The prices of vacations are among the highest in the world for both Israelis and foreigners. Since the prices of flights to Israel have been slashed, hotel prices are currently driving away foreign tourists, an economic resource of obvious value. For their part, hoteliers assert that excessive regulation is forcing them to keep their prices higher than the prices in Europe and Jordan, not to mention the security situation, which also deters tourists from visiting Israel.
Minister of Tourism Yariv Levin, however, believes that the key to prosperity for the tourist industry is to increase competition, in other words, an increase in the number of rooms - i.e. construction of more hotels.
Levin has set a target of 15,000 more hotel rooms in five years. He has reached the conclusion that building low-cost two and three-star hotels will provide one of the missing links in tourist demand. He says that tourists paying less than €100 for a flight on a low-cost airline also expect a fair price for overnights. Unfortunately, they will have to pay dearly for other services and expenses, just like Israelis.
Levin has two solutions for the problem of enticing investors to enter the hotel sector, in which a return on investment comes only after many years, if at all. The first, approved this week by the cabinet, is providing a grant to developers building a low-cost hotel. The state currently provides a grant equal to 20% of the investments; the cabinet has approved a 13% supplement, bringing the total grant to 33% of the investment. The cabinet also approved budgetary support for construction of hotels and motels in key tourist sites in Judea and Samaria, arousing predictable opposition from MK Itzik Shmuli (Zionist Union), who argued that the government was neglecting residents of outlying areas by transferring money to Jewish communities in Judea and Samaria.
Levin's other proposed solution is also controversial: allowing developers building hotels to allot 20% of the hotel space for residences. The current revised version of the bill will also allow existing hotels to convert a fifth of their area to residences. Opposition to this proposal has arisen, including many environmental organizations, which argue that the result will be the construction of luxury beach hotels and the destruction of outline plan for Israel's beaches.
Published by Globes [online], Israel business news - www.globes-online.com - on June 26, 2016
© Copyright of Globes Publisher Itonut (1983) Ltd. 2016