Are Israeli Hotel Prices Fair?

Oded Lifschitz, the highest-ranking Israeli in the global Hilton chain, says the surveys are useless, and he isn't afraid of the Internet, either.

Nadan Feldman.
Nadan Feldman
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Oded Lifschitz: There's opportunity in Chinese tourism, which is developing fast.
Oded Lifschitz: There's opportunity in Chinese tourism, which is developing fast.Credit: Michal Fattal
Nadan Feldman.
Nadan Feldman

When Oded Lifschitz walks down the street and sees an old building, he automatically wonders if it could be transformed into a boutique hotel. That's where his heart is. Lifschitz, UK and Israel area vice president for Hilton Worldwide, loves old buildings with a rich history that can be reinvigorated.

The most senior Israeli in the Hilton hotel chain, Lifschitz has been in the business for almost 40 years. He's been with the Hilton chain for 35 of them, during which time he ran chain hotels around the world, including Japan, Australia and New Zealand.

The main difference between hotels in Israel and elsewhere is the "warm atmosphere" in the Israeli establishments, says Lifschitz, who lives with his family in London. "I don't think there are real differences between the average hotel in Israel and the average hotel abroad, but in Israel, there's no sense of alienation. Israelis have a warm business nature, and there's a sense that the hotel people enjoy serving you," he says.

Lifschitz came to Israel for the inauguration of the Waldorf-Astoria – Hilton's luxury brand, which occupies the sight of iconic Jerusalem hotel the Palace, which was built in 1930. Staying there won't be cheap – in fact, it will be one of the most expensive hotels in Israel, which is already known for the high cost of its hotels.

Do Israeli hotels really cost an arm and a leg?

Recently Israel ranked fifth in the Hotels Price Index, which covers a cool 260,000 hotels worldwide.

In 2013, the World Economic Forum ranked Israel's tourism sector 53rd in the world, which is pretty lousy. And Israel ranked 133rd in the category of competitive pricing in tourism.

Why are the hotels in Israel so expensive, even though they aren't considered to be particularly high in quality?

"Let me explain something to you about these surveys," Lifschitz replies. "The question is how the survey is done. For instance, if we check the prices that hotels in London charge during Champions' League season, the price will be very, very high, even if the hotel is a fleabag."

Do you feel hotel prices in Israel are fair?

"Hotel prices are affected by supply and demand, and that's how it is everywhere in the world," Lifschitz answers. "If you want to compare hotel prices in Israel with prices in other countries, you have to look at average prices throughout the year. If you do that, I don't know where Israel will fall, but I assume it will be somewhere in the middle, not in fifth place."

Also, he adds, ranking Israel fifth doesn't make sense to him, "because I know how much rooms cost in Tokyo, in London and in New York. "

Coping with the Internet age

One thing is for sure: the global hosting industry is changing, thanks to Internet. When staying abroad, the default option doesn't have to be a hotel or even a guest-house or hostel. Today the traveler can go online and look at sites such as Airbnb, to find an apartment – an ordinary apartment belonging to an ordinary family – to rent. Or a room in the family's apartment. And that's just one example.

Airbnb, to use that example, began as just another Internet startup. Today it's worth a cool $10 billion, according to the terms of its latest financing round – in which it raised a staggering $500 million, according to TechCrunch. (The Wall Street Journal says Airbnb raised only $450 million, but still.) 11 million people have booked stays in 34,000 cities using this convenient transactional app, Business Insider reported last week.

That stunning valuation is well, well beyond the value of the Hyatt chain of hotels, which presently boasts an enterprise value of $9.3 billion, and a market value on the New York Stock Exchange of $8.4 billion.

Israelis adore Airbnb. The number of rooms offered for rent through the site climbed 400% inside a year, and the local hotels have taken notice. Reuven Elkes, CEO of the Fattal chain of hotels, calls Airbnb a "serious threat." Lifschitz however is unimpressed.

"Essentially, to date we are not seeing an impact from Airbnb. We feel that we have a strong, time-tested business model, one that is very different from that of Airbnb, and the success of which is reflected in the strength of our brands and in our growth," he says.

Nonetheless, the global hotel industry needs innovative growth drivers. Two such are China and India, says Lifschitz. " China is a very good example. We have grown from 5-6 hotels to operate some 50 hotels in a few years." In Europe, the chain is focusing on incoming tourism from China, with special services catering to their tastes.

"It's quite like what happened with the Japanese tourists: In the beginning you see the Chinese travel in groups without spending a lot of money. As time progressed – and China has progressed very fast – you see the Chinese groups in more luxurious hotels. At the next level, they have started to travel as individuals."

For their convenience the hotels have a fluent Chinese speaker in the reception, menus are in Chinese, television channels in Chinese and so on, Lifschitz explains.

Are you being served nicely, sir?

He also feels that the quality of service in Israel's hotels is nothing to complain about.

"We as Israelis love to complain about the service here, but it's enormously improved over the last 20 years, next year virtue of the international chains that opened up here, training programs for workers, Israeli department heads who worked abroad and came back, and more," Lifschitz says.

Of course, Israel has its unique challenges. There is the brewing boycott and divestment movement, though Lifschitz says he hasn't heard anything about it; and there is always the perennial geopolitical misery.

"The political situation always affects things, but that's true in all the 93 countries in which we operate," says Lifschitz. "This week for instance we opened a hotel in Kiev. We have been pioneers in the last hundred years around the world and we always had hotels where things happened."

The courtyard of the Waldorf-Astoria, Jerusalem. March 25, 2014.Credit: Oliver Fitoussi

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