has to be reduced to one line, it is this: Dan's mix will not rebalance when the company adds more revenue. It will rebalance only when the city hotels stop absorbing most of the relief that Eilat produces.
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