Israel Passes Law Aimed at Lowering Hotel Rates

Knesset approves 'national infrastructure' designation for hotels, in hopes of encouraging the construction of additional hotel rooms and driving down prices.

The Crown Plaza hotel in Eilat.
Rami Solomon

A law aimed at lowering hotel rates in Israel by encouraging the construction of additional hotel rooms was passed by the Knesset late Monday, by a vote of 50 to 42.

The law designates new hotels as national infrastructure projects. That means that approval for the construction of new hotels is to be streamlined and handled by the National Infrastructure Committee of the Interior Ministry. By boosting supply, the hope is that hotel rates will go down.

Prior to the final vote by the full Knesset, the legislation, with amended language, was brought before the Knesset Interior and Environment Committee, paving the way for the final vote. The new language provides for the expansion of existing hotels and allows 20% of the expansion to be given over to apartments. It will also allow residential use of up to 20% of new hotels. The provision will not apply, however, to hotels built near the coastline purportedly so that the shore is protected as a resource available to the public as a whole.

The Tourism Ministry predicts that the law will greatly boost the number of hotels in Israel, and in the process, it is hoped make hotel stays in Israel less expensive. Tourism Minister Yariv Levin called it “the most significant step taken in Israel to lower the cost of vacations.” The legislation, he said, will usher in immediate construction of thousands of hotel rooms in the country and will maintain environmental safeguards.

The new law provides for the establishment of tourism subcommittees on the district planning committees around the country, which along with independent local planning committees will have authority to approve expansions for residential use, in connection with the construction, conversion or expansion of hotels.

For his part, however, despite the limitations in the law regarding coastal construction, Joint List Knesset member Dov Khenin, who heads the Knesset’s environmental caucus, said the legislation “rolls out a red carpet for contractors and real-estate sharks who want to build luxury hotels on the coast. The truth is, there is no shortage of hotel rooms in Israel. There simply isn’t,” he said. “From now on, it will be possible to build hotels without proper procedure, including along the coasts or in sensitive nature sites.” And he added: “Today they’re telling us that hotels are national infrastructure. Tomorrow it will be something else that harms the environment and people.”