Hotels report spike in tourism

Hotels are reaping the benefits from an influx of foreign tourists in the first half of the year. Following the elimination of visa requirements for Russian tourists, 400,000 Russians now visit Israel annually, second only to the 600,000 visitors from the United States. The Tourism Ministry expects 3 million foreign tourists to visit during all of 2010, which would make this year the best ever for the industry.

The number of hotel night stays by foreign tourists in Israel rose by 31% in the first half of this year compared to the same period last year, the Israel Hotel Association reported. The increase is partially the result of the relative weakness of the tourism business last year in the aftermath of Operation Cast Lead and the world economic crisis. But if the first half of this year is compared instead with the same period in 2008, tourist hotel nights actually declined by 5%.

Hotel night stays by Israelis rose by 1% in the first half of this year compared to the period last year and actually also rose by 3% compared to the first half of 2008.

	Tourists on Tel Aviv's Gordon Beach.
	Photo by: Tal Cohen

Foreign tourists and local residents spent a total of 9.9 million hotel nights at Israeli hotels in the first half of 2010, an increase of 14% over the period last year, distributed almost equally between foreign visitors and locals.

For the first half of 2010, the biggest increases in hotel night stays by visitors from abroad were the 38% rise in hotel nights in Jerusalem and Tiberias and 37% in Tel Aviv. Hotels at the Dead Sea saw a 33% increase. Nazareth experienced a 17% rise and Eilat hotels had 15% more hotel night stays by foreign tourists.

Of hotel night stays by Israelis in the first half, 63% were in Eilat and at the Dead Sea. Eilat chalked up 2.4 million night stays by Israelis, unchanged from the first half of 2009, while the figure for Dead Sea hotels declined by 1%. Kibbutz hotels saw a 5% rise in hotel nights by Israeli customers from January through June and Jerusalem and Tel Aviv each experienced a 2% increase.

The appreciation of the U.S. dollar during the first half of the year worked to the benefit of Israeli hoteliers, who generally set rates based on the dollar, giving them higher revenue when the dollar goes up. Tel Aviv and Jerusalem had the distinction of the most expensive hotel rooms on average. The David Citadel Hotel in Jerusalem, for example, was getting close to $500 a night in August and the Carlton in Tel Aviv was commanding about $400 a night for a deluxe room with a sea view.

Occupancy still lower than in 2008

Ariel Rotstein of the Jerusalem Hotel Association said occupancy rates at the city's hotels from January through June reached 67%, compared to 51% for the first half of 2009, but he said the 2010 occupancy rate is still lower than the comparable figure for 2008.

He said the price of rooms in the capital had declined last year and has returned to its 2008 levels at most of the city's hotels. Tel Aviv experienced a 55% increase in hotel nights by German tourists in the first half, a 47% increase from tourists from Russia and 33% from American tourists. British tourists chalked up a 24% rise in hotel nights in Tel Aviv and French tourists spent 15% more nights.

One of the beneficiaries of the tourist influx has been the Dan hotel chain, which has 14 hotels around the country. The company reported second quarter revenues of NIS 271.5 million, up 39% against the same quarter last year. Operating profits grew by 20% to NIS 87.6 million. Financing reduced the chain's net profits by 18% year over year to NIS 44 million. Dan Hotels finished the first half of 2010 with revenues of NIS 482 million, up 40% over the year before. Net profits for the half more than doubled compared to the first half of 2009 to NIS 65 million. The chain's stock has shot up 22% since the beginning of 2010.

The Alrov Group, which is controlled by Alfred Akirov, runs the David Citadel Hotel and the Mamilla Hotel in Jerusalem. The David Citadel generated an operating surplus for the company, measured by revenues minus expenses and depreciation, of NIS 30 million in the first half of the year, twice the level for the period last year.

The Mamilla Hotel, which opened last year, had an operating surplus of NIS 3.5 million from January through June of 2010.

Contrary to expectations, Israelis' unofficial boycott of Turkey didn't result in a substantial rise in hotel night stays in Israel, according to the 12-hotel Isrotel chain. The chain still reported improved results for the first half of the year though, with NIS 11 million in net profits and a 10% rise in revenues.

Isrotel's head of marketing, Nahum Kara, said he expects the picture to continue to improve next year.