Pai Siam: Can the Hotel Layer Stabilize Before Mevasseret Opens
Pai Siam's hotel layer in 2025 looks less like a deep pricing problem and more like an operating system that lost occupancy, visibility, and continuity. That matters now because Mevasseret is underwritten on a far richer hotel model, so before it opens the real question is whether the current hotels can stop behaving like an emergency layer.
The main article framed Pai Siam primarily through its development, appraisal, and financing story. This follow-up isolates only the hotel layer that already operates, or is supposed to hold the system until Mevasseret opens, and asks whether it can stop being a source of operating noise before the next flagship asset enters service.
The more reasonable reading from the filings is a weak hotel layer, but not one that is broken at the room-price level. In 2025, average occupancy at the two active Jerusalem Ibis hotels fell to 41.6% from 52.2% in 2024, and EBITDA at the active hotels turned negative NIS 2.4 million from positive EBITDA of NIS 1.6 million a year earlier. But at the same time, ADR recovered to NIS 467 per room, almost back to NIS 476 in 2023 and well above NIS 392 in 2024. That does not read like a product that completely lost pricing power. It reads like a system selling too few nights, with weak booking visibility and very high exposure to shocks.
That gap matters because Mevasseret is not just another Ibis. According to the latest update in the annual report, the project was expanded to 346 rooms, is branded as a Pullman at a 5-star level, and includes spa, conference, and large public areas. The appraisal already assumes a completely different hotel economy: a 4-year ramp, room pricing of NIS 1,350 after ramp-up, 70% occupancy, and food, beverage, and other revenue equal to 38% of room revenue. So the near-term question is not whether the current hotels can prove Pullman economics. It is whether they can return to basic operating continuity without another round of emergency closures.
Bottom line: yes, the hotel layer can stabilize before Mevasseret opens. No, the annual report does not show that stabilization has already started. What still has to be repaired is occupancy, booking visibility, and the ability to stay open. The high-profit question comes only after that.
The Price Held, the Nights Did Not
This is the most important chart in the piece. A reader looking only at the negative EBITDA or at the post-balance-sheet closures could conclude that the operating problem runs much deeper, maybe even that the hotels no longer know how to sell their product. The numbers do not support that. They support something narrower: price per night recovered almost back to 2023 levels, while occupancy kept deteriorating.
The revenue line supports the same conclusion. Revenue at the active hotels fell to NIS 20.9 million in 2025 from NIS 25.8 million in 2024 and NIS 35.6 million in 2023. At the same time, the broader hotel segment, which includes assets under development, narrowed its loss to NIS 13.7 million from NIS 21.7 million. That distinction matters. The project layer is already softening the read on the segment as a whole, but the active hotels themselves have not yet returned to clean operating economics.
So the issue is not just a weak market. It is a weak market combined with a cost base that does not compress fast enough once sold room nights fall too far. That is why 2025 reads like an unpleasant bridge year: not a pricing disaster, yes a sharp utilization problem, and yes a move below break-even.
2025 Was No Longer Really Carried by Evacuees, and There Is No Booking Cushion
If 2024 was still a year in which evacuee occupancy helped hold part of the picture together, 2025 was already much less comfortable from that angle. Government payments for evacuees amounted to NIS 1.047 million out of NIS 20.872 million of hotel revenue, roughly 5% of the total. That is not zero, but it is not large enough to explain the story by itself.
The second point is even sharper. The company states explicitly that the nature of hotel operations allows bookings to be cancelled on short notice, and therefore it has no binding booking backlog. That is one of the most important lines in this entire report. Its meaning is simple: even if sentiment improves, there is no signed cushion that can carry revenue through the transition period. Stabilization, if it comes, will have to come through realized demand, not through a locked order book.
That chart adds another layer. In 2025, room revenue returned to 77.5% of the mix, versus 65.9% in 2024. At first glance that could look like a quality improvement. In practice, it mostly reflects the fact that food and beverage revenue almost halved, down to NIS 4.7 million from NIS 8.8 million. So even if room pricing held, the hotels lost supporting revenue streams and did not offset that through occupancy.
There is also no easy comfort on the cost side. Accor waived fees through the end of September 2024 during the war period, and after that the fees were set only as a percentage of bookings that come through Accor systems. In other words, even after the arrangement became more flexible, the active hotels still ended 2025 with negative EBITDA. That suggests the weakness is not a technical issue around one small fixed fee or brand charge. It is a deeper issue of demand and operating continuity.
Port Tower Weakens the Full-Collapse Reading
One intuitive reaction to the annual report is that the whole hotel layer must be broken. Port Tower is the most important counterweight to that view. Pai Siam holds 50% of the asset through Tzafon Hayarkon, and its share in the associate's results moved to a profit of NIS 589 thousand in 2025, versus a loss of NIS 2.114 million in 2024. That is not large enough to rescue the hotel segment. It is large enough to show that not every hotel asset in the system is producing the same weak economics.
| Layer | What is disclosed now | How it should be read |
|---|---|---|
| Jerusalem Ibis hotels | NIS 20.9 million of revenue, 41.6% occupancy, NIS 467 ADR, and negative EBITDA of NIS 2.4 million | The problem is utilization and continuity, not necessarily a pricing collapse |
| Port Tower Tel Aviv | 151 rooms and a NIS 589 thousand positive contribution to Pai Siam's share in 2025 | There is at least one asset showing that low-single-digit positive economics are still possible |
| After the balance sheet date | Ibis Styles closed, Ibis City Center was expected to close within days, and Port Tower also closed | 2025 does not yet prove that stabilization has started, because 2026 opened from another emergency footing |
That is exactly the difference between weak and broken. Port Tower does not save the thesis, but it does weaken the argument that the problem is a hotel economy that simply does not work by nature. If the operating problem were equally structural across the board, it would be hard to explain why the associate contribution turned positive in 2025 of all years.
At the same time, the report itself does not allow the reader to lean too hard on that profit. After the balance sheet date, Port Tower also closed. So the correct read is not that the layer is already out of the crisis. It is that the layer is not devoid of operating value, even if it still lacks continuity.
Mevasseret Is Not a Linear Extension of the Ibis Hotels
This is the most important point for anyone trying to understand whether the current layer is really enough until Mevasseret opens. The answer is that Mevasseret sits on a different, larger, and richer hotel economy.
According to the annual report, the Mevasseret hotel was expanded to 346 rooms, most of the structural work has been completed, the interior works are at an advanced stage, and the group estimates construction completion during the first quarter of 2027. At the same time, in an addendum signed with Accor on March 6, 2026, the expected opening was pushed out to December 31, 2027, and the room count was updated to the latest room configuration.
The appraisal is not presenting just another Jerusalem hotel. It presents an asset based on a 4-year ramp, 346 rooms, room pricing of NIS 1,350 after ramp-up, 70% occupancy, and food, beverage, and other income equal to 38% of room revenue. It also assumes operating expenses equal to 60% of turnover before the equipment renewal fund and management charges, and an operating profit of NIS 47.2 million in year four.
That chart explains why it is wrong to ask the Ibis hotels to prove Mevasseret one for one. Mevasseret is meant to open at a higher price point, with richer ancillary revenue, and on a much larger scale. So the active hotels of 2025 are not the direct value model for Mevasseret. They are only a basic credibility test: can Pai Siam stabilize an active hotel layer enough to reach the next opening without another cycle of closures, forced leave, and missing visibility.
That leads to a more precise answer to this continuation question. The hotel layer does not need to become a major profit engine before Mevasseret opens. It does need to stop signaling emergency mode. If the two Jerusalem hotels and Port Tower return to operating continuity, if occupancy climbs above the 41.6% trough, and if EBITDA returns at least to break-even or a little above it, that would already be enough for the market to stop reading the active layer as a bottomless drag.
The strongest counter-thesis is obvious. One can argue that the lack of a binding booking backlog, the post-balance-sheet closures, and the huge gap between 41.6% occupancy today and 70% at Mevasseret are evidence that the problem is deeper than a temporary shock. That is a serious argument, and it is exactly why it would be wrong to claim that stabilization is already here. But the filings do not support the opposite extreme either, as if the entire hotel layer has lost the ability to generate reasonable economics. ADR, Port Tower, and the relatively low evacuee share in 2025 all point to a more nuanced picture.
That is why the next 2-4 quarters are not really about a return to 2023. The test is more practical than that: reopening, continuity, an occupancy recovery that does not lean on evacuees, and proof that the current hotels stop eroding the quality read on the company just as Mevasseret is supposed to move from appraisal to operation.
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