Budget Tourists Flock to Eilat, but Avoid Israeli Resort Town's Top Hotels

Low-cost airlines double number of arrivals this winter season, but youth hostels are getting most of the business.

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The resort city of Eilat.
The resort city of Eilat.Credit: Eliyahu Hershkovitz

At the Sunset Inn Motel in Eilat last week, there was hardly a room available last week.

At rates as low as 200 shekels ($50) a night, a group of tourists flying in to Uvda Airport from Europe, who might otherwise have moved on to Egyptian resorts or Aqaba in Jordan, have chosen to stay put in Eilat and booked 24 rooms.

Others from the group were staying at other city hotels, and from conversations with Sunset’s manager last week that was not unusual. The winter season for Israel’s southern report is looking up — at least for smaller, downmarket hotels, motels and hostels.

The Civil Aviation Authority says that 43,733 travellers landed at Uvda in November and the first three weeks of January, nearly a 200% increase from the same time last year.

Much of the increase is due to the low-cost airline Ryan Air, which began six weekly flights this year from three European cities. The carrier launched its Eilat route after Israel’s Tourism Ministry offered to pay 45 euros ($49) per passenger to airlines and wholesalers flying tourists to Eilat. To date, it’s paid out 15 million shekels ($3.78 million). The Eilat Hotels Association has topped its own with another 15 euros per passenger.

The problem is that the kind of tourists who fly low-cost airlines tend to have little to spend on their holidays. When they arrive in Eilat they’ll stay at a youth hotel or vacation apartment.

“These are tourists with monthly incomes of 350 to 400 euros, so for them to book a room, at $120 a night isn’t an option,” said Yevgeny Semipiadny, Sunset’s manager. His occupancy rate has jumped 30% this winter, compared to last year. “Many days were entirely full and on average occupancy rates are about 90%.”

The Tourism Ministry’s Eilat initiative came just as tourism to Egypt was devastated by the bombing of a Russian jet leaving Sharm al-Sheikh airport last autumn. Hoteliers in Eilat hoped to capture some of Egypt’s lost business but were worried budget travelers would risk crossing the border to Egypt once they landed or to Jordan.

Instead, they’re staying in Eilat , said Shabbtai Shay, director of the Eilat Hotels Association. The Russian government ban on flying to Egypt stemmed the cross-border traffic from Eilat and more recently Jordan tightened visa restrictions so that tourists have to get one in advance.

At the Little Prince hostel, occupancy rates have doubled to 60% this season, thanks entirely to low-cost flyers lured by room rates of 160 to 180 shekels a night during the winter season. Shmulik Shalem, one of the owners, says Israelis prefer higher-priced hotels and last year he was losing tens of thousands of shekels a month.

“Now I’m breaking even. I’m covering my costs this winter, which is a big thing in Eilat. Usually during the summer I’m profitable and I keep the money to tide me through the winter. Now I’m managing even without my summer savings,” he said.

For Eilat’s top hotels, and not a few of the mid-range ones, which are helping to subsidize low-cost flyers, the results have been disappointing.

“Our chain is only getting a small share, you could even say a marginal share, of the tourism coming through Uvda,” said a hotel executive in Eilat, who asked not to be named. “I assume that’s the case with the other hotels. It’s clear that many of them are going to hostels and hotels of three stars or less, and some of them are going to Aqaba.”

He said quality hotel rooms in Aqaba can be had for $35 a night. “Because of the high cost of living and regulation we can’t match prices like that,” he said. “Until we address this problem, we won’t be able to offer low-cost tourists coming to the city the kind of rates they’re looking for.”

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