What could derail Israel's tourism boom?

Shir Elmaliach in Tourism Ministry campaign

It isn't Hamas rockets - the answer lies closer to home.

Over 4.55 million tourists visited Israel in 2019, 10.5% more than in 2018. Israel is becoming more and more firmly established on the global tourist map. Jerusalem and Tel Aviv, the two cities in Israel most visited by tourists, have both earned mentions in recently published global tourism ratings - Tel Aviv, for example, won appreciation as a destination for foodies. Tel Aviv also made Google's list of the hottest destinations for 2020 - after all, no site anywhere in the world is safe from terrorism.

Google's list was compiled in December on the basis of search data for hotels all over the world, which give an indication the hot destinations under consideration by people for travel in the near future. Tel Aviv was listed in fifth place, after Da Nang, Vietnam; Sao Paolo, Brazil; Seoul, South Korea; and Tokyo, Japan; and ahead of Marseilles, Vienna, Bangkok, Dubai, and Perth, Australia.

The recognition of Israel and its leading cities as tourist destinations is significant both for Israel's image and in money terms. 10.5% growth in the number of incoming tourists is less than the growth rate in 2018, but is still many times the growth rate in global tourism. The jump in tourist entries to Israel is directly linked to the security situation, which is why the number of tourists visiting Israel has jumped every year since 2016, when Israel began enjoying relative calm. Another reason is the attitude of tourists - security events no longer drive tourists away, as they once did. Such events now take place in many more countries, and tourists seem to believe that no destination is safe from terrorism.

Bank Leumi's economists cite the stability in the region, a matter of supreme importance for continuation of the positive trend in local tourism, with 40% of proceeds originating in incoming tourism. They add that the positive trend in incoming tourism is likely to continue in the coming months, assuming that the security situation in the region does not take a turn for the worse, among other things because of the escalating clash between Iran and the US. "Some improvement in global growth is projected in 2020, a development that is likely to support incoming tourism during the year, and consequently the activity of companies operating in the tourism and hotel sector and related sectors, such as transport and restaurants. At the same time, it should be noted that among the developed countries, the economy's main source of tourism, no substantial increase in growth is projected," writes Bank Leumi economist Yaniv Bar.

The transition government could put a spoke in the wheel

Absurdly enough, however, the security situation is currently not the main threat to growth in tourism. The Ministry of Tourism calculates that tourists visiting Israel spent an average of $1,400 during their stay, and revenue from tourism in the Israeli economy totaled NIS 22 billion in 2019. The Ministry of Tourism warns, however, that this growth could come to a halt if the tourism marketing budget for 2020 is not fully approved while Israel is run by a transitional government. Diklah Cohen Sheinfeld, who heads the office of the Ministry of Tourism director general, told "Globes" that the ministry was making preparations with its budgets from the preceding year (already approved by the Accountant General) for campaigns scheduled in January-February, after which she says the publicity campaign, to be conducted digitally on many websites, will end.

"As soon as we have to stop this, we'll get other prices on global media, and our shekel will be worth less. At the moment, we have NIS 100 million left for the first wave of ads, from which the Ministry of Finance cut NIS 25 million, after which it looks as though we'll have to stop them. We began at a price of NIS 14.90 per click, and now we're at less than NIS 1 per click, because we're always on. Digital advertising gives us many tools, and enables us to know how close we've gotten to the potential tourist," she says.

The Ministry of Tourism's NIS 450 million marketing budget is separate from the ministry's basic budget, which was approved the same way as for the other government ministries. From this budget, the Ministry of Tourism funds marketing campaigns via influencers, grants and subsidies for airlines operating routes to Israel - €250,000 annually for each route operated by an airline from a new destination with potential for bringing tourists to Israel (spending that is supposed to encourage incoming tourism), and a €60 subsidy for each passenger landing at Eilat's Ramon Airport in the winter campaign for encouraging direct flights to Eilat, mainly by low-cost airlines from Europe.

The budget for flights taking place now at the rate of 45 flights a week was already approved in 2019, and grants approved the previous year will be still be given to airlines operating flights to Ben Gurion Airport. If a new airline submits a request now, however, it will be refused. "For example, if Singapore Airlines says it wants to open a direct flight to Israel, it would ordinarily receive a grant. Now, however, we'll have to turn the request down," Cohen Sheinfeld explains. "Even if the low-cost airlines flying to Eilat ask for approval of a subsidy for next year, a timetable that they already have to plan now, we won't be able to approve such a subsidy. It will be a death blow to Eilat."

"Globes": The question is, how much are tourists really affected by your advertising? Surveys conducted among incoming tourists indicate that the advertising is not a major consideration for the tourist.

Cohen Sheinfeld: "It's not just the advertising; there's a great deal of activity in the field. I think that as soon as we take our foot off the gas pedal, the car will start running on fumes, but will eventually slow down, until it stops. I don't think that the tourists won't come, but growth rates will be lower, and certainly won't be more than 10%. We're already concerned about a decline in 2021. Last month, there were already countries in which we had no digital presence but only signs on buses. This is liable to affect the number of tourists in January. Something else is also happening - when we're not there, other countries aren't exactly sitting on their hands. There are other markets in the Middle East that are trying to encourage tourism, and are advertising in our place. Saudi Arabia and Dubai are conducting extensive digital advertising campaigns, and are appealing to the same category of tourists. It's obvious to me that this can change decisions by tourists whether to come to Israel or to travel to one of the neighbors."

Published by Globes, Israel business news - en.globes.co.il - on January 13, 2020

© Copyright of Globes Publisher Itonut (1983) Ltd. 2020

Shir Elmaliach in Tourism Ministry campaign
Shir Elmaliach in Tourism Ministry campaign
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