Why Are Israeli Hotels So Expensive?

At an average of $223 a night, Tel Aviv boasts some of the most pricey hotels in the world, with Jerusalem not far behind. Alas, the high prices reflect the cost of running a hotel in Israel.

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The Norman finally opened in downtown Tel Aviv in October, after years of renovations. The roughly $12 million invested in the boutique hotel is evident in the sensuously lit library bar and magnificent...