Levin, Kahlon plan to lower hotel room prices by 20%


The Israeli tourism and finance ministers announced a new national plan to reduce prices by streamlining regulation on new hotels.

Israel's Tourism Minister Yariv Levin announced Wednesday a new national plan to reduce hotel room prices by 20% in 5 years, at a joint press conference in Jerusalem with Finance Minister Moshe Kahlon.

The linchpin of his plan: shortening the construction process for hotels, thus increasing the competition in the market and leading to an eventual drop in prices.

Levin said the National Infrastructure Committee -- which was tasked with overseeing natural gas, energy, and flight installations -- will also deliberate on tourism infrastructure, including hotels and tourist attractions.

The proposed amendment to the planning and building law will be submitted to the government on Sunday. Meanwhile, the Tourism Ministry's new national plan, which received the Finance Ministry's blessing, will include "mixed use" plans, allowing developers to add up to 20% building rights for residences alongside the commercial hotel rights.

These changes, said Levin, would increase the supply of guest rooms and lower the costs of stays by some 20 percent.

If the proposal is implemented, the average time to open a hotel in Israel would be cut by half -- down from a decade. The red-tape is a deterrent to hoteliers; businessman Alfred Akirov, owner of Mamilla Hotel and David Citadel Hotel in Jerusalem has repeatedly said: "I have no intention of opening new businesses here because of the burdensome regulation; I'll just maintain the existing ones."

Levin said: "Hotel construction will no longer be for the die-hard, and will begin in larger numbers. We are making a fast lane to bring to one committee all tourism projects to be developed across the country. It will completely change the existing reality."

"Making leisure more accessible"

Finance Minister Kahlon also addressed the press conference: "The plan will lower vacation costs. The financial and real estate benefits of building hotel rooms, and the opportunity to receive more tourists here, are blessings. If the project succeeds, it will make hotel rooms in Israel accessible to the bottom segment of society. Hotel rooms will not exclusive to the wealthy and to high-earners.

"Across the world, the middle class and below go on vacation. In my time, we used to be sent to our aunt, and it was fine; but today the country can afford to make vacations affordable even for those not earning NIS 30,000-40,000 per month. People need to vacation, it is no longer a luxury."

Turning to Levin, Kahlon said, "I will be glad to assist, and -- at worse -- we will not interfere."

According to figures from the Central Bureau of Statistics, in the decade of 2004-2014, there was an increase of 70% in the average revenue for a hotel room, a sign of the rising prices; meanwhile, the average salary increased by only 30% in the same period.

Published by Globes [online], Israel business news - www.globes-online.com - on November 11, 2015

© Copyright of Globes Publisher Itonut (1983) Ltd. 2015

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