For Israel’s Tourism Industry, the Latest COVID Scare Is Only One Problem

On top of the new travel ban barring tourists from entering Israel, the sector faces an unfriendly government and growing competition from digital alternatives

David Rosenberg
David Rosenberg
Israeli tourists in Jerusalem earlier this year.
Israeli tourists in Jerusalem earlier this year. Credit: Emil Salman
David Rosenberg
David Rosenberg

For Israel’s travel industry, it looked like the coronavirus nightmare had come to an end in November when the government allowed foreign tourists to enter the country for the first time in 21 months. Travel businesses resumed operations, began hiring and launched marketing campaigns.

But just three weeks later, with the emergence of the omicron variant, the nightmare was back. The government barred foreign tourists again at least until December 29 and is making it tougher for Israelis to travel abroad by tightening quarantine rules and imposing outright bans.

Still, the persistence of the pandemic is only one of the sector’s deep problems, industry figures say.

At home, the Finance Ministry increasingly looks askance at the industry and is no longer willing to spend money to keep it afloat. Globally, even in the best of circumstances, it could take years for travel to claw its way back to pre-COVID levels. A lot of travel may never come back in the face of digital alternatives.

The tourism industry is livid over the government’s zigzagging policies.

“We opened our offices for the first time since March 2020, employed people to work and started to see reservations – and two weeks later they shut us down again, which is catastrophic,” said Yossi Fattal, head of the Israel Incoming Tour Operators Association. “Now we’re left with opened offices and employees but we’re under quarantine just as we’ve been since March 2020.”

Moreover, the Israeli response to omicron by imposing a blanket ban on incoming tourism seems like an overreaction; only a handful of countries have imposed one, and the World Health Organization has called travel restrictions ineffective.

The ban on foreign tourism has hurt some segments of the travel industry far worse than others. Many hotels have been living off domestic tourism, which has grown as foreign travel for Israelis has become more difficult. Many tour guides have done the same, aided by a government program to subsidize day trips.

But the industry segment that brings in foreign visitors has few ways to diversify. Fattal estimates that of the 2,500 people working in the segment before COVID, only about 1,000 remain. Even when the gates reopen to foreign tourism, many of these people won’t return, leaving the industry unprepared.

“You can’t recruit people quickly – it takes two to three years to train them,” he said. “If I gave you a travel company today as a gift, it would take you at least two years to bring over your first group. You have to learn the market and make the connections – it’s not just technicalities.”

Travelers arriving at Ben Gurion Airport recently.Credit: Ohad Zwigenberg

No more aid

The industry’s staving off of total collapse can be attributed to government aid of about 300 million shekels ($96 million) since the onset of the pandemic.

But that’s likely to be the last aid package. The treasury is tired of bailing out the industry, which, unlike much of the rest of the economy, has rebounded from the COVID-induced recession of 2020. Officials take a dim view of the sector’s prospects, as Finance Minister Avigdor Lieberman signaled at a cabinet meeting this week when he recommended that tour guides “find a new profession.”

He later apologized, but the fact remains that the treasury doesn’t think the tourism sector deserves encouragement from the government. It mainly provides low-skill, low-pay jobs, and the dollars it brings in are no longer needed at a time when Israel is deluged with foreign investment.

Moreover, tourism numbers aren’t going to recover anytime soon; one estimate puts the number of arrivals in 2025 at just 1 million, compared with 5 million in 2019, the last pre-COVID year. The tourism industry accounts for just 2.5 percent of the economy, so the impact will be marginal if it shrinks.

Officials believe that tour guides, among other people in the sector, should reach their own conclusions. “There is no moral or economic justification for paying tour guides to keep them from working,” an official told TheMarker, Haaretz’s business section. “The tourism industry isn’t a critical industry, and most of the guides who transition to another sector will probably be happy to return to the profession once tourism recovers.”

Fattal disagrees. The industry is a major employer, and for many towns in Israel’s outskirts, it’s an economic lifeline, he says.

“It’s not only tour guides, it’s bus drivers, restaurant workers, workers at tourist attractions – 100,000 jobs all over Israel,” he said. “In cities like Nazareth,Tiberias, Safed and Acre, the economy is based on incoming tourism. Without it, they’ll be doomed to poverty.”

There’s also a national security element, Fattal added, because a much greater 15 percent share of the Palestinian Authority’s economy is based on tourism. A declining tourism sector would reduce employment and increase political and social tensions. But the sector can only exist if there’s tourism to Israel. Tourists to the West Bank almost always enter through Ben-Gurion Airport, and most of their itineraries include Israeli sites.

A man walking along the promenade in Tiberias by the Sea of Galilee. Cities like Tiberias, Nazareth and Safed rely on tourism as a vital source of income.Credit: Gil Eliahu

The digital danger

Prof. Natan Uriely of Ben-Gurion University’s Department of Hotel and Tourism Management doubts that world travel, including to Israel, will pick up where it left off before COVID – though he admits that this makes him a contrarian.

“The conventional point of view is that things will go back to where they were,” he said. “People aren’t inclined to believe that we’re in a process of change.”

The image that comes to mind when you hear the word “tourist” is someone basking in the sun on an exotic beach, dining at a hotel or backpacking through Europe or South America. Those kinds of tourists are here to stay because the itch to travel is so fundamental, Uriely says.

But nearly half of global travel is for business or to visit friends and family. In Israel, business travel accounts for slightly less than the world average, but due to the large number of immigrants, friends-and-family travel is large.

An employee of the Bethlehem Hotel taking a call as tourist agencies cancel reservations for Christmas.Credit: HAZEM BADER - AFP

Uriely expects much of the business and friends-and-family segment to be replaced by digital alternatives. Business meetings and even family visits can be done over Zoom and other media; during the pandemic, people have become even more comfortable with the virtual world, and this won’t change.

“The world is on your cellphone – you can be anywhere virtually,” he said. “When you look at the long term, that and the government’s growing ideology that isn’t favorable to tourism, taking all of it together and frequent crises such as COVID and terror, I think over time tourism will change. Crises are taking us in a new direction.”

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