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Israel pours money into hotel industry as tourism climbs

Posted By Abigail Klein Leichman On May 8, 2011 @ 4:00 am In | No Comments

City break holidays to Tel Aviv have become increasingly popular over the last seven years in European markets.

Thousands more hotel rooms, city-based festivals, beefed-up tourist attractions and maybe even another international airport – all these are planned over the next few years as Israel looks to maintain a major uptick in tourism. A record 3.45 million travelers came to Israel in 2010 – 25 percent more than in 2009 — and the trend is steady despite regional unrest keeping visitors from neighboring countries.

Several ambitious strategies were revealed by Israeli Prime Minister Benjamin Netanyahu and Minister of Tourism Stas Misezhnikov at the inaugural International Tourism Conference held in Jerusalem at the end of March. Netanyahu declared his intention to attract enough tourists each year to match Israel’s population figure of more than seven million.

“Israel should have more tourists than [residents],” he said. “Instead of a two-to-one ratio, we need a one-to-one ratio.”

Misezhnikov announced thanks to a doubled budget for hotel construction, the Israeli government will step up grants for such projects from 20 percent to 28%. Entrepreneurs may apply for 10% grants to help them build new tourist attractions.

“Six major projects are waiting to begin, and we are investing in a broad recruiting campaign to attract personnel to the tourism sector and build 10,000 more hotel rooms so that in 2011 we can provide for one million more tourists than last year,” said Misezhnikov. “We will also spend tens of millions of shekels to upgrade existing hotels.”

The list of priority areas earmarked for tourism dollars is expanding to include Eilat, the Negev and the Beit Shean Valley as well as the Lower Galilee, an area with special significance for Christian tourists.

In fact, said Netanyahu, “we are looking to work with Christian communities to highlight biblical attractions and develop direct flight paths to the Galilee.”

Of the 3,100 new hotel rooms expected to be ready by the end of this year, 660 will be in cities near the Sea of Galilee, such as Tiberias. About one-third of them will be built in Jerusalem, and 440 others in the northern Negev and Tel Aviv areas. In addition, the Tourism Ministry will invest $8.35 million to upgrade, expand and convert nine youth hostels around the country to accommodate general tourists.

Tel Aviv rivals NY

Always attractive to tourists, the cities of Tel Aviv and Jerusalem are getting more attention from the Tourism Ministry as well as local government agencies.

Tel Aviv has seen great success with its City Break marketing campaign begun seven years ago in European markets. The sandy cosmopolitan city appeared at third place on the Lonely Planet travel guide’s list of the world’s top 10 cities for 2011 and was named one of National Geographic magazine’s top 10 beach cities.

“Now it is one of the capitals of tourism in the world — better than London, rivaling even New York,” according to Eli Cohen, head of marketing strategy, service and corporate responsibility for Bank Hapoalim.

More tourism dollars are expected to be spent in Eilat in the coming years.

A luxury Ritz Carlton will open on the Tel Aviv coast within two years, said Kathleen Matthews, a vice president of Marriott International. Another is planned to straddle the border between the new and old parts of the city.

Cohen said the Tel Aviv municipality has invested heavily in infrastructural improvements for the benefit of tourists, and that Jerusalem is embarking on a similar venture under Mayor Nir Barkat. “Maybe we can promote ‘Holy Break to Jerusalem’ tours after there are enough hotel rooms,” Cohen added.

Major tourist thrust in Jerusalem

Marriott is scouting out prospective sites in Jerusalem, which boasts chain hotels such as Leonardo and Dan, exclusive hotels such as the King David and Mamilla, and boutique hotels and B&Bs situated in areas off the main streets.

Meanwhile, before its expanded hotel room goal is reached, the Jerusalem Development Authority (JDA) is banking on targeted events, such as the recent marathon and the upcoming Opera Festival to draw international tourists, says Ilanit Melchior, tourism director for the JDA.

“With the Israel Hotel Association and the Jerusalem Hotel Association, it’s part of our strategy to position Jerusalem as a global tourism destination for cultural activities,” she says. “We already have 1,100 packages sold for the Opera Festival and we had 1,000 foreign visitors for the marathon. When you have the right product, people will buy it.”

Museum directors from New York, Amsterdam, Chicago and St. Petersburg joined Israel Museum director James Snyder in a conference session exploring cultural institutions and events as catalysts for tourism. The Israel Museum has welcomed nearly 600,000 visitors since unveiling its $100 million facelift last July.

“Jerusalem was already branded 3,000 years ago as the world’s spiritual city,” said Misezhnikov, “but now we have expanded into the niche of cultural tourism.”

Surveys show that 80% of first-time tourists to Israel wish to visit Jerusalem, and the mayor has expressed his dream to attract 10 million annual tourists by 2015. Foreigners apparently aren’t scratching Jerusalem off their lists even in the wake of a terrorist bomb that killed a British woman and wounded 50 Israelis just a day before the conference, just outside the meeting venue.

“We certainly think and hope peace will come eventually, but the tourism industry realizes we don’t have to wait for a peace agreement,” said Cohen. “Over the last five years, Israel — and particularly Jerusalem — has gotten onto the international tourism map. We’ve opened the skies; flights from Europe are cheaper and there are more airlines flying here.”

He strongly advocates building a second international airport, situated in Eilat. It would not only serve tourists coming to Israel’s Red Sea resort but also South African travelers using Israel as a convenient hub to and from Europe.

Tourists from new markets

Pini Shani, head of the International Department at the Ministry of Tourism, said the ministry does intensive marketing all over the world each spring.

“In North America, we are approaching three segments: the general secular segment, who will come for culture and history; the evangelical Christian segment; and the Jewish segment that historically has been coming and providing good support.”

Russia and Germany are also major sources of foreign tourists to Israel, says Shani. Waterside resorts in Eilat, the Galilee and the Dead Sea are major magnets. The Dead Sea is one of 28 finalists in the New 7 Wonders of the World contest that ends November 11, 2011.

The ministry is using online, TV, print, radio and social media efforts to reach potential travelers in North America and Europe. Shani adds that China, Korea and India are new promising markets actively being explored.

Fast facts

• The number of tourists in Israel has risen from 1.2 million in 2001 to 3.45 million in 2010.
• The tourism industry employs some 96,000 people and is anticipated to add 15,000 jobs in 2011 — a 16% increase over 2009 levels. One-third of Israeli workers are employed in the hotel industry.
• Hotel development is on the rise, with 3,100 guest rooms expected to be added in 2011 and thousands more in subsequent years.
• The Tourism Ministry budget for 2011 is more than $250 million, a significant portion of which supports the hotel industry. In 2010, the ministry approved grants totaling about $248 million to hotel construction/expansion, while in 2011 the total budget for such investments is anticipated to be $400 million.
• The Jerusalem Development Authority’s tourism budget grew 800%, to nearly $7 million, between 2010 and 2011.
• According to Israel Incoming Tour Operators Association, the number of foreign visitors taking trips exclusively to Israel rose 10 percent in February despite regional unrest.


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