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A disagreement between the Israel Hotel Association (IHA) and the Tourism Ministry over the main impediment to tourism in Israel arose during the meeting of the committee to explore the idea of opening up the skies to greater competition.

The committee, headed by Transportation Ministry director general Gideon Siterman, convened this week in Tel Aviv for a last hearing before a final decision is made on the issue, TheMarker has learned.

In his presentation before the committee, IHA CEO Eli Gonen asserted that the high price of airline tickets constituted the main obstacle to incoming tourism. Gonen said the airline ticket component in a holiday package bears a lot of weight, due to insufficient competition among airlines. Opening up the skies to competition, he says, will result in lowered air ticket prices and increased tourism in Israel.

Tourism Ministry director general Nahum Itzkovitz, however, disagrees. In his presentation to the committee, he said that the relatively high price of hotels in Israel was a far greater deterrent to inbound tourism. He said his assertion was based on the results of a study conducted by Ernst & Young, which supports opening the airways to competition among airlines. The results, however point to other barriers that should be addressed, such as the relatively high price of hotels in Israel as a part of the overall price of a visit to Israel.

Hoteliers prefer foreigners

"We do not want to be a country where local tourism takes over the tourism business. If local tourism does not stop filling up the hotels, we cannot advance," said Eliezer Hod, the head of the division for marketing development in the Tourism Ministry.

Hod was speaking at a conference held in Nazareth to discuss various aspects of the Israeli tourism industry.

His comments were based on the fact that Israelis tend to spend the holidays in hotels, which reduces the number of rooms available to tourists from abroad.

Hod says charter flight operators, who sell package deals that include both flights and hotels, need to know they can sell vacation packages for Israel throughout the year - and not just during non-holiday periods.

Hod added that because some Israelis do not leave their hotel rooms until Saturday night, because of the Jewish Sabbath, it blocks the entrance of other tourists to hotels over the weekend.

Five-star prices

Quoting from the Ernst & Young report, Hod said that Israeli hotels charge tourists five-star prices for hotels that barely deserve three stars. According to Hod, standards in foreign five-star hotels are much higher. For example, they replace all their sheets every three months.

"If we were to bring in an American company to rate Israel's hotels, almost no hotel would receive more than three stars," he said.

As for tourism in Eilat and the Dead Sea, he said the report states: "The tourism product has changed, and Eilat has not changed with it. Eilat has 82 percent local tourism. In the meantime, tens of thousands of cheap rooms have been built in Sinai, and Eilat continues to wait for tourists."

Ami Hirschstein, the CEO of Dan Hotels Israel and the chairman of the IHA's marketing committee, responded: "We all prefer incoming tourism. But we are forced to fill the hotels with local tourism, since there are no tourists. Why have we reached 12 million nights for Israelis? Because we sell five-star hotels for the price of four-star hotels. When we need the rooms for tourists, we will control the local tourism with the help of pricing," said Hirschstein.

As for Eilat, he said the city's future was tied to the establishment of a casino and conference center.