Israeli hotels charge too much, says minister

Israel's hotels will have to lower prices to stay competitive and attract domestic tourism in these hard times, Minister of Tourism Ruhama Avraham Balila suggested at a conference last Wednesday aimed at persuading labor committees to vote "blue & white" when organizing group vacations for company workers.

Her sentiment was echoed by many of the participants at the conference, which was organized by the tourism ministry and Histadrut labor federation. Israel's hotels just aren't competitive, they argued.

The list of 130 attendees at the event, which was held at the Dan Hotel in Tel Aviv, included labor representatives from the big banks, the Israel Electric Corporation, the Oil Refineries, the Egged bus cooperative and government companies. Large companies customarily send workers on group vacations, for which the companies naturally receive special prices. The thing is, often these group vacations aren't in Israel, but in neighboring countries.

Turkey had been a favored destination until the recent downturn in relations following Operation Cast Lead. Greece and Cyprus are also popular, as are Croatia, Romania and like places.

How are Israeli hotels and resorts to compete? That's the rub.

"We hoteliers can't compete with the prices offered by other countries in the area, which pay their workers a fifth, maybe less, of the average wage in Israel," said Eli Gonen, chairman of the Israel Hotels Association. "Our costs are high. But we want to keep the hotels running, to continue employing the workers and contributing to the economy. I call on the labor committees to help us survive, as they did during the intifada years - then a lot of hotels were saved from collapse thanks to the help of the labor committees."

That help, in 2002 and 2003, took the form of keeping the group vacations inside Israel rather than flying the guys to a foreign resort.

Israel's tourism industry is a big employer. It has 100,000 workers, said Histadrut labor federation chairman Ofer Eini. He also called on labor committees to lend a shoulder and choose Israel for group vacations, in order to preserve these jobs in today's dire economic climate.

The labor committees certainly have provided big business. In 2008, Israelis were responsible for 11 million "room nights." Of that figure, the committees were responsible for 1.5 million. If they keep their business in the country, this figure could rise.

Yakov Alush, chief executive of Vaadim, a company that organizes fairs and events for labor committees and has all their economic information on tap, said that the market for company-organized tourism is NIS 600 million to NIS 800 million a year.

The decision to avoid Turkey as a destination for group vacations only increased local tourism by 2% in January and February, said Alush. In other words, the labor committees simply chose other countries rather than keep their business in Israel. And they're doing that because of the high prices Israel's hotels charge, Alush said. "The gimmicks the Israeli hotels offer couldn't compare with offers overseas," he said.

Riki Bachar, chairman of the labor committee at Discount Bank, said that the bank's workers typically spent 20% of their group vacation time abroad and 80% in Israel, and will continue to do so this year. "Usually the workers travel to Europe," Bachar said. "Last year, for instance, they went to Romania, Croatia, Berlin, Bulgaria and Crete. We took Turkey off the agenda. The selection abroad is large and cheap."

As for local vacations, Bachar said, as a large labor committee, the bank gets "more convenient" prices. "But to get more people to come to Eilat, the hotels will have to lower their prices."