Tourism To Israel Faces Major Declines After Gaza Operation

The year 2014 was supposed to be a banner one for Israeli tourism. After attracting a record 3.6 million visitors in 2013, Israel was expecting to exceed that figure by about 15 percent this year, according to industry projections based on the number of visitors through June.

But all that ground to a halt when conflict between Israel and Hamas erupted in early July. Tuesday’s announcement that the U.S. Federal Aviation Administration was temporarily prohibiting all U.S. air carriers from flying in or out of Ben Gurion Airport, after news of a rocket strike just one mile away, seemed to be the final nail in Israeli tourism’s coffin.

Tourism pumped $11.6 billion into Israel’s economy in 2013, accounting for about 6 percent of the country’s GDP. “It’s the country’s largest source of foreign currency income,” said Geoffrey Weill, a spokesman for the Israel Ministry of Tourism.

That income is sure to take a major hit, as tourists cancel or postpone trips due to security concerns. Haim Gutin, head of the Israel tourist office in the U.S., said the U.S. State Department’s travel warning on Monday and the FAA’s ban on Tuesday is having a grave impact on the sector.

“Today, it started to get very serious,” Gutin said Tuesday. While most of the cancellations he had seen until then were from individuals and families, he said large tour groups are also now starting to suspend their trips.

“Most hotels and airlines say the year is lost. The worst possible time for a war in Israel from the vantage point of tourism is the summer,” Mark Feldman, chief executive of the Jerusalem travel agency Ziontours, told Reuters.

Air travelers are particularly skittish after last week’s shock when a Malaysia Airlines jet was shot down by a missile while traveling over Ukraine. Delta and United suspended their flights to and from Israel indefinitely Tuesday, as have several European carriers, including Lufthansa and Air France, the continent's two biggest airlines by passenger-kilometers carried, a common measure of size in the industry.

El Al Israel Airlines Ltd. announced on Tuesday that it expects to lose as much as $50 million in third-quarter revenue based on cancellations. The airline’s revenue was $643.3 million in the third quarter of 2013.

The Israel Hotel Association estimated that the war would cost its members about $124 million in revenue. “Even before the [Israeli army's] entrance into Gaza we saw a big drop in occupancy rates and now ... the situation is worsening,” IHA president Eli Gonen told the newspaper Haaretz. “Hotels in Tel Aviv and Jerusalem are supposed to be 80 percent full right now, but today the occupancy rate is at about 40 percent. A lot of people canceled.”

Several tour operators that arrange travel for North Americans reported news of cancellations and drops in future bookings. Iris Hami, owner of Gil Travel in Philadelphia, said that her agency, which sends about 30,000 people to Israel in the summer, had received cancellations on about 20 percent of coming bookings.

“We have a lot of people who are delaying their trips because of the uncertainty,” said Hami. “But our clients who are there in Israel now have not cut their trips short.”

Shalom Stark, who runs Shalom Israel Tours from the coastal Israeli town of Caesarea, said his company had received cancellations from about a quarter of its clients for the month of July. And inquiries about future bookings had dried up. But, he added, visitors currently in the country have not altered their travel plans.

The suspension of flights by American air carriers left tour operators scrambling on Tuesday. “North Americans visitors is the largest demographic for travelers to Israel,” said Hami, indicating that the FAA’s announcement is sure to have a major impact on Israeli tourism.

But Israeli airlines are hoping to pick up the slack. One of Hami’s tour groups leaving for the country on Tuesday night was supposed to fly on an American carrier. The group has been rebooked onto an El Al flight instead.

“While U.S. and some foreign carriers have called a temporary halt, all three Israeli airlines are operating as normal and are planning additional flights for the overflow,” said Weill. The other two air carriers are Arkia and Israir.