Israel is facing a tourism boom and needs new hotels for accommodating tourists

Published on : Thursday, July 12, 2018

Israel association of travelSince 2015, Israel is facing a tourism boom. The number of foreign visitors jumped from approximately 2.5 million in 2015 to 3.6 million in 2017. The price of hotel accommodations has gone up in many areas in Israel as a direct result of increased demand and relative shortage of new hotel stock.

Presently, with the visitor number jumping more than 1.6 million (an 80-percent increase), hotel room count stands at 55,000 (a 12-percent increase).

A recent MasterCard study put Tel Aviv among the 10 top European cities whose tourism rate increased substantially in 2017, coming in at seventh place on the list. The study found that 1.7 million tourists stayed in Tel Aviv last year, marking an increase of 21 percent over 2016.

However, with limited stock of hotel accommodations, where are the tourists staying? The answer is Airbnb. Airbnb offers 8,000 units in Tel Aviv—the same number as the listed hotel accommodations in the metropolitan Tel Aviv area. In 2017, the annual average occupancy in the city’s hotels was 74 percent, and this year, occupancy is expected to reach 78 to 79 percent.

Hence, Tel Aviv needs an additional 5,000 or more new hotel rooms within the next five years.

Although hoteliers understand that Airbnb is here to stay, at the same time, they want some regulatory requirements to put into practice, similar to what has been implemented in various European and U.S. cities, including Barcelona, Spain; Amsterdam; London; Paris; New York and San Francisco.

The main reasons for the shortage of new hotel stock in Tel Aviv are:

The high price of land in the city;
Alternative uses for land, such as offices;
Lack of appetite from financial institutions to grant funding for new hotel projects;
The growing shortage of land in Tel Aviv’s main demand areas; and
High levels of regulation, red tape and bureaucracy involved in the hotel-development process.

There are some new hotels in the planning stage, which include the Nobu Hotel Tel Aviv, which is a conversion of an old office block into a luxury boutique hotel.

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