13 June 2018, London: Israel’s hotel sector is likely to see a second year of strong growth in 2018 as the number of tourists visiting the country continues to rise.


According to a new report from global hotel consultancy HVS, launched in London yesterday in conjunction with the Israel Ministry of Tourism, the country received more than 3.6 million visitors in 2017, a year-on-year increase of nearly 25%, boosting hotel occupancy across the country from 67% to 73%.


The majority of tourists to Israel come from the US, Russia and France, while German visitors as well as those from China, Poland and Romania are growing in importance.


The HVS annual Israel Hotel Market Overview, which covers the performance of leading hotels in Tel Aviv, Jerusalem, Eilat, Haifa and the Dead Sea along with an analysis of the tourism market, trends in hotel values and hotel investment, portrays a positive future for the hotel sector as Israel becomes a more affordable and popular destination.


“Last year was the first time in Israel’s history that visitor numbers reached three million,” commented HVS chairman Russell Kett, co-author of the report.


“The drivers of this growth have been a combination of improved geopolitical stability in Israel, successful marketing, the celebrations surrounding the 50th anniversary of Jerusalem’s reunification and additional incoming air routes,” he said.


Jerusalem, for example, saw international bednights rise by over 30% last year, while Haifa experienced an impressive 28% hike. International bednights in the popular Dead Sea region were up 22%, while the southern city of Eilat recorded a 16% rise.


As a result hotels across Israel saw their average daily rate (ADR) rise to US$209 in 2017, from US$203 the previous year, while RevPAR (rooms revenue per available room) was up by an impressive 11% to US$151.
Hotel investment in Israel has been boosted by a Government grant scheme providing additional finance for developers. Last year grants were approved for some 35 projects, for a sum equal to nearly US$50 million. These schemes amounted to the approval of some 2,570 additional hotel rooms, an increase of 33% on the previous year’s growth.


“This suggests investors are showing a growing interest and more confidence in the strength and potential of the Israeli market,” added Kett.


Israel’s hotel sector is strongly skewed towards the top end of the market, with a growing supply of boutique hotels, although the fact that international hotel chains are now looking more closely at cities such as Tel Aviv suggests that the lack of branded hotels is likely to be addressed in the future.


“As Israel celebrates 70 years since its inception, its hotel pipeline is expected to become much more significant with both local and international operators expected to strengthen their presence,” said report co-author Lionel Schauder, an associate with HVS.


”The budget and hostels segment remain untapped markets, which in a country where low-cost air carriers have become the norm means that growth in this sector would considerably enlarge Israel’s target market and fuel further growth,” he concluded.


In November 2018 Tel Aviv will host the first Israel Hotel Investment Summit, which HVS London is co-sponsoring, providing potential international and domestic investors with a valuable overview of the country’s investment climate and development potential.
Click here to view the full report.
