19,000 new rooms needed to meet gov't tourist goal.
By RON FRIEDMANinbal hotel room298 88(photo credit: www.inbal-hotel.co.il)
Israel urgently needs 19,000 new hotel rooms if it wants to meet the government’s goal of bringing in five million tourists to the country by 2015, Tourism Minister Stas Meseznikov said Wednesday at a tourism investors conference in Tel Aviv.“To avoid the loss of tourists, which means the loss of income and the loss of jobs, the Tourism Ministry’s investment budget for the next two years has to grow to NIS 1.1 billion,” he said.Some 100 participants heard addresses by Meseznikov and leading hoteliers.An independent report analyzed the need for new hotels and the ways in which the government could help.“We are witness to a worrying phenomenon: While the demand for tourism and business visits in Israel is climbing and reaching previously unseen figures, during some seasons of the year we are incapable of meeting the demand and are in effect forced to reject the same tourists we encouraged to visit Israel,” Meseznikov said.“At the same time, our neighbors, who compete with us for the hearts of tourists visiting the region, are attracting the largest and most lucrative hotel chains and every year are increasing the supply of hotel rooms.”According to the Tourism Ministry, there are currently 44,000 hotel rooms in the country, which have a 65 percent occupancy rate.However, they will not be enough to support continued growth in tourism numbers, especially during peak seasons, the ministry said.According to research conducted by Rotem Strategy, the 19,000 needed rooms would cost NIS 10.2 billion and would have to be financed by private investors, government grants and lenders.For potential investors, however, that may not be enough. David Fattal, owner and CEO of the Fattal hotel chain, said entrepreneurs faced difficulties when embarking on a hotel venture in Israel.
“The major obstacle entrepreneurs face in Israel is that it is simply unprofitable to build a hotel here,” he said.“There are a lot of people and companies who would gladly build here if they thought they could profit.But with high land prices, diminishing government grants, incomparably high expenses on energy water and labor… it’s just not worth it.”“In the last 20 years, apart from small boutique hotels in Tel Aviv and one or two projects in Jerusalem, there have been zero new developments,” Fatal said. “Israelis prefer to invest in hotels in Europe.”
