Israeli Hotels Are Back in Business, but Airbnb Threat Still Looms

Overnight stays climbed two percent in 2016 to about 22.1 million, while average occupancy rates grew two percentage.

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Occupany rates are up in Tel Aviv hotels.Credit: Daniel Bar-On

Israel’s hotels saw some recovery in their business last year, thanks to rebounding incoming tourism and more business travel, but competition from Airbnb and Israelis vacationing abroad constrained growth.

Figures from the Central Bureau of Statistics and the Israel Hotels Association released on Monday showed that overnight stays in Israeli hotels climbed 2 percent last year to about 22.1 million, while average occupancy rates grew two percentage points to 62 percent.

The recovery was strongest in the last third of the year, mirroring an increase in tourist arrivals.

Still, overnight stays were down 1.2 percent from 2013, the year before Operation Protective Edge, which struck a huge blow to tourism, the figures showed. Moreover, many parts of the country haven’t recovered since the war, said Noaz Bar-Nir, CEO of the Israel Hotels Association.

“The areas where incoming tourism still hasn’t returned to levels from before Protective Edge are Nazareth, Jerusalem, Tiberias, Eilat and the Dead Sea,” he said. “By contrast, a return to previous levels, or even levels exceeding them, is evident in business centers – Tel Aviv, Herzliya and Haifa.”

Dan Hotels, one of Israel’s biggest chains whose properties include Jerusalem’s King David Hotel, said business traffic at its hotels had risen 5 percent in 2016, mainly at properties in Tel Aviv and Herzliya, where business travel accounts for 45 percent of all overnight stays.

“The business segment grew moderately and it remains stable even during terror events,” said Rafi Beeri, vice president for marketing and sales at the chain. “But there’s still no reason to rely on it as a main growth engine for tourism.”

Hotel stays by foreign tourists rose 4 percent last year and accounted for 39 percent of all stays in Israeli hotels, although they were down 12 percent from 2013. Overnight stays by Israelis edged up just 1 percent, as people took advantage of falling airfares to vacation abroad. Figures from the Civil Aviation Authority showed a 15 percent increase in travel abroad last year.

Bar-Nir said the hotel industry also took a hit from the growing use by vacationers of Airbnb and similar services to rent apartments and rooms, and noted that tourist-arrival figures were growing faster than increases in hotel stays. The number of tourist arrivals came in at exactly 2.9 million last year, a 4 percent increase over the 2015 figures.

“Overnight stays data in comparison with tourist arrivals to Israel testify to the fact that tourists are staying less time in hotels or are moving to alternatives,” he said.

Five or six years ago, occupancy rates at Israeli hotels was 65 percent and 66 percent or more on average. Competition from lower-priced hotels in the Palestinian Authority and Jordan has also taken business away from the Israeli industry.

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