Israeli Nightlife Venues, Event Halls Collapsing Under Debt and Coronavirus Uncertainty

Adi Dovrat-Meseritz
Adi Dovrat-Meseritz
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Teder Beit Romano, a leading cultural institution and nightlife spot, Tel Aviv, June 30, 2019.
Teder Beit Romano, a leading cultural institution and nightlife spot, Tel Aviv, June 30, 2019. Credit: Nir Keidar
Adi Dovrat-Meseritz
Adi Dovrat-Meseritz

Rami Malka, 64, has worked in the events industry his whole life, with years of experience managing event halls. Less than a year ago he launched his own business, an event hall in Ashdod named Mamila, investing millions of shekels in renovations, furniture and equipment, and funding it with a bank loan, an outside investor and his own savings.

The festive opening took place on March 1. Two weeks and 15 events later, and the government shut down the industry. Two weeks after that, Malka was hospitalized with chest pains and underwent catheterization.

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This story may be specific to Malka, but the numbers tell a broader story of small- and medium-sized event businesses, bars and clubs that are collapsing under debt and uncertainty.

Other industries, such as commerce, are likely to resume operations within the next few weeks. Restaurants are permitted to offer takeout or deliveries. But for Malka and others in his industry, the end of the tunnel is nowhere in sight.

The coronavirus cabinet, led by Prof. Ran Balicer, is the most senior team of experts tasked with advising Israel’s government in its coronavirus response. This week, the team wrote that businesses that involve crowds are not likely to open in the next few months, and that this should be clearly stated so that business owners aren’t given false hopes.

The Block, one of Tel Aviv's most prominent nightclubs, June 20, 2013.Credit: Tomer Appelbaum

The cabinet didn’t detail which businesses fall under this designation, but it’s clear they mean pubs, clubs, enclosed conference halls and apparently also event halls. The experts stated, “It would be best to compensate these business owners and clarify that they won’t be opening in the next few months, rather than misleading them that they’ll be able to open during the most advanced stage of reopening in mid-winter.”

For Malka, that would be too little, too late. “If there are a few more months like this, the property owner will evict me, and everything I’ve invested will be lost. I leased the place in November, well before anyone heard of the coronavirus. I invested four million shekels, I booked events a year in advance – but then the coronavirus came and shut us down. After that the government let us open with up to 100 people, or 50 people. I tried working like that, but I lost money, and I needed to let workers go. Some of them aren’t even eligible for unemployment because they worked less than half a year.”

The Finance Ministry is proud of expanding its financial security net for the self-employed, but the sums that Malka says he received from the state show just how deep the crisis is. “My accountant called and said jokingly, ‘Bring a Brinks armored truck,’ after the Finance Ministry said new businesses could receive a grant of 3,000-4,000 shekels for May and June, and even this I didn’t get,” he says. “Other grants, such as for taking back workers from unpaid leave, or for keeping workers on payroll, don’t apply to me.”

Malka says that his rental payments alone are 70,000 shekels ($20,700) a month. “I don’t know what to do anymore,” he says. “I haven’t paid since June because I can’t, and they could kick me out any day now. The manager of the event hall next to me, which is owned by the same owner, was kicked out last week because he can’t pay. For now the owner is taking pity on me, but he’s told me that he, too, has a mortgage to pay. I just canceled checks to suppliers totaling nearly 290,000 shekels, and I have a 330,000 shekel bank debt due to a loan. My debts total more than 1 million shekels,” he says.

“It’s no surprise I have chest pains, I can’t sleep, I can’t eat, I can’t do anything. I can’t show my face to suppliers anymore. I returned down payments to customers who couldn’t hold their events because I didn’t have the heart to keep them. The down payments are tens of thousands of shekels per event,” he says.

Late night at the Breakfast Club, Tel Aviv, April 14, 2015.Credit: Avishag Shaar-Yashuv

Israel’s event halls union is calling on the government to draft a plan to enable them to open, since the public is already holding events illicitly. “There are weddings every day. The Arab community is holding weddings with more than 1,000 people in attendance, and ultra-Orthodox and non-religious Jews are getting married, too,” says Noam Levy, the union’s chairman and an event hall operator himself.

Levy says that three days earlier, he was contacted by a family that flew in two planeloads of relatives from Belgium and had planned to hold a wedding at a hall on the beach in Netanya. The place was shut down a day before the wedding, and the family asked if Levy would host their event. “I said no, of course, but ultimately they found a horse farm in the Jerusalem hills and got married there,” he says.

“You can’t stop it, so the government needs to create a plan to let events happen with a few dozen people present, and also compensate us. Currently we’re receiving on average 15% of our revenue, and we’ve asked to increase that to 20% because we have high rental costs. I estimate that 20-25% of businesses in the industry will disappear and won’t resume operations afterward,” he says.

The government’s panel of experts has also acknowledged that Israelis are holding illicit events. “We need to significantly increase enforcement to prevent social gatherings such as large weddings, crowded social gatherings and events in closed spaces,” they stated. “The lack of enforcement and the numerous reports of such events in all communities endangers the success of Israel’s response, and cannot be accepted.”

A party at Forum, a nightclub in Be'er Sheva, 2017.Credit: Michelle Amzaleg

As of the beginning of 2020, there were 950 event halls in Israel. Some 608 are in financial crisis due to the coronavirus pandemic, and 122 have already closed, according to statistics from CofaceBDI.

The future of Israel’s bars and clubs is also glum. Of some 900 businesses that existed before the pandemic, 495 wound up in financial crisis and 120 have since closed. The longer they are not allowed to resume operations, the more that number will rise. “Until now, quite a few event halls held on thanks to events that were planned for this period and delayed. This money won’t exist anymore, and more will collapse,” says Tehila Yanai, CEO of CofaceBDI.

Bar and club sector sources expect near total collapse. “Clubs won’t be able to begin operations until there’s a vaccine against the novel coronavirus, and I don’t expect them to survive,” says Shay Berman, CEO of the restaurants and bars union. "A business can’t be closed a year and half or two years, and then just open. Certainly not in the case of clubs, where the equipment wears out, and the customer base is young people whose taste changes and loyalty is fleeting.”

Hila Formoza Refael, 35, one of the chairs of the bars and restaurants union, says she believes one of her three businesses, the bar Queen Bee on Tel Aviv’s Ibn Gvirol Street, won’t survive. “This is a new business and I invested my money in it, I saved every shekel and I don’t believe it’ll come back,” she says.

“Our industry, which was the first to shut down and will be among the last to reopen, needs industry-wide compensation,” she says, calling on the government to intervene in businesses’ rental contracts because rents are so high. “At this rate, at least half of the bars and restaurants won’t survive the next several months.”

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