Akko has all the attributes and competitive advantages to become one of the most visited domestic and international tourist destinations - an Israeli version of the Greek tourist attraction of Mykonos. Akko has a fascinating 3,000 year old history, a captivating old city, a special food market and restaurant scene, ancient port, beach and the sacred Bahai Gardens. In practice, the city’s leadership and its residents do almost everything in their power to make sure Akko remains off the tourist map, and visitors do not flock to the city.
A mixed Arab-Jewish city, Akko suffered terribly during Operation Guardian of the Walls in May 2021 when two of the city’s Jewish owned hotels were extensively damaged by rioting Arabs protesting Israel’s actions in Gaza. A substantial influence still weighs today on the city’s commerce with some businesses having abandoned the city such as the Mercato restaurant in the Turkish bazaar. The number and type of visitors has also been affected.
Akko has relatively good economic development figures, which can and should allow the city to invest in its residents, infrastructures and economic and business development. According to the city’s financial report for 2019, the city invested NIS 4,800 net per resident, higher than the national average of NIS 4,400. Akko was ranked 35th among Israel’s cities in terms of investment per resident. The city has 26 square meters of income-producing property per resident and the average annual municipal rate is about Nis 1,500 per resident (both higher than the national average of 22 square meters and NIS 1,200 per resident).
In 2019, the city had 50,000 residents including 17,000 households. According to Akko’s approved master plan approved in 2017, the city is expected to grow to 85,000 residents, although no target year is given for this anticipated 70% growth of 35,000 residents.
Several targets are set out in the master plan: "Urban renewal of the existing fabric, allocating additional areas for a range of housing which will satisfy the long-term needs of 85,000 residents, including land zoned for future planning, and including the required public areas.
"Creating and scaling up a network of urban roads, creating suitable access to the old city, and connecting the parts of the city to a fully linked urban network; developing an urban center as a regional entertainment and commercial center; developing a range of unique hotels and accommodation, relying on existing assets; upgrading the industrial zone so that it will include a range of uses: developing a network of open areas, walking and cycle trails; and setting instructions for preservation, restoration, rehabilitation and reviving the city’s treasure trove of heritage and culture."
As always, the defined aims are generalized and appropriate for practically every city. In addition, there is basically no strategic plan or working plan for realizing these aims.
At the same time, the city has signed an roof agreement with the Israeli government for the development of 17,000-21,000 housing units in Akko by 2023 - an unrealistic target, and like a game of random numbers. It was decided that the housing units would be marketed in two stages: in the first stage 17,80 housing units and commercial and office space. In the second stage 3,500 housing units might be added, with the approval of the local planning and building committee.
As part of the roof agreement, Akko was required to build 2,000 apartments each year. In practice, over the past decade less than 200 apartments have been built each year on average. In other words, there is no correlation between the potential economy and the desired planning.
The neglected anchors
Akko is not a player in the Israeli tourism market. It barely warrants mention in the Central Bureau of Statistics report about hotel rooms in Israel and it is mentioned as part of the Akko district. The main city in the Akko district is Nahariya with 30% of the overall hotel night stays. The average occupancy for hotels in the mainly rural Akko district is low at 46%.
The hotel occupancy rate in the Akko region was declining even in the decade before the Covid crisis. Akko itself has several boutique hotels like the Effendi and Arabesque but the overall number of rooms is small. The Nakash family is currently renovating and rebuilding the Khan al-Umdan, which will become the Setai Akko.
Regarding Akko’s domestic commercial economy, the average monthly purchasing power of the city’s households is about NIS 70 million. Assuming an entirely closed economy, with no outward or incoming expenditure, such an income could support a net area of 40,000-45,000 square meters of commercial space.
According to the findings of economic consultants Czamanski & Ben Shahar Ltd., Akko has a net 56,000 square meters of commercial space, which means there is a balance between supply and demand, assuming that Akko residents are buying online and in surrounding shopping areas like Big Regba and in Arab towns, while there is incoming expenditure of visitors from surrounding towns.
What are the anchors operating in the city? Firstly the Old City has a net 10,000 square meters of commercial space. The market there is neglected, dirty and uninviting and does not encourage a good shopping experience. Even the authenticity, simplicity, and earnestness and warmth of the vendors has disappeared.
The Old City market must urgently be reinvented with the concept and mix of food and some non-food businesses and galleries that rely on the historical heritage of the city, as well as a range of restaurants offering a Mediterranean and Arab culinary experience.
The municipal market is in the city center next to the central bus station in an area of just over 1,000 square meters. It is an 'old generation' facility that is not managed or maintained. The Azrieli shopping mall in Akko is typical for the chain and will be expanded. It contains a mix of basic stores that provide local needs. Supermarkets and food stores cover 27% of commercial space in Akko compared with a national average of 26%. Restaurants and cafes take up 15% of commercial space compared with a national average of 10%, due to the places available in the Old City. This high rate can be an outstanding competitive advantage as in other such national attractions like Machnei Yehuda market in Jerusalem, Tel Aviv Port, Levinsky Market in Florentin and the Flea Market in Jaffa. Akko also has empty commercial space of 7%, slightly higher than the national average of 6%.
The master plan sees 378,000 square meters of commercial space in the city, five times the existing amount, but no actual plans for any major new commercial centers in Akko have been published, except for several neighborhood centers.
Yet Akko has the potential to be in the forefront of Israel's tourism, commercial and restaurant market. In practice, the city far from realizes this potential as an ancient city to become a world tourism center in general and national commercial center in particular.
In order to change the reality, the city must upgrade its infrastructures and embark on a building program, create a strategic marketing plan and genuine plan of action, and set up a management company for the market and Old City. Hundreds of hotel rooms and hostels must be built in the Old City and in the bay to the south, with a new beach created with bars along the seafront. Such a plan has already been designed by the Mayslits, Kassif, Roytman architects firm. In fact, Akko needs to be about just Akko, and the tourist treasure contained within it. It couldn't be simpler than just realizing properly planned endeavors.
The author is the CEO of economic consultants Czamanski & Ben Shahar Ltd.
Published by Globes, Israel business news - en.globes.co.il - on January 20, 2022.
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