Holidays Spending: Airlines Enjoy a Boom, Malls Feel the Gloom

Hotels and planes are full for the Sukkot holiday, but retailers report that sales are tepid.

Israelis are vacationing overseas in droves, despite higher prices for hotels and airfare, while back home people are pinching pennies, window-shopping at malls and refraining from buying, industry sources reported this week.

Prices for overseas travel went up between 5% and 10% over last year, but that has done nothing to crimp demand said Ronen Carasso, Issta Lines Group’s vice president for marketing. In fact, he says that the two weeks following Yom Kippur had seen a 10% increase in overseas travel.

"The holiday season this year was a dream come true,” said Carasso. "De facto, there were three months of vacation from the beginning of July until the end of September. People went on vacation two or even three times. The three consecutive months were driving parents insane, and as a result people went on travel vacations more than they did in previous years.”

Domestic tourism is also doing well, industry executives said. Prima Hotels CEO Avi Dor reported that his hotels are enjoying full occupancy in Eilat and Tiberias for the entire Sukkot holiday, while in Jerusalem they were fully occupied for the first part of the holiday and slated to stay above 90% for the remainder. The Israel Hotel Association said it members reported occupancy rates between 95% and 100% in Haifa. Hotels in Jerusalem and the Dead Sea were not far behind, with rates averaging 95%. Tiberias, Netanya and Eilat enjoyed 90% occupancy rates on average, although in Tel Aviv they were a much lower 80%, the association said.

But while Israelis were travelling hard, those staying at home have been spending little at the malls, retailers say.

“This is the first time that the holidays weren’t felt at all [in the sales],” said Zvika Levinson, CEO and co-owner of the fashion chain Daphna Levinson HDL. “The national mood and the return back to school so close to the holidays have caused sales to be worse than in previous years. Sales during the holidays were even weaker than on regular days.”

Sales data from 1,725 mall stores gathered by the market research firm Retail Information System on behalf of the TheMarker confirmed store owners' observations. Between the week before Rosh Hashanah through September 22, sales at the country's malls and strip malls fell 1.9% from the same time last year, with the sales falling to an average of NIS 56 per square meter from NIS 57. The biggest drop was in apparel, which saw a 3.8% dip in the year, to NIS 53 a square meter.

Proprietors of cafes and restaurants reported a similar trend. Last month sales at the Cafe Cafe chain were 30% lower than in previous months and the previous year, which saw no drop in sales at the start of fall, said Ronen Nimni, who owns the 106-branch chain. He said back-to-back summer vacation and fall holidays, together with back-to-school expenses, meant that people did not have extra cash to go on shopping sprees.

“It's been a weak period for us,” he said. “On the holiday eves no one leaves their homes, and there were just two weeks of work in September.”

A source at another cafe chain, who asked not to be identified, said sales on Rosh Hashanah and Sukkot were down 15% compared with last year.

At the supermarket chains, business has also been slow. Sales figures have been rising in recent months but that’s due to higher prices not because shoppers are buying more, industry sources said.

“The holidays have certainly not been great,” said an executive at one of the discount food chains. “People are buying more products when they’re on sale, and cheaper products, and putting less in their carts. But sales are similar to last year [in shekel terms] because of higher prices and the increase in the value-added tax.”

This year's drop in holiday sales is also part of a broader shift in consumption patterns among Israeli Jews, said Ofer Shechter, CEO of Ariel Pro-Mall Malls Management.

“It used to be that people would buy shoes and clothes for Rosh Hashanah, and would take advantage of the intermediate days of Sukkot to go the mall and buy things,” he said. “Now there are always sales, and people no longer see the holidays as a reason to splurge.

“We’ll be forced to make do with the increase of sales on non-Jewish holidays like Christmas and Id al-Fitr, which still have some significance as holidays,” he predicted.

Nir Keidar