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Tourism in Israel Has Strong Potential for Growth

The hospitality sector of Israel had a stable performance last year and is expected to keep growing in future because of the increasing incoming tourism. This information is present in the latest report by HVS, “Trends and Opportunities: Israel Hotel Market Overview”. The report is dedicated to main metrics of Israel hotels in 2016 and prospects for their development.

As usual, the country’s hotels suffer from weakened occupancy because of the geopolitical situation with the neighboring countries. In 2016, the average occupancy stopped on the level of 67% with the average daily rate being US$202. Revenue per available room (RevPAR) reached US$136. However, there is a series of factors that positively influence the travel sector of the country. The technology sector of Israel is in bloom, and the launch of numerous business start-ups means a boost for the business travel as well. The same goes to the improved transport infrastructure, such as new high-speed trains between Jerusalem and Tel Aviv, and a new Eilat airport. In general, the GDP of Israel added 4% last year.

The government is also concerned about the development of tourism. For example, in 2012, the country signed the EU Open Skies agreement, according to which it became possible to lower the cost of flights between the EU and Israel and increase their number. Naturally, this gave a boost to the international tourism. However, many resort destinations of Israel are still too pricey for foreign tourists. For example, the Mediterranean destinations of the country are more expensive than those of competitors, so Eilat hotels and the Dead Sea resorts are mostly popular with domestic visitors. International travelers prefer to visit Tel Aviv and Jerusalem.

Hotels in Tel Aviv face one more problem – accommodation booking websites like Airbnb. Currently, there are more Airbnb listings than hotel rooms in the city. When it comes to hotels, there is still space for budget hotels in Jerusalem and Tel Aviv, as travelers who want to benefit from cheaper flights are not likely to book expensive rooms and apartments.

With the growing number of flights, investors consider Israel an attractive destination, so the hotel pipeline is strong. The results of first six months of 2017 only prove that the hospitality industry is developing – the increase of tourist arrivals reached a fantastic record, 26% more than during the same period of 2016. By the end of the year, Israel might reach a significant milestone – 3 million tourist arrivals.

09.08.2017

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