Israel's tourism industry is one of the most outstanding service sectors, in terms of economic volume. In 1996, revenues amounted to $4.5 billion. The sector directly payrolls 55,000 employees, with another 85,000 employed by sectors providing tourism inputs.
The industry's contribution to gross domestic product amounted to $6 billion, of which 70% derived from incoming tourist traffic demand. The tourist industry contributed 6% to gross domestic product, which amounted, in 1996, to $96 billion.
Since March 1996, the Israeli industry has been in deep crisis. This was due to a series of security incidents and instability, which frightens tourists off. At the same time, Israel in recent years has served as a target for international hotel chains, which perceive the target's unrealised potential and wish to take a slice of the cake, either in the year 2000, or, in the more long-term view, of world tourism development.
Israel, with 2.3 million tourists (Central Bureau of Statistics figures for 1995), constitutes 0.4% of international tourist traffic, and is ranked 44th in the world in terms of the number of tourists. This positions it in the lower bracket of states with a medium volume of transactions. Total income for the tourist industry in Israel amounts to 0.7% of total international tourist traffic revenues. In these terms, Israel places 32nd in the international rating, thanks to the relatively high average spending level of incoming tourism.
According to Tourism Ministry forecasts, by the year 2010, more than a two-fold increase is expected in incoming tourist traffic, rising to 5 million tourists. In 2000, more than 3 million tourists are expected to visit Israel.
However, the essential condition for realising quantitative targets is political and security calm in the region, as well as a proper solution for a number of bottlenecks that are likely to be created in the future, including a significant increase in the number of hotel rooms in Jerusalem, and immediate realisation of the Ben Gurion Airport 2000 plan.
These data and conclusions, and many others, emerge from a comprehensive analysis of the tourism and hotel industry, jointly published this week by "Globes" and the Maalot securities rating company.
Just now, when incoming tourism is in crisis, the authors stress that the economic weight of that sector will increase progressively, both in absolute terms and relative to the volume of the inland tourism sector.
Israel is an attractive target for Christian pilgrim tourism, for historic-cultural tourism and for Jewish visits to the Holy/ancestral land. But, and this is an important point for the Prime Minister and those who agree with him, Israel will not be a target for mass recreational tourism, in the style of Greece or the Spanish coast. This is due to a combination of natural conditions of the Mediterranean shore in Israel, with Israel's economic attributes (price levels of tourist sector inputs, including manpower, compared to most states of the Mediterranean Basin), and the high cost of reaching Israel by air.
Incoming tourism increased by more than 66% in 1985-1996, the main upswing taking place after 1992. The political and security situation in the region and in Israel is the main factor affecting incoming tourist traffic volume.
According to Tourism Ministry forecasts, tourist traffic is expected to increase by 10% on annual average by the year 2000.
In the 'nineties, the source of most tourist traffic was certain west European countries (Britain, Germany and France), and the United States. Those four countries account for 50% of all incoming tourist traffic. It may be assumed that those countries will continue to be the chief source of incoming tourist traffic in the next decade too.
However, the share of tourism from south-east Asian states could increase significantly in the next few years, in light of the rapid economic development of those countries and the rapid increase in the volume of traffic from those countries in recent years.
The incoming tourist sector has represented, since the mid-'nineties, about one third of Israel's tourist industry. Ministry of Tourism forecasts say that growth in inland tourism will continue, and is expected to increase by 3.5% per annum on annual average. The main growth potential will be among those populations which, at present, consume very little in the way of inland tourism services. They are the ultra-orthodox population, the minorities and new immigrants.
Hotel keeping is the leading sector in Israel's tourist industry in terms of economic volume. Its 1996 revenues amounted to 28% of the total proceeds of the tourist industry. Of that amount, hotel revenues constituted 90%. Overall hotel proceeds amounted in 1996 to NIS 3.8 billion, up almost 37% compared to 1985. Some 50% of hotel revenues derived from incoming tourist overnights, and the balance from the domestic market.
Between 1985 and 1996, the number of rooms in the various hostelries in Israel (not including other semi-hostelry facilities) rose by 26% reaching 48,000 rooms. About 38,000 are in hotels, 4,200 in rural bed-and-breakfast (B&B) facilities ("zimmers"), 1,800 in youth hostels, Christian hostels and field schools (of the Society for the Protection of Nature in Israel), and a few thousand rooms in semi-hostelry facilities (boarding houses, non-establishment hostels and so forth).
In recent years, hotels have enjoyed relatively high rates of occupancy. 1996 was the fourth consecutive year in which there was a 65% average national occupancy rate. In 1996, hotels recorded 16.5 million overnights, of which 55% were foreign tourism overnights. Another 2.3 million overnights were recorded in youth hostels and in the rural B&B sector. Throughout that period there was a 44% increase in total overnights, while the increase in inland tourism came to more than 80%, compared to a more moderate increase of 18% only in foreign tourism overnights.
The average profit per room in registered hotels amounted in 1994 (the last year for which the Central Bureau of Statistics has published hotel profitability figures), to NIS 18,000. The highest profit was recorded in Tel-Aviv hotels, at 50% higher than the national average. In Jerusalem, profit per room was 20% above the national average and in Eilat and the Dead Sea, 10% higher.