Abraham Hostels, named for the famously hospitable biblical forefather, is a mecca for independent travelers to Israel seeking budget accommodations and a chance to dip their toes into local culture in the company of like-minded tourists.
Now the hostel chain is contemplating a relocation of its Jerusalem space, and at the same time is making use of a NIS 25 million ($7.14 million) investment to open two new locations, at the Dead Sea and in Eilat.
“We didn’t want to lose control or ownership, but we were willing to sell some equity to bring in funding,” said Gal Mor, one of the two original owners of Abraham Hostels, which currently exist in Tel Aviv and Nazareth as well as the capital. “We eventually decided to move forward with Bridges, because their criteria is only to invest in excellent businesses with social and community impact.”
The investment fund is Bridges Israel, an independent affiliate of Bridges Fund Management, with offices in the UK and US.
“We’re impact investors,” said Ran Grodecki, managing partner of Bridges Israel. “We look for competitive returns, but with impact embedded in the day-to-day business.”
The investment fund liked Abraham Hostels’ system of sustainable tourism and emphasis on low-cost tourism that included meeting other travelers and local businesses, creating tolerance and positive societal good, added Grodecki.
Now, with the NIS 25 million in hand, Abraham Hostels is hoping to open an Eilat location in 2020, preferably in a former hotel, which would provide an easier conversion. The Dead Sea is a trickier location as there are fewer empty buildings available with 100 rooms, and it may require a construction project.
That expansion is expected to take another three to four years, and they’re also looking to enter other Mediterranean locations, said Mor.
The company also has to figure out what to do with its Jerusalem location, which is slated to be flattened and rebuilt as a high-rise along with other buildings in the downtown neighborhood.
It can situate its 400-bed hostel within the tower when it’s constructed, although it’s not yet clear what else will be there. Moreover, there remains the question of what to do during the period between destruction and construction, so the company is looking for a new space that would be either temporary or permanent.
This isn’t the first time the Abraham Hostels founders have embarked on an ambitious adventure to expand upon their dreams. The hostel chain got started when Mor, a Jerusalemite and inveterate traveler, returned to Israel after several years of traveling and living abroad, and began Abraham Tours, a tour company geared toward individual travelers looking to explore the country on a budget.
He homed in on local tourism, seeing a need for urban tours with the ability to leave the city and visit nearby sites and for urban hostels that offered clean, comfortable accommodations, good WiFi and communal spaces.
“People looked for places in Jerusalem, and what was available just wasn’t good enough,” said Mor, who named Abraham Tours, and later, Hostels, for the biblical forefather known for feeding and caring for any wayfarers who passed near his tent. “It was clear to me that there was a need for the kinds of hostels that I knew of from my travels.”
He soon met Maoz Inon, who owned Fauzi Azar, a small hostel in Nazareth, and was guiding on the Jesus Trail, a four-day hiking route to religious Christian sites in the Galilee. The two partnered and later added three other investors and partners — Yaron Burgin, Nitzan Kimchi, Dror Tishler and Bridges Impact Fund.
When they began looking for a Jerusalem building that could house the first branch of Abraham Hostels, the pair found their current location, which was functioning as a low-end apartment building for local students, new immigrants and foreign workers. Mor said they had to convince the owner to rent it to them instead of to 100 individual renters.
They ended up renovating the building’s three floors into the Abraham Hostel’s current setup of 300 beds divided into high-ceilinged dorm rooms, family rooms and doubles, as well as a small lobby and a large spacious dining room that also functions as a bar, seating area and workspace. The city’s light rail system, which was eventually was built a block away, offers guests easy transportation.
In Tel Aviv, a long search for Abraham Hostel Tel Aviv finally led them to an historic former telephone company building in the Electricity Garden neighborhood. They rented the building as a shell and spent five years planning and renovating it into a large, standalone hostel with 400 beds. That project required a $25 million bank loan.
The Nazareth location is just 15 rooms and more of a boutique hostel, said Mor, with 55 beds and hostel facilities. It has helped foment a rehabilitation of the Nazareth market area, where there are now 12 other guesthouses, all owned by locals.
“Location is a big part of our agenda,” he said. “We’re all about social businesses, to augment art in the community, to have narrative tours, to meet local businesses and go around and taste and get to know the nuances, foods and culture.”
That’s what pushed them to create their hummus workshops, along with the Abraham Hostels narrative tour in Hebron, where half the day is spent with the Arab community and the other half with members of the Jewish community.
“It’s a privilege that tourists have and we don’t, to get to know and try to understand the complexity of this region,” said Mor. “Because everyone comes with their preconceived notions.”
Each of the Abraham Hostel locations has its own activities, as well as its own touches and flavors. The Tel Aviv hostel is more lifestyle-oriented, while Jerusalem is geared toward religion and history, said Mor.
There is a daily shuttle between the hostels, and some 20 percent of their guests stay in two or more of their accommodations. Others take advantage of packages that include overnights in their various locations and trips with Abraham Tours. Some 8,000 people take day and package tours with Abraham Hostels each month.
As of June 2019, the Jerusalem Abraham Hostel has a 90% occupancy rate, Tel Aviv has an 86% occupancy rate and Nazareth has a 70% occupancy rate.
For Mor and his partners, it’s clear that hostels are the future face of tourism, in terms of both independent, budget travel and the visitor’s desire to engage with the destination.
They’ve had such success in relating to their surroundings that young Israelis use the hostels in Jerusalem and Tel Aviv as an extension of their nightlife and hangouts. Some 10% of their overnight guests are Israeli, and some activities draw a crowd that is at least half Israeli, certainly at the live music events and rooftop yoga classes.
“We’re now a strong brand, internationally recognized, and we’ve got a larger ship to steer,” said Mor. “In the beginning, I used to dabble in everything, managing the bar or reception or the tour company. Now I’ve got an operations team and managers and a fleet of minibuses.”
He can, however, show up at the bar and not necessarily be recognized by the bartender. And Mor enjoys that anonymity.
“It’s mine, and all of a sudden I’m a semi-stranger,” said Mor. “I’ve gone through almost all of the different positions, and now I’m at the point where I’m mostly in meetings in Eilat or Tel Aviv.”