An entirely new regional travel infrastructure is being set up in continued discussions between hoteliers and governments in Bahrain, Israel and the United Arab Emirates.

Collaboration between these countries in any capacity might have seemed a distant prospect a year ago, but the ground-breaking Abraham Accords signed by the three countries last August and September now are a source of excitement among hoteliers.

Some other Middle Eastern countries recognize Israel, and not all accept Israeli passports. The inclusion of the UAE as one country that does opens up its huge hotel inventory to Israeli travels.

Speaking at a webinar hosted by HVS London and titled “Israel and the United Arab Emirates: Opportunity for Investment," Mark Maurice, executive director and founder of wealth-management firm Ameera Group, said there is huge potential in the accords and it would be foolish to seek opportunities without local partners.

“Take a breath and do due diligence. There are consistent changes of laws, rules and procedures that require eminent planning before you step in the right direction … and then it is down to eye-to-eye relationships,” he said. “This is not just an opportunity for the UAE, but also for the [Gulf Cooperation Council] countries. We can expand our horizons now."

Fleur Hassan-Nahoum, co-founder of the UAE-Israel Business Council and deputy mayor of Jerusalem for foreign relations, economic development and tourism, said a market exists and will only grow.

“In the smartest way, we’re on the cusp of regional tourism, such as Europeans enjoy,” she said, referring to more seamless, if not passport-less, travel between countries.

Orit Farkash-Hacohen, minister of tourism at the Israel Ministry of Tourism, said the agreement comes at an optimistic time as the world gets a grip on COVID-19 — and certainly as Israel and the UAE are farther along with vaccinations than many other countries.

Hoteliers are already moving ahead.

Kamal Naamani, managing director at Al Habtoor Group, said his hotel firm will be one of the first from the UAE, if not the first, to move into Israel.

“We will waste no time. Right now we are in discussions. Demand from the UAE will be on large-scale investment. We see the need for big hotels, similar to what we have in Dubai and the UAE, but we have to work hand in hand with the governments in both countries," he said.

“Investment will take guts as to who is moving first,” he added.

Farkash-Hacohen said government aid from two advanced nations will help hoteliers realize projects and create travel corridors.

“Eighty percent of our tourism is international tourism, and in Jerusalem, we have been offering help for hotels as Jerusalem lacks hotels. … [This] provides us with a head start so that hotel investment over the next 10 years will be ahead of the curve,” she added.

She called for patience, conversation and the willingness to learn from and be helped by one another.

“UAE property prices go up and down, while in Israel they are very high. All hotel groups are in talks, but I do not see anything being signed up in the next two months,” she added.

Panelists said joint ventures are the most likely scenario for development in the region.

Arild Hovland, senior vice president of business development, Radisson Hotel Group, said his firm lacks a presence in Israel, but has 23 assets in the UAE, which will help it as it searches for opportunities.

Hovland said the two countries generally have different operating models — with the UAE preferring management contracts and franchise while Israel favors leases — but the first challenge will be to find the right financing partner.

Israel-based developer Henry Taic, owner of Taic Hotels, said his company is actively looking to develop in the UAE. That company also has a management contract in Israel — the 250-room David Kempinski in Tel Aviv that is to open later this year.

The panelists said the accords provide an opportunity to grow brand recognition among guests from both countries.

“This will help raise the flag of international brands in the respective countries. Guests from the UAE have stayed in our hotels in, say, Germany, and the presence in the Gulf will act as a springboard. This is a very special moment in normalization,” said David Fattal, CEO of Fattal Hotels, which owns and manages 220 hotels in 20 countries — 45 of them in Israel.

“We’re looking for opportunities to manage, own or lease hotels in the UAE, and we have actually appointed someone to check for that. It will take some time, but the potential is huge,” he said.

Jonathan Falik, CEO of New York City-based JF Capital Advisors, said Israel will prove alluring to UAE travelers. He said both countries have an infrastructure in Arabic and English and that Israel and its culture will be a hit with the UAE’s very young, educated and well-traveled population.

“There are the tools for cross-border dialogue that will lead to investment. It is inevitable,” he said.

“All is driven by the capital markets, the banks’ ability to lend. You will succeed if you have the operating knowledge, meaningful equity and track record, and the right partners and local knowledge of culture and relationships developed over centuries,” Falik said.

There are no shortcuts, at least at the moment, Fattal said.

“It needs someone to create a fund for this special purpose, but before then, well, it’s the old way,” he said.

Farkash-Hacohen said approximately 130,000 Israelis have been to UAE since the accords were signed despite the ongoing COVID-19 pandemic.

Proceeding without a local partner is not a wise move, Ameera’s Maurice said. A partner is needed not only to guide development, but also to match guest expectations, he said.

“Without one, as the British say, you will hit a sticky wicket. UAE travel expectations are extremely high, moving as they do from the GCC to the Dorchester [London] to Mykonos, he said. "Service is the key component as to what drives the [UAE] industry. Israeli groups will help GCC groups understand what is wanted from their first side, too."

Hovland added “the political situation is moving nicely, but it is a region that has had a number of problems, so that might be a concern for many who have limited knowledge.”

Taic said “there are challenges every four or five years, and then it is not so good for 18 months."

"Israeli has tourism growth, but it should be closer to the 17 million seen in the UAE,” he said.

To get there requires one of two selling points, Maurice said.

“Any form of bilateral investment has two battles. Either you must be unique in your niche, as people always are willing to pay a price premium, or alternatively cheaper than your competition while retaining quality and [guest] experience,” he said.

Fattal said development in Israel is also challenged by a lengthy timespan from concept to opening, mostly due to regulations.

The usual route in Tel Aviv is to opt for mixed-use properties, Taic said.

“This is supposed to support hotels, but developers do not want that. They want to take the cash from the apartments. For a hotel there are perhaps 150 permits needed for Tel Aviv alone, and that takes time,” he said.

Maurice said while the UAE has no corporate or income tax and many incentives, that doesn't mean hotel development is easy.

He said it might be easier to develop a hotel in the UAE than in Israel, but hurdles include compliance with labor laws, alcohol licensing and a requirement to retain profits in the UAE.

Falik said UAE investors need to understand Sabbath observance, Kosher laws and local regulations around Jewish holidays.

“Understanding this also will lead to underwriting that is realistic,” he said.

The data backs up the optimism of the accords, said Robin Rossmann, managing director at STR, who added there are few more exciting destinations for hotels than Israel and the UAE. STR is CoStar Group’s hospitality analytics firm.

“The UAE has shown remarkable resilience coming through from December last year, one of the top destinations in the world from an occupancy basis in the last three months," Rossmann said.

“Israel has had a stricter lockdown, so only is now beginning its recovery,” he said.

Rossmann said that for the week ending March 28, the UAE hotel industry posted occupancy of 60.4%.

“Dubai has shown us how quickly things can bounce back, and occupancy was not achieved by hoteliers offering generous discounts,” Rossmann said.

Abu Dhabi hotels posted a new occupancy record during the International Defence Exhibition & Conference on Feb. 21-25, he added.

The Israel hotel industry, meanwhile, is showing strong ongoing demand and growth, with double-digit increases in international visitors between 2017 and 2019, and not just for religious tourism.

“It is also for leisure stays … 75% occupancy in Tel Aviv for full-year 2019,” Rossmann said, noting “occupancies have jumped in a matter of weeks.”

Amir Halevi, director general at the Israeli Ministry of Tourism, said following Israel’s Two Cities (Jerusalem/Tel Aviv) campaign, its next push will be tourism in the Negev Desert and Sea of Galilee.

The UAE’s Dubai Expo, postponed from 2020, will run from Oct. 1, 2021, to March 31, 2022.