NIS 65 million in damage to northern tourism

Hotel, guesthouse owners furious at government, which still hasn't promised compensation for losses: 'Ministry of Finance waging war of attrition against residents of the north'

Tani Goldstein |Published: 07.26.06 , 20:20

Tourism industries in the north have lost NIS 65 million (approximately USD 14.7 million), according to the Galilee Tourism Forum.

Hotels, guesthouses and tourist attractions in the north emptied almost entirely of visitors with the onset of the current confrontation on the Lebanese border. According to forum statistics, the tourism industry in the north lost NIS 36 million (USD 8.14 million) in the first week of the crisis, and another NIS 27 million (USD 6.11 million), as a result of cancelled invitations.

The slight drop in losses derives from the fact that, in the first week of the crisis, hotels and guesthouses had already invested in the expected arrival of guests. In the second week, most anticipated the cancellations and limited their preparations, with many of them even stopping operations entirely.

The forum estimates that, in this third week, the industry will lose an additional NIS 26 million (USD 5.87 million), and, if the fighting continues, will lose the same sum in week four. In total, tourist businesses are expecting a monthly loss of NIS 123 million (USD 27.8 million) for the month of July.

40 percent loss of revenue for guesthouses

The Dun and Bradstreet (D&B) business information company estimates that the war will result in a forty percent loss of annual revenues. According to D&B, the guesthouses alone will lose 116 million NIS as a result of the crisis. This analysis is based on the assumption that fighting will continue for a number of weeks and, thus, losses will affect the month of August as well.

A survey conducted by the company indicated that revenues from the tourism industry in the north constitute a sum of NIS 290 million (USD 65.5) a year: Some 80 percent of the tourism branch's proceeds.

Ministry of Finance waging war of attrition

"The Ministry of Finance is waging a war of attrition against residents of the north," said Meir Levy, chairman of the Galilee Tourism Forum, in reference to political foot-dragging on the decision to compensate northern businessmen for damages accrued as a result of the conflict.

"The government is avoiding a declaration of an emergency situation in order to avoid its responsibility to pay salaries, cover damages and provide advance payments to businesses. Government clerks are executing an exhausting negotiation process in order to prevent decent compensation to businesses harmed by the explosions in the north. It is not possible for the north to absorb the cost of the entire war," he said.

"Based on the of ministry of finance's stiffness and inflexibility towards us, it seems that they are much more interested these days in the interest rate, the state of the stock market, and Israel's status among international credit companies than in Israeli citizens fighting for survival in the shadow of rockets, endangering their lives, seeing their businesses crumble and losing their incomes," Levy added.

CEO of the Pastoral Hotel in Kfar Blum, Dubi Benari, said in a meeting with Tourism Minister Isaac Herzog: "It is unacceptable that, in a democratic country, two weeks have gone by and no plan has been formulated to compensate businesses. The minister of finance and his team were here, heard us and wrote things down, but nothing has happened since then, except for empty promises and statements."

"If you do not protect the financial immunity of the homefront, it will collapse," he added.

Ministry promises: Compensation plan by this week

The ministry of finance is conducting dialogues with various trade unions regarding compensation of business hurt by the conflict because, currently, the government has not declared an emergency situation in the north and, as such, is not required to cover damages.

Up to now, clerks from the ministry have promised that workers will receive full salaries, but it is still unclear if the government will subsidize this completely or will pass along the burden to the businesses and the workers (through reduced vacation days, for example). Likewise, it has not yet been decided whether business owners will receive compensation on other expenses, such as a rent and property tax.

The government torpedoed, yesterday, a bill drafted by MK Ami Ayalon that would obligate the government to compensate businesses. Concurrently, the Knesset postponed by a week the approval of a bill drafted by Minister of Industry, Trade and Labor Eli Yishai, which would forbid firing workers in the north for as long as the conflict continues.