fattal - Ofer Vaknin - May 6 2011
David Fattal. Photo by Ofer Vaknin
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David Fattal is an amazing entrepreneur. Twenty years ago, while he was still at university, he embarked on his career as a night manager at the Dan Carmel Hotel in Haifa. After a decade, he was recruited by Africa Israel to establish a hotel company and bring the Holiday Inn chain to Israel.

In 1998, Fattal decided to build his own independent hotel chain via the Fattal Hotel Management Company. At first he only managed hotels, but slowly he began to buy them. The significant period of growth for Fattal was actually during lean economic years: His first jump up was during the 2001-2002 recession. And during the recent crisis he made his second great leap forward when he bought 12 hotels from Azorim, which had run into financial trouble. Fattal paid Azorim about NIS 1 billion and developed a big chain overseas.

Today Fattal owns the largest hotel chain in Israel, with 29 hotels and 7,000 employees. He also manages 34 hotels in Europe under the Leonardo brand name; Leonardo has ambitious plans to grow to 80 hotels.

Fattal's life is a wonderful story for the stock market: An entrepreneur who started from nothing, and became a profitable and growing business worth hundreds of millions of shekels - and is not thinking about stopping. In tandem with Israel's incoming tourism - which is setting new records - and worldwide successes, Fattal is a company that the capital markets love to love. David Fattal is on his way to an IPO on the stock market, and soon we and our pensions will partner with one of the most successful entrepreneurs in Israel.

That is exactly why we must inform Fattal that entering the stock market is not just a technical matter, but requires changes in his practices: practices in transparency, corporate governance and ethical behavior. That is why, among other reasons, Fattal must stop taking celebrities, CEOs, PR big shots and local business people off for weekends of luxury and gluttony.

In recent years he traditionally threw such weekends in Eilat, but last week he took a step up and flew 300 Israelis to the opening of his new hotel in Munich for a couple of days of festive meals, shows and tours.

A company planning on going public - and part of the money invested in Fattal today is already from the public after Migdal bought 20% of Fattal shares with NIS 150 million of its customers' money - cannot hand out gifts at its expense to cronies.

Ronen Tov, the CEO of Psagot Investment House, was one of those flown to Germany - the same Ronen Tov who used to be a senior official at Migdal. What will happen when Fattal asks investment managers at Psagot (Israel's largest investment house ) to buy his IPO? Will he remind them that he granted their boss favors? And it is not only Tov. Will the underwriters also take a free trip after the IPO, along with the analysts and lawyers - all of whom will make sure to get the public into the offering? The public's pensions don't need to finance such celebrations.