The list of wealthy foreigners invested in Israel was joined the other week by Michel Ohayon, who bought the Waldorf Astoria Hotel in Jerusalem for NIS 600 million.
Ohayon, who lives in Paris, may not be well known in Israel, but he spends a fair amount of his time here. After closing the hotel deal, for example, he went for a vacation in Eilat. The day the deal was signed, he relates, was also the wedding day of his son, one of five children, at the Binyanei Hauma concert hall and convention center in Jerusalem. The young couple intend to continue living in France, but they held their wedding in Israel. "Everyone has a longing for Jerusalem," says Ohayon. "Tel Aviv is an amazing city, but there are many like it around the world. No city has the historic value of Jerusalem."
Ohayon owns an international real estate empire specializing in prestige hotels and commercial centers. The Waldorf Astoria is his first deal in Israel, but several unsuccessful attempts here preceded it. There was, for example, a bid for the Savyonim shopping mall, and an attempt to buy four hotels from the Africa Israel group. The latter deal fell through in the end because of disagreement over price, but the hotels were eventually sold to the Dayan family at the same price as Ohayon had offered.
Ohayon says that he is very happy with the Waldorf Astoria deal, among other things because of the attraction of Jerusalem as a tourist destination for people of all religions.
Hoteliers in Israel complain that it's hard to make profits, and hard to attract people here. Do the high costs of operating hotels in Israel and the high room prices not deter you?
"Here in Eilat there are people who have come for a week's vacation, and who paid $500-600 for a package that includes flight and hotel. Is that expensive? I think that because of such low pricing, the standard of service is deteriorating, and restaurants are closing one after another. That's not good for the city."
So you don’t consider prices to be high here in comparison with Europe?
"If you want service and luxury, you have to pay for them. That's normal. In Israel, prices are half what they are in Paris. There, you pay €1,000 euro per night, and that's how it is everywhere in the world. Only in Israel do people not want to pay. It's not normal."
From a clothes shop to an empire
Ohayon, 56, was born in Casablanca, and emigrated as a child with his parents to Bordeaux. His parents wanted him to be a doctor, but he had been drawn to commerce, in which his family was engaged, since childhood. According to reports in the French press, in his twenties, after a short career as a lifeguard, he opened a clothes shop of the Daniel Hechter brand in Bordeaux's Mériadeck district.
Ohayon's business breakthrough came in the 1990s. According to reports in the French media, he took advantage of a local trough in real estate prices in Bordeaux (stemming from extensive compulsory purchases by the municipality) and in a leveraged deal bought a large building in the city center. The next stage was to persuade a major clothing chain to lease the building from him long term. After that move succeeded, he repeated it several times, with leading brands such as Celio, GAP, Zara and H&M as tenants.
Ohayon brought his real estate business together in a company called FIB (Financière Immobilière Bordelaise), and today the company holds properties all over France, from Paris to the Riviera, and in eight other countries. According to a Tribune report, Ohayon's business in Europe alone amounts to 400,000 square meters of space in 20 cities. Most of the properties, as mentioned, are prestige hotels and commercial centers, but Ohayon also has residential real estate. For example, he is reported to own 200 sheltered housing units in Marseille, and residential properties in Florida, including 88 units in a luxury project facing the sea. "As a former lifeguard," he has said in the past, "I always have a great yearning for the sea."
In recent years, he has become ranked as one of the wealthiest people in France, with personal worth estimated in the media at some €650 million.
Despite his group's international span, Ohayon has remained very loyal to Bordeaux. One of his flagship assets is the Intercontinental Bordeaux Le Grand Hôtel. He also owns a winery in the city, and a huge auditorium that took seven years to design and build, and that drew a great deal of criticism, among other things because the construction got into difficulties resulting in a change of contractor and legal battles. In that context, Ohayon said in an interview in France that he might have a thick skin but he did not forget mockery. "I'm prepared to accept criticism, but for me what matters is the bottom line," he said. In that same article, it was stated that Ohayon's business headquarters, which had been in Bordeaux, were transferred to Paris, among other things because "when we live in the provinces, we're a focus for criticism; when we're in Paris, we 'disappear' in the general hubbub."
Incidentally, in that interview Ohayon said he believed in God, and that his faith "entails a certain restraint, which is important that I should have." Without faith, he added, he feared he would be liable to degenerate into a life "like a bandit, like Al Capone."
"Whenever someone does something ambitious, there's criticism," he explains to "Globes G Magazine" concerning the Bordeaux auditorium. "The criticism was that the construction took too long, but there were seven years between the day of the deal and the opening day, when projects like that generally take fifteen years. It's the most competitive auditorium in all of Europe."
Between Versailles and Jerusalem
One of the assets Ohayon is most proud of is the Trianon Palace in Versailles, which for the past decade has been part of the Waldorf Astoria chain. This historic property was built in 1909, beside the Palace of Versailles, as a luxury hotel for Europe's aristocracy. The war that broke out a few years after it was inaugurated wrecked the plans for a few years, but the Treaty of Versailles, which marked the end of the First World War, was signed in the hotel on June 4, 1920. Today, it has 200 rooms, and boasts a restaurant with two Michelin stars under the direction of British chef Gordon Ramsay, and a 3,500 square meter spa.
The Trianon, says a source who knows Ohayon, is a good example of the way in which he runs his hotels business. "He is very focused on a well-to-do clientele and on the high end of the sector. A few years ago, he got rid of hotels he owned that were more basic and not prestigious."
The Waldorf Astoria in Jerusalem also has a long history. It was previously known as the Palace Hotel, and was built in 1929 by the Supreme Muslim Council, to a design by a Turkish architect. After it opened, it was considered the most luxurious hotel in the city, but it managed to operate as a hotel for only a few years, at the end of which it was commandeered by the British mandate authorities, which used it as an office building. After the State of Israel was founded, it housed the Ministry of Industry and Trade, until it was bought by the Regency group, owner of the Hyatt Hotel in Jerusalem, in the 1990s. In turn, Regency sold it to the Reichmann family of Canada for $21 million in 2005. The father of the family, Paul Reichmann, who died four years ago, invested some $150 million in turning the building, which has a preservation order on it, into the luxury hotel that was inaugurated in 2014.
Ohayon's negotiations with the Reichmanns began last June, with Ohayon represented by Adv. Yaron Tikotzky and Adv. Ronen Kantor of Doron, Tikotzky, Kantor, Gutman & Amit Gross, while the Reichmann family was represented by the firm of Agmon & Co. Rosenberg Hacohen & Co. In the course of the negotiations, Ohayon says, he began to feel close to the Reichmann family. "This hotel," he says, "represents the family's personality. Reichmann was a man who kept up his Judaism and was proud of it. In this deal, I'm buying 'spirit' as well."
Under the deal, he is buying the company that holds the hotel, and since the company still has three apartments in the complex that was constructed (which also included residential apartments), Ohayon will receive those too.
His plans for the hotel are far reaching and are reminiscent of the hotel in Versailles. He talks about building a pool and a large spa on the hotel's ground floor. They are meant as a draw for people who are not guests of the hotel. At the same time, a restaurant will be opened under the direction of a chef with an international reputation, whom Ohayon refrains from naming, while a mikveh (ritual immersion pool) will be built on the roof. "I want all the religious people to come here," he says. "But secular people as well. I want to show the secular people that a mikveh is something special, that it gives you feeling of being cleansed."
Are you a religiously observant person yourself?
"I'm not religious, I'm traditional. I don't drive on Saturdays, and I eat kosher."
What will you do about the hotel's low profitability?
"I'm sure that with correct management it will be one of the good hotels. We're professionals, and we know how to improve results. We'll improve the level of service, although I must say that the service there today is good, unlike in the past."
Do you think you paid a high price for the hotel?
"I paid the right price."
A source who knows Ohayon says that with the Jerusalem Waldorf Astoria, Ohayon will aim at religious Jews, chiefly American, well off, who have no difficulty in spending high sums on hotels, and for who it's important to stay in Jerusalem. "It's mainly aimed at an Orthodox clientele. There's a large clientele of Jews from all over the world who are looking for luxury, and that’s what will be there. He's about to invest a great deal of money in the hotel, and hopes to make it profitable - with the pool, and also the restaurant and the spa. He believes that that will improve profitability. After all, that's what he's good at."
Published by Globes [online], Israel business news - www.globes-online.com - on January 8, 2018
© Copyright of Globes Publisher Itonut (1983) Ltd. 2018