'Eilat Will Collapse Within a Year': Businesses Warn of Bleak Future for Israeli Resort Town

At the height of the tourism season, the Red Sea resort's hotels and boardwalk are packed — but the rest of the southern city is almost empty, prompting fears for its future.

A beach walkway in Eilat, with the underwater observatory in the background, August 16, 2016.
Ofer Vaknin

“Excuse me, I lost my husband and my battery is gone. Could I make a call?”

“Sure.”

The woman, pushing a stroller with a baby and holding another young child in her arms, took my phone and dialed.

“Where are you?! You better get here now! I’m with the kid in my arms! Come here now! After the bridge, near Maman, the Nargila King,” she screams at her errant husband.

It was very easy to lose someone last week on the boardwalk in Eilat, where thousands sought sanctuary during the period between the end of summer camps and the beginning of the school year. But even though the boardwalk itself was full, just 100 meters (330 feet) away was a different city. On the other side of the road to the busy Mul Hayam Mall, we found a block with four or five empty bars.

“The groups visiting the city are families, not our people; or youths, who we can’t let in,” says Liam, 27, the hostess at Paddy’s Pub, which is almost completely empty.

“This entire summer was very weak, and since Operation Protective Edge [in Gaza] in 2014, there has been a drop,” she says. “But instead of creating attractions in the city that would draw people in, they built us a musical fountain [at a cost of 8.5 million shekels ($2.25 million)]. Great, how will that help us? This city must wake up! It needs someone to shake it up, otherwise I don’t know what will happen here.”

Next to Paddy’s is the Casa bar, which has a sign out front saying it is “limited to 142 people.”

The Casa bar in Eilat. No danger of exceeding its limit of 142 customers on a quiet Sunday night.
Ofer Vaknin

But at 11 P.M., and even though it may be Sunday night, the only people here are the staff: Five young people, aged 22 to 25, who are sitting in despair at the entrance.

“The hotels are taking all our customers,” bemoans one of them. “People come here for a vacation, and after they paid such a high price for a hotel room, they don’t feel like spending more money. Anyone on an ‘all-inclusive’ deal has no reason to come here.”

“Someone from the government needs to see what is happening here. Except for the hotels, the city is dead,” says DJ Matan Pariente. “This city needs a recovery plan. They need to lower prices [in Eilat], because everyone here is greedy. I was overseas, and there you enjoy and drink at normal prices, because there they are not pigs. This city needs to work together in order for everyone to make money, not just the hotels. We don’t need to take so much money from vacationers,” he says. Let the hotels “fleece” the foreign tourists, but they should give discounts to Israelis, adds Pariente.

Separate entities

There are two separate entities in Eilat: there are the hotels, and then all the other entertainment spots. This can be witnessed in other businesses here. Shlomi Shoshani, the manager of the Babylon games park in the Ice Mall (the mall with an ice-skating rink that opened in 2012), says this year has been very slow because the hotel prices in Eilat are “astronomical.”

He notes that a “family vacation here costs 15,000 shekels. For that price, people prefer to go abroad, see the world. If the hotels lower prices, we too will lower prices and everyone will profit,” he says.

At the underwater observatory — one of the symbols of the Red Sea resort — the foot traffic is pretty sparse. Only the shark tank, where the staff is busy trying to convince parents and children that sharks do not usually attack people, is drawing any interest.

Neta Katz, a former hotel employee who now works in a souvenir store at the underwater observatory complex, complains not just about the hotel prices. She says cabdrivers are also a problem: they fight over customers in front of them.

The underwater observatory in Eilat, August 16, 2016.
Ofer Vaknin

The Kings City biblical theme park, which was over 50 million shekels in debt, shuttered at the beginning of the year, and the Imax theater is also closed. The city has no cultural activities and no future, Katz says. She also wonders how a city like Eilat doesn’t have a water park.

She says she is disappointed by the city, which “pains her. This city will not last for long. I have no hope. The city will fall — if not this year, then next year. In the meantime, they are building in Jordan. They are investing a lot more there than here, and accommodations are cheaper there.”

She sees one hope: a casino.

“They are scaring us with [stories of] crime and prostitution, but look at Las Vegas. It works there. We simply need police with balls here. A train from the center [of the country] could help a lot, too,” she reasons.

Others are less keen on the idea of bringing gambling to the city.

“A casino is a Band-Aid, it is the easy solution,” says Omer Armoza, operations manager of the Dolphin Reef in Eilat. “It won’t help us, because those who come to gamble at night do not usually go to swim with the dolphins in the morning. What Eilat needs is a full package for the tourist: attractions and convenient transportation to keep them satisfied,” he says.

Spending less money

In 2013, the stands spreading out along the seaside boardwalk were removed, after a legal saga that lasted for over a decade. In April 2014, the sellers began working from a new area with dozens of new stands set aside for them. But stall owners, who fought the entire process, are still unhappy.

“Look, from 9 A.M. until 9 P.M. I make 500 shekels. If I was on the boardwalk and not here in the complex, I would be at 2,500 shekels by now,” says one of the stall owners. “People need to come here specially — but it’s hard when the tourists spend all day in the hotel, and in the evening they don’t spend money in the rest of the city.

“In general,” he continues, “you feel people today are spending less money. The hotels are really setting the prices in the city, and they are high, so the tourist doesn’t spend money here. ... What will happen in another year or two? God only knows,” the stall owner sighs.

Figures released by the Israel Hotel Association last week show that Israelis spent 750,000 nights in hotels in Eilat in July — a 5% drop from the previous year.

Ziv Rozen, the CEO of Gulliver Tourism, told TheMarker last week that reservations for Eilat were down 10%, at a time when Israelis are flying to Greece, Cyprus and even East Asia for beach vacations. Israeli tourists think the price of a family vacation in Eilat in July is just too expensive, he says.

“I did my annual vacation with my husband overseas,” says a grandmother from Be’er Sheva, spending time on the boardwalk with her family. “Now I’m here for the grandchildren.” But the prices in Eilat are excessive, she says. “I love this city, but the prices here are scary. We, for example, took an apartment hotel and I cook lunch for the children, which makes the stay here cheaper.”

Zion, 49 and from Tel Aviv, came to Eilat with his daughter. They booked a hotel far from the sea at a rate of 560 shekels per night. Everything in Eilat is expensive and the restaurants are nothing special, either — but they still charge high prices, he says. Also, the service isn’t great compared to Tel Aviv and, except for the sea, promenade and mall, there’s nothing much to do. “The city is dying, in a catastrophic situation,” he says.

So why did he come? Zion cites historical reasons, because he himself came when he was a child and back then it was paradise. It was a city of beatniks and clean, without any violence in the air — not like today, with groups of youths looking for something to do. However, he still believes the city has “infinite potential.”

The whole country is expensive

It’s true the prices in Eilat are high during the summer, “but we won’t act any differently” says Shabtai Shay, director general of the Eilat Hotel Association. If Israelis want to come during peak season, at the end of August, then they have no reason to lower prices at that time, he observes. “Every year, some 2 million to 2.5 million Israelis come to Eilat, and it has always been the preferred vacation destination for Israelis.” But don’t expect lower prices, he adds.

“I have yet to meet a business owner in Eilat who has something good to say about the hotels, both when the city is full and when it’s empty. They always complain,” says Shay. Maybe their prices are also too high, he suggests. The entire country in general is expensive — just look at supermarket prices in Berlin or London, which are about 30% lower than in Israel, he adds.

What’s missing in Eilat are conference centers. And a casino would change things too — if it was operated according to the right model — and would provide a lot of jobs, says Shay.

Eilat city hall says competition for tourists, whether Israelis or foreigners, has increased and the city is investing more and more to exploit the potential for tourism. As for a casino, the municipality passed a resolution years ago supporting the building of one.

The Tourism Ministry said in response that hotel prices in Eilat are the result of supply and demand, and that prices are high only during three peak periods: the Passover holiday; the High Holy Days in September and October; and the July-August summer vacation. Hotels in Eilat are very reasonably priced the rest of the year, it says.

The ministry added that it does not interfere in setting prices for private businesses, and its role is to create a competitive environment by providing grants and incentives for those interested in building hotels — all over the country, as well as in Eilat. The ministry says the new law passed by the Knesset in early August, to speed up hotel development, will help lower prices.

In addition, the ministry says it is working to reduce bureaucracy; is investing large sums in tourism infrastructure and improvements; diversifying the type of hotels available; as well as providing incentives to airlines to fly to Eilat directly. Finally, the ministry is currently examining the establishment of a casino in Eilat, in conjunction with other ministries.