A busy market popular with tourists in Istanbul. Bloomberg

Why Is the Global Tourism Boom Passing Israel By?

Beaches, nightlife, and holy sites are all in just a few hours' drive for visitors. So why aren't a lot more tourists coming?

Over the first nine months of 2016, almost 1 billion tourists traveled to different countries around the world, says the United Nations World Tourism Organization in a report released at the beginning of November. This is 34 million more tourists than in the same period of 2015, and is particularly impressive considering the terrorist attacks around the world over the past year.

Global tourism has been consistently growing and since 2010 the average annual increase has been 4% for international tourism – an industry that employs one out of every 11 workers around the globe and produces revenues of some $1.6 trillion a year.

Taleb Rifai, the secretary general of UNWTO, says no destination is safe from all risks, and we have to increase our ability to deal with global threats to security and safety. The organization’s latest annual report on global tourism reflects to a great extent the story of Israel’s tourism industry too, which the local industry has been trying to make heard for years.

The two major challenges, security and a lack of guarantees offered by the government to those working in the industry; alongside distorted views of the business and middling marketing – are the two main factors that have prevented Israel from fulfilling its tourist potential for years, and becoming what it should be: the heart of Middle East tourism as well as the bridge between East and West.

Israel is the only country in which in a few hours’ drive the tourist is offered snow-capped peaks, desert landscapes, a lake and holy sites – along with lively urban scenes and unique and breathtaking desert craters; the Mediterranean and Red seas, alongside the Dead Sea.

Gil Eliahu

The factors that have enabled the rapid growth in international tourism in recent years are first of all related to the “global village effect” and the huge amount of information and connections now available over the internet, which encourage people to expand their physical and intellectual horizons and see the world.

Live longer, travel more

In addition, factors such as a longer life expectancy and earlier retirement age, along with the growth in tourism in countries with enormous populations such as China and India, have enabled real growth in global tourism.

These trends can be seen easily in the Middle East. Chinese tourism to Israel has grown by dozens of percent in recent years; but in Turkey the number of Chinese tourists has risen by 31% from 2000 to 2014. Jordan too has benefitted, and from 1.4 million tourists in 2000 the country attracted about four million in 2014, a 186% rise. Egypt went from 5.1 million tourists in 2000 to 9.6 million in 2014, an 88% increase.

Israel too has felt growth in incoming tourism, from 2.4 million tourists in 2000 to 2.8 million in 2015 – only a 17% percent increase. When we dig down into the statistics of incoming tourism we find that in 2002, during the second intifada, the number of foreign tourists was just under one million; and 10 years later the figure had climbed to three million. This is a wonderful recovery, but it seems that after every major security crisis, incoming tourism finds it difficult to bounce back.

Dr. Eran Ketter, an expert in tourism crises from Kinneret College, says that so far in 2016, the entire Middle East shows an over 6% drop in tourists. Turkey shows a 30% decline because of the turbulent events there, such as terrorist attacks and the failed coup, and Egyptian tourism has dropped by dozens of percent too. “If Israel manages to finish 2016 with a drop of only 2%, it will be clear that part of the [tourism] marketing budget is not dedicated to growth, but actually for a rearguard battle to preserve its market share, which seems to be rising nicely,” says Ketter.

“All the security incidents which the public forgets about very quickly, for me they are a scar that I had to understand in their wake how I organize my cash flow, how I pay salaries to my employees and how to project a facade to my visitors, my wife and children that everything is okay,” says Maoz Yinon, one of five entrepreneurs who are partners in the Abraham Hostel chain.

The group opened three hostels over the past decade, which are used mostly by independent tourists from overseas who come without organized groups. The hostels are in Nazareth, Jerusalem and the center of Tel Aviv.

“If [supermarket mogul] Rami Levy knew that every two years, statistically, he had a 90% drop in revenues for a period of between two weeks to two months, he might survive one such war, but not six consecutive ones like that. For us that is the reality. What is sad is that this is the country’s interest, that the world will think Israel is a dangerous place,” says Yinon. “The existence of the ‘enemy’ is what allows the present government to survive. The government for the past 12 years has used the idea that Israel is a dangerous place, and tourism is not at all a factor. It is not a matter of budget at all, it is a matter of outlook.”

Yinon is one of those brave entrepreneurs who are not part of a large hotel chain and do not have much capital of their own to absorb their losses. But they are highly motivated, creative and Zionist – in an attempt to create a different experience in Israel, on a low budget and with a social and community perspective. When you ask Yinon how he benefits from the increased budgets given to Tourism Minister Yariv Levin, Yinon says the money helps a great deal in increasing the competition in the entire industry and in encouraging new initiatives; but does not guarantee the survival of existing players.

Gidon Sharon / GPO

“Another campaign on Google won’t help. Give the money to those who really need it. They invest in bringing public opinion leaders and to pay more money to Google – but in the meantime, between wars, the businesses are failing,” says Yinon.

For years, people avoiding investing in tourism because of the inherent instability in light of the security situation, and even the large hotel chains that are expanding their operations are not building new hotels, at most they just convert existing buildings or buy existing hotels from someone else.

New target groups

Levin became tourism minister less than two years ago, a short time after Director General Amir Levy arrived too. The new arrivals seemed to have brought with them a new spirit to the ministry. Levin arrived with new ideas about different target groups, and marketing methods never used before by the ministry. In 2015 the marketing budget was 230 million shekels ($59.5 million), and today it is about twice that amount. Levin arrived with a demand to adapt the Israeli tourism sector to the dynamic pace of the marketing world and the private entrepreneurial world.

Levin has worked to remove obstacles to the construction of new hotels over the past year, and hotels were included in the definition of “national infrastructure” in the law to lower vacation prices, which allows them to be approved much more quickly in the planning and building process by a single committee on the national level.

In addition, after quite a number of obstacles, the law includes a provision allowing the use of 20% of the area of a hotel for housing in plans for building, expanding or converting hotels. This will increase the economic feasibility of hotels and enable them to receive credit more easily. Levin also expanded the areas around the country where new hotels are given grants, and is also acting to encourage the construction of much more popularly-priced hotels.

It is unlikely that Levin will still be around in the ministry to see all these actions bear fruit, because he hopes to receive a political promotion when the next round of major cabinet portfolios opens up. But the fact that such major league players as Rami Levy and the Azrieli Group are taking their first steps in the hotel business is still a sign that things may have changed in the industry.

Another barrier that tourists face when coming to Israel is the high cost of vacations here. For an Israeli, a weekend in a hotel in Eilat can be about the same price as the same weekend in Greece – including the airplane tickets. Hoteliers traditional blame these high prices on over-regulation of hotels.

Levin intends on removing many of these barriers, and has established a special committee whose mission is to lower vacation prices in Israel by reducing regulation. The idea is to impose the same level of regulation on hotels as exists in Europe. The committee is headed jointly by the Tourism Ministry and the Prime Minister’s Office. Among the rules that are expected to be thrown out are those requiring a large number of lifeguards at hotel pools and others requiring large public spaces, including shelters. In addition, the goal is to provide grants for various subsidies to hotels, such as for transporting workers to hotels at the Dead Sea and for hiring new employees in maintenance and cleaning. The idea is to allow hotels to lower prices – and compete with those in other Middle Eastern nations.

While reducing regulation and encouraging the construction of new hotels are important steps, a lot of criticism is leveled at the sad shape of existing tourist sites in Israel. For example, the seaside promenade in Eilat, the unfulfilled potential of the Lake Kinneret shore in Tiberias, the lack of development of hotels and beaches along the Dead Sea – all these can be partly blamed on years of unsatisfactory functioning by the various operational arms of the Tourism Ministry, too.

“Tourism is not just good for the economy as an independent and isolated industry, but it has the power to create growth indirectly in many other sectors,” says Eli Gonen, president of the Israel Hotel Association. Food and beverages, real estate, shopping, entertainment, culture and financial services, all these can benefit significantly from more tourism is it takes its role as an important national resource, he says. The big winners will be those living in the periphery.

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