A Tumbling Euro Is Taking Its Toll on Tourism to Israel

Wholesalers priced packages they're offering now a year ago, before currency lost value, and are now losing money.

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Passengers at Ben-Gurion Airport after flights to the U.S. were cancelled on July 22, 2014.
Passengers at Ben-Gurion Airport after flights to the U.S. were cancelled on July 22, 2014.Credit: David Bachar

It’s not just the lingering worries about security after Operation Protective Edge last summer that is weighing on Israel’s tourism sector. A new problem has emerged with the weakening euro, say tour packagers.

Hotels and wholesalers typically price package deals, which include airfare, transportation, hotels and guided tours, in dollars. But Europeans buying packages in euros have been seeing the cost of travel going up.

Although it has staged a small recovery in the last two days, the euro hit a 12-year low of $1.0457 at the start of the week. On Tuesday, it was trading at $1.0620, but many economists say the two currencies will soon be trading at parity, or $1 to 1 euro.

“There’s been a lot of talk in Europe about this,” said Oni Amiel, co-owner of Amiel Tours, which specializes in incoming tourism to Israel. “We’re already seen as a high-cost destination and there are the geopolitical problems in the region, and now the European currency has made us even more expensive. The minute the euro makes a dramatic move like it has, Israel becomes more expensive even if we’ve done nothing.”

Tourism wholesalers priced the packages they are offering travelers now a half year ago based on the euro-dollar exchange at the time, said Amiel. “Right now they’re selling them at a loss and they’re asking for help in lowering prices because they’re having trouble selling them,” he said.

But it is unlikely they will be getting much help from Israeli hotel chains.

“We can’t adjust prices. When the dollar drops, I don’t ask for money from the travel agents I work with overseas. It would have been nice to do that. But by the same token I can’t do much to help them even though I would like to,” said Anat Aharon, vice president for marketing at the Rimon hotel chain.

She said her hotel rates are already low because Protective Edge took a toll on incoming tourism last year that has still not reversed, while costs have risen.

“We are sensitive to specific cases, but I can’t reopen contracts all the time,” she said. “We have agents that booked rooms a half year ago and now they can’t sell them because of the euro, so I’m trying to help. We’re hearing about problems agents are having selling, but it’s still not a terrible problem.”

Amnon Ben-Dor, CEO of Eshet Incoming Tourism, says otherwise, adding that there’s been a drastic decline in reservations by Europe tourists, mainly from Germany, Italy and France.

It’s not just the packages, but the incidentals European tourists have to spend on once they arrive, like meals out, taxi fares and souvenirs. These are priced in shekels, but the Israeli currency has also appreciated 14% on the euro since the start of December.

Tourist arrivals were down 19.6% in the first two months of this year from the same time in 2014, to 380,400 people, while hotel occupancy rates fell to 49% in January – the last month for which there are figures – from 53% a year ago, according to the Central Bureau of Statistics.

How much of this is due to the continuing impact of last summer’s fighting and how much is due to exchange rates in unclear. It’s not just Europeans who are being hurt by unfavorable rates; Russian tourism has also fallen sharply because of the tumbling ruble.

“We tend to say that the drop is due to the political situation, but even if the geopolitical situation changes for the better, money is still the dominant factor,” said Ben-Dor.

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