Israeli Tourism Officials Worry Coronavirus Will Cause Sector’s Collapse

Israel’s tourism industry, which has plans to accommodate wars but not pandemics, is worrying that the coronavirus could spell catastrophe

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A woman wearing a face mask walks past a restaurant that is built in an aircraft in Wuhan, the epicentre of the novel coronavirus outbreak, Hubei province, China, February 26, 2020.
A woman wearing a face mask walks past a restaurant that is built in an aircraft in Wuhan, the epicentre of the novel coronavirus outbreak, Hubei province, China, February 26, 2020. Credit: STRINGER/ REUTERS

Many tourism sector sources had anticipated that Israel would have a record five million incoming tourists in 2020, but the coronavirus outbreak has completely changed expectations. Now, Israel’s tourism industry, which has plans to accommodate wars but not pandemics, is worrying that the virus could spell catastrophe.

“Everything is falling apart. Aside from taking antidepressants, there’s nothing to do,” said a sector source.

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Other countries are also seeing major hits to their tourism industries as new outbreak hot spots emerge and people reevaluate their travel plans. France announced incoming tourism is 30-40% lower than anticipated, and Singapore is also anticipating a 30% drop.

The Israeli sector sources understand that Israel is no exception to the new forecast for global tourism, which is liable to take a crucial hit this year.

“If France is seeing a drop of 30%, then what about us?” says the head of the Tourism Ministry director general’s office, Dikla Cohen-Sheinfeld. “If it turns out that this is only a three-month event and summer can be saved, that’s one thing, but if it continues, it’s another matter entirely and it’s not clear how Israel will handle it,” she said, adding that the Tourism Ministry is constantly telling contacts abroad that Israel has not has an outbreak yet, and that everything is operating as usual. “But it’s clear that the moment it broke that we’re examining whether to halt incoming tourism from Italy, we received several very worried phone calls,” she said.

At this point, no one is willing to gauge the extent to which Israel’s tourism industry will be affected for the year. The industry is likely to be particularly hard hit if a coronavirus outbreak occurs here.

“That will change the entire picture, and all the tour groups that are still coming from Europe and the United States will cancel,” says Sheinfeld. The ministry is trying to keep an optimistic outlook, which is crucial for business. “But we’re also preparing for a potential decision to kick out all Italian tourists, as was done with Korean tourists after it was found that many members of a tour group were infected with coronavirus,” she says.

Others are planning for a recovery plan once the outbreak passes.

“I have no doubt that Israel will rebound faster than places such as northern Italy, for instance,” says Dr. Eran Keter, a tourism expert from the Kinneret Academic College.

One third of tourism businesses that took part in a survey by CofaceBdi said they’d seen a decrease of more than 50% in demand by Israelis for travel abroad, not just to China. Another 17% said they hadn’t witnessed any change. Another 67% of tourism companies said the impact was already apparent in summer vacation reservations.

As TheMarker reported earlier this week, airlines have reported a dramatic drop in airline ticket reservations for the Far East, for destinations including Thailand, Singapore, Vietnam and Cambodia. They’ve also seen a drop in reservations for short trips to other destinations around the world, including Europe and the United States.

Importers say they’ll raise prices

Some 80% of Israeli businesses that work with Chinese manufacturers expect they’ll need to raise consumer prices, according to the survey conducted by CofaceBdi.

The company surveyed 450 executives at Israeli companies that import from or export to China, or work in tourism. It categorized respondents according to company size: Those with revenues of more than $100 million a year, those with revenues between $20-$100 million and those with revenues under $20 million.

Some 82% of executives at large companies said they anticipated increasing prices, as did 78% at medium-sized companies and 83% at small companies. This could indicate that all players in affected markets may be increasing prices.

Some 83% of respondents with commercial ties to China said they’ve experienced a drop in business due to the coronavirus. Half said their operations have decreased by 50% or more.

Many companies have already announced price increases of 3-10%, including Brimag, Electra Air Conditioning, Tornado, Newpan, and Xiaomi’s local importer, Hamilton. It’s not clear at this point to what extent the price increases have been necessary.

Nearly half of the importers surveyed said they already had shortages of their end consumer products due to the coronavirus crisis. Some 10% of Israeli imports are from China, not including the diamond industry. Another 10% of Israeli exports are bound for China, again not counting the diamond industry.

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