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Hotels in Israel Lose Money Because of Operation Protective Edge

News According to the report of the Israel Hotel Association, hotels in the country have already lost over US$100 million and growing because of Operation Protective Edge. The estimated sum of loss for the third quarter of 2014 is a lot bigger – US$500 million.

The damage is calculated from the decreased number of tourist arrivals, and, as a result, smaller hotel occupancy and revenue. That already cost the hotel industry of the country $100 million, and extra $25 million losses will be caused by the drop in the in-country tourism.

The expected number of tourist entries to the country estimated 830,000 in the third quarter of 2014. That is 15% more than during the same period of the previous year. Experts made such positive forecasts thanks to good results of the first quarter and second quarter of 2014, when the growth of tourist arrivals estimated 17% and 19% respectively. However, the launch of Operation Protective Edge made those forecasts futile. The revised forecast for the third quarter is 35% below the level of 2013. The country might welcome 280,000 less tourists for the given period. This amount will bring the expected loss of US$500 million to the country’s hotel industry.

Before the launch of Operation Protective Edge, the expected number of tourist overnight stays in July-September 2014 was 2.4 million, which is 10% more than in the third quarter of 2013. However, with the drop in arrivals of 35%, the drop in overnight stays will be 840,000, leading to a loss of $100 million. The decrease of occupancy is no less serious. While the standard occupancy of hotels in Tel Aviv is 60% for this period, current occupancy is only 40%. Hotels in Jerusalem post similar results – the occupancy has fallen from standard 60-70% to 45-50%. Hotels in Eilat post better results – here the occupancy has lost only 5%. Occupancy of hotels in cities close to the operation site is predictably extremely low. Hotels in Ashkelon and Ashdod have the occupancy of 20%, while the expected occupancy was 80-90%. Most of tourist arrivals here are foreign journalists.


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