A German tourist named Stefan wanted to wrap up his week of vacation in Israel at a hotel in Tel Aviv. A relative of his who was traveling with him was enlisted to the task and checked out prices being offered by hotels in the city. It wasn’t supposed to be a particularly complicated task since the major Israeli chains, such as Fattal, Isrotel, Prima and others, have websites that clearly set out their offerings and allow the user to make reservations online.
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The Israeli chains also offer the user who doesn’t read Hebrew a choice of other languages in which they can book directly with the chain rather than through reservation sites such as Expedia and Booking.com, which would be expected to charge the hotels a commission. All the user has to do is click on a language from a pull-down menu at the top of the page and the information appears in the selected language, including details regarding rooms, discounts and special offers.
The problem is that it is not always only the language that changes when the user switches from one language version to another. Sometimes the price does too. If you designate English, for example, the prices won’t be in shekels but generally in dollars. Unlike the prices in Hebrew, where the prices include 17% value added tax (except in Eilat where there is no VAT), the prices in English don’t generally include VAT.
That makes sense to the extent that foreign tourists are the audience for the sites, because foreign tourists are exempt from VAT on their room charges at Israeli hotels, but Israelis aren’t. Israelis who find it easier to use the English sites can do so, but they will be required to add the VAT to the prices stated in dollars, and the chains clearly state that on their websites, explaining that the rates stated are for foreign tourists.
But when Stefan’s relative rechecked the price on a website that he had already consulted, he was in for a surprise. In many instances, the price that was being offered in Hebrew in shekels was lower than the dollar rate in English. And TheMarker has found this is not an isolated case, although a class action suit on a related issue also alleges at least one reverse instance: customers who paid more in Hebrew than they would have in English even after adding the VAT.
In many cases, the hotel chains offer different prices depending on the language selected. By all logic, since foreign tourists don’t pay VAT, the rates they are offered in dollars might be expected to be lower than the shekel rates in Hebrew, except in Eilat, where, in the absence of VAT, they would be expected to be the same.
But that’s not what TheMarker found. A check of the cost of a three-night stay at the Prima Music hotel in Eilat between May 19 and May 22 revealed that price offered to Israelis in Hebrew was 1,682 shekels (the equivalent of $447) while in English, it was 1,970 shekels ($523). Because the hotel is in Eilat, no VAT was charged in either language.
At the Herods Hotel in the seaside Tel Aviv suburb of Herzliya, a stay between May 26 and 29 can run 4,332 shekels according to the Hebrew site. If VAT is deducted, a foreign tourist reserving a comparable room would pay 3,702 shekels, all things being the same, but the price on the English site was 4,535 shekels.
On Isrotel’s website, we found a similar situation. In Eilat, where prices would be expected to be identical, the price for three nights in May at the Isrotel Yam Suf was 2,655 shekels on the Hebrew site but 3,622 shekels in English for the comparable room.
A class action suit was filed this month on a similar issue against Fattal Hotels on behalf of a plaintiff named Natan Neustein by Tomer Apfeldorf, a lawyer who specializes in Internet and class action matters. The suit alleges that there is a commitment that appears on the Fattal hotels website in Hebrew and other languages to compare prices in the event that a lower price is found after the reservation is made on the website.
“But Fattal is well aware that in many cases, when the reservation is made by the customer on its site in a certain language, it itself offers exactly the same reservation and exactly the same conditions on its website in other languages and a price that is hundreds and even thousands [of shekels] cheaper,” the suit states. “It does not occur to the reasonable customer that if he would just choose to use the site in another language, he could have purchased exactly the same service at a lower price compared to the purportedly best price that he was offered.”
An example alleged in the lawsuit found a reverse situation at Herods Tel Aviv in which Israelis would actually save money by reserving in English even after then adding on the value added tax than conducting the transaction in Hebrew.
Responding for this article, Fattal hotels stated: “There is a range of considerations involved in hotel prices on the chains sites, marketing and technical considerations, etc. We make efforts to provide the customers with the lowest price and the best service.”
At hotels that clearly cater to a foreign clientele, however, such as the Tel Aviv Hilton or Sheraton, we did not find disparities in pricing, because the room prices appear only in dollars. An Israeli reserving on the site would automatically have VAT added to the dollar rate.
Isrotel staff admitted that there are pricing disparities, but they attributed the differences to technology that makes it impossible to revise pricing in their department that deals with reservations for foreign tourists as frequently as is done in the department handling the domestic market. TheMarker was told that a decision has been made in principle to offer uniform pricing at each of the hotels in the chain and it is working on implementing the plan.
For its part, Prima hotels said the following: “This clearly does not involve an attempt at over-charging by anyone, but rather relating differently to two different populations. Vacation package pricing is set based on a series of parameters, including supply and demand, seasons and holidays, the exchange rate, competition, etc.”
The Atlas hotel chain said it offers identical prices on the English and Hebrew versions of its website and that any disparities are the result of digital technology. “We set a relatively low dollar exchange rate that Israelis benefit from. That’s compensation for the fact that the Israeli needs to pay VAT.”