With the summer break in full swing, Israelis opting to vacation domestically rather than overseas. The ongoing conflict and the uncertainty of air travel, compounded by numerous flight cancellations, have dampened the desire to travel abroad. Despite the absence of foreign tourists, local tourism and the accommodation of evacuees have more than made up for it. The government is covering the costs for evacuees from the northern and southern regions, further boosting hotel occupancy.
This heightened domestic demand has driven up hotel prices. Even with soaring accommodation costs, Israeli families are seeking respite from the persistent stress of conflict. Industry insiders report a 30% increase in demand for local vacations, particularly in Eilat and the Dead Sea. According to the Central Bureau of Statistics, hotel occupancy in June was robust across several cities: Eilat at 88%, the Dead Sea at 69%, Tiberias at 71%, and Haifa at 83%, all showing notable increases from the previous year.
Escalating Prices Amid High Demand
As Israelis find limited vacation options outside their country, certain hotels are capitalizing on the situation by raising prices. The cost of staying in Eilat and the Dead Sea has notably surged. Eshet Tours reports a significant rise in average vacation prices this August, with costs jumping from NIS 3,748 last year to NIS 4,799. Similarly, Ophir Tours observed a 30% increase in nightly rates, with a family room in Eilat costing NIS 1,933 this August, compared to NIS 1,480 the previous year.
Dr Shay Ronen, a lecturer at Kinneret College, explains that high demand naturally leads to price hikes, particularly when room availability is limited. He notes that booking dates also influence prices, with costs typically higher closer to the booking date. Additionally, group bookings often occupy a significant portion of available rooms, further constraining supply and contributing to price increases.
Beyond domestic tourists, the presence of evacuees in hotels has buoyed occupancy rates. The Ministry of Tourism reports over 21,000 evacuees housed in 416 hotels across Israel, supported by government funds. Though the government’s rates are below market prices, hosting evacuees remains profitable for hotels. Isrotel, for example, has seen increased profitability from these arrangements despite the adjustments required for personnel and services.
Prof. Alon Gelbman of Kinneret Academic College confirms that hotels hosting evacuees are indeed profiting, particularly those offering basic services. Good management and adaptability have been key to maintaining profitability as hotels quickly adjusted to meet new demands. Donations and external assistance, prevalent at the outset, further bolstered hotel profits. In cases where profitability dipped, it was often due to a decline in other revenue streams like restaurants and shops, especially in luxury hotels.
