The expected damage to Israel’s tourism industry in the third quarter of 2014, as a result of Operation Protective Edge, is estimated at $500 million. According to the Israel Hotel Association (IHA), which has estimated the damage based on tourist arrivals and revenue, and hotel occupancy, hotel industry losses to date total $100 million. Further damage totaling $25 million is expected due to the drop in Israeli tourism.
The IHA expected roughly 830,000 tourist entries in the third quarter of this year, up 15% from the corresponding period last year, and continuing the growth trend of 17% in the first quarter, and 19% in the second quarter of 2014. However, due to Operation Protective Edge, the number of tourist entries has been revised to a mere 280,000, 35% less than was expected. This amounts to an expected loss of $500 million from incoming tourism.
Prior to the beginning of Operation Protective Edge, IHA estimated hotel occupancy at 2.4 million tourist hotel overnight stays in July-September, up 10% from the corresponding quarter last year. However, the current estimate is for a 35% drop in overnights - in other words, 840,000 fewer, representing a total revenue loss of $100 million. The expected occupancy rate for hotels in Tel Aviv for this period was 60% but today it is only 40%. In Jerusalem, it has fallen from 60%-70% to 45%=50%. In Eilat, the situation is less dire falling to 80% from 85% before Operation Protective Edge. Predictably, occupancy rates in Ashdod and Ashkelon are much lower than in other Israeli tourist destinations, and stand at 20% (primarily foreign press), down from 80%-90% expected before the operation.
According to IHA data, domestic tourism in July was expected to bring 1.5 million overnights, similar to last July. However, reserve duty, diminished mood, and fear of spending time away from home have combined to cause a dramatic drop in the number of Israelis vacationing in Israel, and an occupancy rate of just 15% - a loss of 225,000 overnights, and revenue loss of NIS 85 million ($25 million). (Note: Domestic tourism figures are for July, and not the entire third quarter.)
The IHA emphasizes that these are estimates, which are liable to change from day to day due to developments on the ground, and also in light of the marketing campaign that Israel is planning to launch abroad to encourage tourism to Israel immediately after Operation Protective Edge.
Published by Globes [online], Israel business news - www.globes-online.com - on July 20, 2014
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