The coronavirus outbreak is having a greater effect on Israel’s tourism industry than expected, with owners of hotels and other vacation rentals reporting occupancy rates below 40%.
Initially it had appeared that the impact of what the World Health Organization has now declared a pandemic was mainly curbing Israelis’ travel abroad and foreign flights to Israel.
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The Israel Hotel Association estimates that the industry is incurring damage of 350 million shekels ($100 million) a month, which would amount to 4.2 billion shekels a year.
Many hotels are now trying to attract Israeli customers via promotions and lower prices, but the success has been limited.
The hotel industry’s main concern at the moment is a wave of cancellations for Passover week next month, one of the industry’s busiest times. Passover vacations are already being priced at between 3% and 11% less – some industry members say even 30% – and prices are expected to drop even further the longer the pandemic lasts.
Sector sources are also worried that the crisis will continue into the summer.
On Monday, the hotel association said 4,000 workers were being put on unpaid leave.
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Many hoteliers say the main problem is the uncertainty, particularly regarding how long the outbreak will last and whether the government will offer financial help.
The Health Ministry’s strict rules mandating quarantine for anyone arriving from abroad have hit the industry doubly hard – there has been a dramatic drop in the number of incoming tourists, which means canceled reservations and empty hotel rooms, and Israelis are now increasingly afraid to attend gatherings.
Many Israelis are likely to stay home over Passover instead of reserving a vacation at a hotel, something many religious Jews would normally do.
The hotel association warned that the wave of cancellations and the unusually low occupancy rates could even cause the sector to collapse.
“Israelis are afraid to go to the mall. So why would they rent a hotel room?” asked Dani Assa, owner of the Armon Yam Hotel in the Tel Aviv suburb Bat Yam.
The Fattal hotel chain published a profit warning this week, forecasting that revenues will be down 10% for the first quarter compared to the same period last year, translating into a 50-million-shekel drop in operating profit.
Israel has around 55,000 hotel rooms. The industry’s revenues will fall by 500 million shekels a month because of Israel’s closing of its borders, or 6 billion shekels a year, the industry association says. Dozens of hotels are likely to be shuttered.
The Rimonim and Olive hotel chain has 14 hotels with a total of 600 rooms around Israel. Its vice president, Adele Edry, says Passover is the chain’s sweet spot. “It’s a strong time of year when the hotels are full, and reservations are generally booked six months in advance,” she said.
“At the moment things are relatively good because of the reservations booked in advance, particularly among religious Israelis. But there’s no way to know what will happen. Over the past two weeks there’s been a sharp drop in bookings.”
Assa, the owner of the hotel in Bat Yam, paints a much more morose picture. The hotel opened last year, and last Passover it was full, he says. But this year Armon Yam is only 20% booked for April and it’s not recording new bookings.
“It’s a catastrophe,” he said.