The summer of 2007 in the north, with the current dearth of incoming tourism, is marked by strong competition between hotels and guest house owners for the hearts of local tourists.

Hotels in Galilee and the Golan Heights are expected to reach an average capacity of 85 percent - a 10 percent decrease from last summer, on the eve of the 2006 war.

David Koifman, director of the Israeli association of bed and breakfast business owners, estimates that the drop in reservations compared with last year is closer to 25 percent. The assumption, Koifman says, is that people are waiting until the last minute, just in case there is a renewal of hostilities. Moreover, he said, declarations by politicians of a possible war this summer are having a negative effect as well.

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One of the outcomes of last summer's war is a sharp drop in incoming tourism. One source in the local industry says that foreign tour agents are afraid to sell tourism this season, to avoid the possibility of cancelations. As a result, hotels in the north have launched aggressive sales campaigns aimed at the Israeli public, competing with rural bed and breakfast hospitality services. In absolute numbers, the source said, Israeli tourism is similar to that of last year, but the number of bed and breakfast businesses has grown.

The head of a tourism association in Upper Galilee, Yehiam Frenkel, says the reservations situation for this summer is not too bleak. "The Katyushas in Kiryat Shmona caused something of a slowdown, but it's calmed down now" he said.

Golan Heights tourism businesses are also licking their wounds from the war. Ran Reichman, owner of ?Mor and Cinnamon? restaurant and cafe located in the southern Golan Heights, only opened his business full time last week.

"During the war we were all paralyzed, and there were no customers," he said. "I opened for the holidays, and closed down again."

He now hopes to recoup his losses.