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So why isn't Israel hosting Formula One?
By Eli Gonen
As is so often the case, Shimon Peres described it rather colorfully: "There are many oily lands, but only one Holy Land." So why hasn't Israel maximized its potential as a Mecca for tourists?
One answer lies in the disdain the leadership has evinced for Israel's tourism industry. Over the course of 10 years, the Tourism Ministry has been led by 10 different ministers; instead of serving about four years, each served roughly one. Each naturally took a long time to learn the job. Seven inquiry committees were formed and five comprehensive plans for the industry were compiled, which on occasion contradicted one another. Forget about actually implementing any of the plans. They remained on paper.
The current tourism minister is Ehud Olmert himself, winding up three months in acting capacity. He will be followed by Gideon Ezra, who will also serve for three months, and whom the cabinet chose as acting tourism minister, an appointment that didn't even undergo Knesset approval.
This is not a recipe for building a booming tourism industry.
Tourism is one of the global economy's leading industries. It's a sector growing by about 5 percent a year, that serviced 900 million people in 2007, a figure the World Tourism Organization (WTO) expects to reach 1.6 billion in 2020. The global population of today generally has a more disposable income, more leisure time, and longer life spans, all of which contribute to the global tourism boom. Outbound tourism from the giant nations of China, Brazil, India, Indonesia, as well as South Korea, has been exploding, underscoring the optimistic predictions for the industry.
Tourism is also an industry rich in human resources. One person in 12 in the world is employed in tourism and in associated services, according to the WTO and other organizations. Developing tourism as an industry can significantly diminish unemployment, as many governments have found.
Ireland instated a long-term plan backed up by intense marketing, to which it allocated 80 million euros, and saw tourism jump from 2 million a year to 7 million, creating jobs. Ankara noticed in 2006 that inbound tourism had dropped by 5 percent and allocated some 50 million euros to marketing, in addition to the 70-million-euro tourism budget. The magnitude and speed of the Turkish response attests to the authorities' keen awareness of any decrease in incoming tourism. There's also the example of France: appalled at ceding first place in European tourism revenues to Spain, Paris poured 100 million euros into its Tourism Authority.
Moreover, even the Israeli Finance Ministry itself defines tourism as a public asset, arguing that an investment in this sphere would benefit the greater good.
Meanwhile, our neighbors in the Mediterranean region are experiencing tourism booms. We are not.
The accounting firm Ernst and Young presented a report in 2006 on the potential of local tourism, which the Israeli government claims to have adopted. The report outlined several steps, most notably on how to improve Israel's image, which suffers from grave misconceptions related to its geopolitical situation and the reality of Israeli life.
True, inbound tourism to Israel has been on the increase. But Ernst and Young concluded that if the Israeli government were to invest $50 million a year in appropriate image campaigns in a few select countries, tourism would grow by another 500,000 visitors a year, beyond the present upturn in the sector.
Indeed, a trial campaign to change perceptions, which was based on Ernst and Young's recommendations and carried out in the U.S., did have positive results, indicating that the advisers were on the right track. When Israel announced the campaign, and committed to the massive three-year investment of $15 million a year, 18 major tourism wholesalers who hadn't worked with Israel before began doing so.
But a pilot is one thing and a policy change another. The Ernst & Young report was handled by four different tourism ministers, and it is likely to pass through the hands of several others before anybody actually does anything to implement its recommendations.
Based on recent history, by 2014, the year in which we estimate we can reach the optimum number of tourists to Israel, 5 million a year, we can expect to have gone through seven more ministers at the Tourism Ministry. Each will take time to learn the job, each will set up committees of inquiry that will produce seven different business plans, which will contradict each other. Based on data from the Central Bureau of Statistics, I estimate that revenues from inbound tourism could reach up to $7.9 billion a year in 2014, compared with $4.2 billion if the situation remains as is.
But there are things the Israeli government can do here and now; the first being to elevate tourism on the national economic agenda. The government needs to formulate a long-term plan once and for all, and to assign a budget for its execution, as other countries do. Israel needs a tourism marketing board, in the form of a joint effort by government and private enterprise. Speaking of private enterprise, the business sector should be incentivized to invest in building new hotels, and hoteliers should be motivated to upgrade their establishments.
It is also high time to "open the skies" properly, allowing for true competition between the airlines, and to sign an aviation agreement with the European Union. The time has come to lower the barriers, such as waiving visa requirements when appropriate. All this is needed for Israel to maintain its competitive edge.
Our neighbor Jordan is in the process of developing 8,000 hotel rooms in Aqaba, a resort city on the Red Sea. It is building an additional 2,000 hotel rooms on the north-east bank of the Dead Sea.
Egypt recently hosted the World Economic Forum on the Middle East and is preparing to host Formula One. Meanwhile we are preparing studies and playing musical chairs at the Tourism Ministry.
Eli Gonen is the president of the Israel Hotel Association and of Azorim Tourism. In the past he served as the Tourism Ministry's director general.
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