Vacation Real Estate News
Israel Hotels Poised for Growth as International Visitors Set to Return
According to international hotel consultant HVS, Israel's domestic tourism market has been its saviour, with growth last year in excess of pre-pandemic levels, while international visitation is set to continue to improve leaving the country's hotel sector showing 'great promise', according to our latest report.
At 69%, domestic tourism dominated the share of hotel room nights spent in Israel in 2022, and it's expected that foreign travellers will soon regain their share of around 47% and more based on marketing efforts, the attraction of certain cities and regions, and the impact of the Abraham Accords peace agreement aimed at boosting tourism between member countries.
The Israeli economy, according to HVS' Israel Hotel Market Overview 2023 - Recovery in Progress, has exhibited a robust recovery following the COVID-19 pandemic, helped in part by a successful vaccination campaign. The country's resilient economy, boosted by sectors such as technology, industrial manufacturing, energy and financial services, has also demonstrated strength in the face of the repercussions of Russia's war with Ukraine.
'Israel's existing hotel supply has experienced a strong recovery post-pandemic, particularly in the second half of 2022, with performance back to pre-2019 levels or higher,' said report co-author Charles Carpentier, senior associate, HVS London. 'This has had a positive impact on hotel values in Israel, which our figures show are just 1.4% over 2019 overall, in nominal terms, compared with 8% across Europe. This has largely been due to strong performances from destinations such as Eilat and the Dead Sea, although values in Tel Aviv and Haifa are around 8% below 2019 levels owing to the heavy reliance on international visitors in these regions.'
HVS further reports Israel's hotel industry has also benefited from increased levels of investment, with new developments receiving grants of up to 20% of development costs. Before the pandemic, the country's hotel pipeline was at record levels with most of these projects still moving forward, despite delays, amounting to several thousand new rooms set to come on stream, with strong representation from international operators and brands.
Travel and tourism makes a significant contribution to Israel's GDP, although the Abraham Accords peace agreement, which includes Israel, the UAE, Bahrain, Kosovo, Sudan and Morocco, is expected to improve the flow of inbound tourists from these countries. HVS's report says that significant progress has been made in the first two years since the signing of the Accords, particularly in improving diplomatic relations between member countries, evident in the opening of various embassies and the appointment of ambassadors.
'The Israel hotel market is well-positioned for further growth and success, and hotels show great promise as the government's commitment to attracting international and regional tourism as well as retaining domestic visitors remains steadfast,' commented Russell Kett, chairman, HVS London and report co-author.
'The Abraham Accords have created a historic opportunity to grow the sector and improve Israel's GDP and tourism's prominence within the economy. It's important this momentum is carried forward, particularly easing the visa situation and the development of a robust marketing plan for each member nation.'
