The Israel Ministry of Tourism in collaboration with global hotel consultancy HVS, presented a live event last week at Expo Dubai focussing on hotel opportunities in Israel during which senior representatives of hotel, real estate and tourism companies – investors, developers, operators, and financiers – discussed encouraging more investment into Israel’s hotel sector.
The event, further strengthening trade, investment, and tourism ties between Israel and the UAE, opened with minister of tourism Yoel Razvozov outlining the importance of tourism to Israel’s economy. Fleur Hassan-Nahoum, deputy mayor of Jerusalem, followed, warning that while Israel’s hotel pipeline remained strong, with hundreds of new rooms yet to come on stream, there was still a massive shortage of hotel stock, particularly in the upscale segment and in alternative accommodation such as serviced apartments.
“We lack hotel rooms in the city of Jerusalem and looking at pre-covid numbers, when the peak of tourism was 4.5 million, investing in hotels in Israel and Jerusalem makes good business,” she said.
HVS London chairman Russell Kett presented HVS’s latest Israel Hotel Market Overview 2022. In 2019, he said, tourism represented 2.5% of Israel’s GDP, low compared with some countries. Raising that figure to 4%-5% would rely on a number of factors including more international flights and more international visitors.
“You then get the impact of the ‘tourism multiplier’ as people that come then spend in tourism facilities with the knock-on effect that would bring. The tourism multiplier has a huge impact on the economy of a country,” he said, while exhorting the government of Israel to encourage further hotel investment by doing more to reduce the current red tape and to do more to welcome the enhancement of tourism to the economy.
With domestic tourism having largely propped up hotels over the past two years, Israel’s hotels held up well during the pandemic, Kett said, anticipating full recovery to 2019 levels in Israel’s hotels by 2025. “We expect to see occupancy levels in Israel’s hotels rise throughout 2022, resulting in a RevPAR increase of 49% for the year, occupancy recovering by 2024 and average room rate recovering by 2025. Domestic demand will drive recovery in the short term with international demand coming back when covid restrictions are fully lifted.”
“Eventually we expect international demand to come back, and improved operating leverages to be achieved which will help support a recovery of EBITDA in the sector. That uplift in performance and the return in investor confidence should enable hotel values in Israel to return to pre-pandemic levels. There is strong developer interest, which is very encouraging and there are numerous hotel projects that confirm investor and developer interest,” he concluded.
A distinguished panel including Alok Batra, CEO of Five Group, Ronit Copeland, CEO of Copeland Hotels, Gilad Maoz, partner of Epstein Rosenblum Maoz and Ami Federmann, vice-chairman of Dan Hotels then discussed key issues surrounding the development of Israel’s hotel sector and took questions from the audience on topics including attracting more people into tourism and where gaps exist in Israel’s current hotel supply. Dr Sabine Schaffer, managing partner and co-CEO of Pro-invest Group outlined what she looks for when considering a new region to develop hotels, including the political situation, legal environment, demand and existing supply.
The topical session was concluded by Lorin Maugery, head of foreign investor relations at Israel’s Ministry of Tourism who outlined specific ways in which the government could help investors including pinpointing plots of land currently out to development tender and details of government grants available.
Download a copy of Israel Hotel Market Overview 2022 by Russell Kett and Christopher Boyd.