Tourism to Israel flourishes despite high prices

Tel Aviv seafront

Tourism is breaking new records even though a recent survey by FIT found Tel Aviv to be the world's third most expensive city.

3.3 million tourists visited Israel in January-September, 13% more than in the corresponding period last year. Israel finished 2018 with 4.1 million tourists, enabling the Ministry of Tourism to set a target of five million tourists a year. If this does not happen this year, it is likely to happen next year. It all depends, of course, on the security situation, to which the tourism industry is very sensitive.

Who are these tourists? If relatives, acquaintances, and businesspeople are excluded, most of the tourists coming to Israel are pilgrims. Backpackers and families have also arrived in more respectable numbers recently, but they are outnumbered by those driven by religious motives.

Together with this impressive number tens of thousands of tourists are also expected to coming to Eilat this winter on dozens of direct flights from various destinations in Europe landing in Ramon Airport. Many of them are going straight to Jordan and Egypt, simply because it is cheaper there - much cheaper.

1. Tel Aviv - 3rd most expensive city

Israel is indeed an expensive destination. This is indicated by not only every survey conducted among tourists, whether coming in groups or as individuals (free independent travelers - FIT); it has become part of the discourse on websites visited by potential tourists before selecting their next destination. "Israel is beautiful, cool, and worth visiting, but it is horribly expensive" is already virtually a slogan. Nodding our heads in pain and admitting that it is also expensive to live, and that the tourists' complaints are justified, however, is not good enough.

Something has to be done. We cannot continue to accept the fact that Israel in general, and Tel Aviv in particular, are high on the list of most expensive destinations. The recent rating published by the Omio website, which to a great extent expresses the cost of a vacation for tourists, puts Tel Aviv in third place among the world's most expensive cities for tourists.

This is not a compliment. According to Omio, half a liter of beer costs $9.50 in Tel Aviv, more than in New York ($8.90) and even Tokyo ($7.70). The only two cities more expensive than Tel Aviv are Hong Kong and London.

Beer is not merely a symbol. Almost everything in Israel is expensive for a tourist: taxis (even if the official rate is observed); food in supermarkets, not to mention in restaurants (how much falafel can you eat?); and worst of all, sleeping in hotels.

According to the Trivago website, the average price for a hotel in Tel Aviv is $200-300 a night, far more than in cities like Amsterdam ($150-190 a night), Barcelona ($120-165), and even London. Hoteliers still argue that the cost of living in Israel, meaning the price of cottage cheese and vegetables, is reflected in high hotel prices, together with the regulatory burden, which they claim is worse in Israel than elsewhere (lifeguard, security, etc.).

2. Abandon the star method for rating hotels

A glance at the report by hotel chains listed on the Tel Aviv Stock Exchange shows that despite this regulatory burden, they are all increasing their profits. Don't get me wrong - a business seeking to make a profit is merely doing its duty, which is good for the economy as a whole. It is possible, however, to put the hoteliers' willingness to lower prices to the test with regulatory concessions, such as seasonal municipal property taxes, concessions in the use of recycled water, and elimination of the unnecessary tax on employing foreign workers - those who are already in Israel and are eager to work. Competition should also be encouraged: it is true that hotels are being opened, but most of them are luxury hotels.

For developers, the investment in building a hotel, with Israel's expensive real estate prices, does not justify building hotels at popular prices, at a time when turning a medium-rated hotel into a luxury hotel requires mainly cosmetic additions. As far as they are concerned, if there is demand, why should they not benefit from it? The Ministry of Tourism has set a goal of increasing the number of tourists who put tens of billions into the economy, a welcome goal that cannot be achieved without addressing the market failures, which include neglect of internal tourism - tourist sites in northern and southern Israel.

In contrast to other countries, where residents welcome internal tourism, the number of Israeli hotel overnights did not increase in comparison with the preceding year, for one simple reason: Israelis prefer an overseas vacation and paying less for their vacation. One project that the Ministry of Tourism should abandon is rating hotels (using the star method). The relevant rating is by the web surfers and specialist websites (TripAdvisor, Booking.com, and so forth). Every shekel spent on encouraging hotels to go through this outdated star rating process is wasted.

3. The time has come to decide on an extra airport

Over a decade ago, an obvious decision was taken to build an airport to supplement Ben Gurion Airport. Under the open skies policy and vacation prices, in Israel, passenger traffic at Ben Gurion Airport has been growing every year, and is projected to exceed 32 million roundtrip passengers this year. Ben Gurion Airport has undergone facelifts and upgrading in order to cope with the growing number of passengers (plus absorbing internal flights to Eilat with the closure of Sde Dov Airport), but decisions should be implemented, and the sooner the better. Shaul Mofaz, who was Minister of Transport a decade ago, made the decision (based on a committee recommendation) to build a supplementary airport at Megiddo. Opposition led to the decision being reversed.

Several years later, the focus for a supplementary airport moved to Ramat David in the Jezreel Valley, which aroused enormous opposition among residents of the area and environmental activists. They claimed that the reason was concern about damage to the Jezreel Valley, not merely keeping an airport out of their backyard. The main advantage of Ramat David is its location in northern Israel, where there are no international airports. The disadvantage can be seen by looking at a map of the dense green area of the Jezreel Valley into which they will try to squeeze an airport (which will be limited in the length of the runway that it can contain).

The main concern is terrible traffic jams and damage to flora and fauna. An alternative to Ramat David is building a spacious airport with no limit on area (the length of the takeoff and landing runway) at Nevatim. The residents are in favor and the local authorities' leaders in the south are enthusiastic about the jobs it will create for residents of the south, but the nearby air force base and nuclear reactor make it impossible to rubberstamp construction of another airport in the south (in addition to Ramon Airport, which was opened a year ago, and is being used as a supplement to Ben Gurion Airport).

The most recent development in the saga of the supplementary airport was the petitions dismissed by the High Court of Justice against the proceeding for selecting the alternatives for a supplementary airport to Ben Gurion Airport at Ramat David and Nevatim. The decisions were made by a special team (another) formed to examine the location of a supplementary airport. The decision about the location for the supplementary airport for Ben Gurion Airport has been delayed for more than a decade. The time has come to make a decision, whether by relatively new Minister of Transport Bezalel Smotrich or his successor. It is time to get things moving.

Ramon Airport took a decade to build, and it took much longer to close Sde Dov Airport. That is how things work in Israel - such projects take time. In a situation in which no decision has been taken yet and the delay continues, the civil aviation and tourism sector is paying the price.

Published by Globes, Israel business news - en.globes.co.il - on October 10, 2019

© Copyright of Globes Publisher Itonut (1983) Ltd. 2019

Tel Aviv seafront
Tel Aviv seafront
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