Hotel Occupancy Rates in Israel Recovering From 2014 Slump

Average July occupancy at 68% is just 3 percentage points below 2013 levels.

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Hotels in Eilat.
Hotels in Eilat.Credit: Mori Chen

Data released Tuesday on July hotel stays around the country indicate that the country’s hotel industry is recovering from the slump of two summers ago, when Israel fought Hamas and its allies in Gaza over the course of July and August 2014.

But occupancy rates have still not snapped back to their pre-war levels. Figures from the Central Bureau of Statistics and the Israel Hotel Association show that hotel occupancy rates in July of this year were 68%, slightly lower than the 71% registered in July 2013, the summer before the war.

In July this year, there were about 2.2 million night stays in the country’s hotels, a measure that tallies the collective number of nights that an individual or group of individuals occupied a hotel room. Of that figure, 662,000 nights were spent by foreign tourists and 1.6 million by Israelis.

The highest average July occupancy rates this year were in Eilat, at 84%, about the same figure as last year and, more importantly, the same figure as in 2013, the year before the war.

Tel Aviv hotels had an average July occupancy rate this year of 75%, a tad higher than the 74% in 2015, but much higher than the wartime figure of 51% in 2014. In July 2013, Tel Aviv hotels had a 78% occupancy rate, just slightly higher than this year.

Jerusalem hotel occupancy rates remained unchanged from last July, at 53%. During the war in 2014, they saw occupancy rates that were not much lower – 51%, but in the summer of 2013, 67% of Jerusalem hotel rooms were occupied on an average July night. It should be noted that July 2013 was also prior to the economic crisis in Russia, significant for a city that has welcomed considerable numbers of Russian tourists.

When it comes to foreign tourists, Tel Aviv is the city that is the biggest draw for tourists staying in hotels, although hoteliers increasingly complain about competition from websites such as Airbnb, which pairs apartment owners around the world with visitors looking for short-term accommodations. In July this year, foreign tourists spent about 202,000 hotel nights in Tel Aviv, unchanged from last year, supplemented by 88,000 hotel night stays by Israelis.

In West Jerusalem, July 2016 saw 177,000 hotel night stays by foreign tourists, up 3% from July 2015, but still 21% lower than July of 2013, the year before the war. Nazareth, which caters to a clientele of foreign tourists, notably religious Christians, the occupancy rate this July was just 36%.

Despite the high occupancy rates in Eilat, 84% this July, the Red Sea resort city is facing competition from other Mediterranean destinations, including Greece and Cyprus.

The promotional budget of the Tourism Ministry touting Israel as a global tourist destination has been boosted this year to 340 million shekels ($90.2 million,) compared to 230 million in 2015. Portions of this year’s budget are not only being spent in countries from which large numbers of tourists have come for years, but also in developing sources of tourist business, such as China and India.

Next year’s Tourism Ministry promotional budget will be 370 million shekels, the highest ever. The director general of the Israel Hotel Association, Noaz Bar Nir, views this as a portent of a better year for incoming foreign tourism in 2017. It takes time before promotional campaigns bear fruit, he noted, adding that if the relevant parties join forces, there is hope to return to the hotel occupancy rates prior to the 2014 conflict.

The hotel industry has certainly been closing the gap. The 68% occupancy rates in July nationwide are just 3 percentage points below pre-war levels.

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