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Israel to build 5,000 new hotel rooms?

Hotel Association presents plan to expand, upgrade existing hotels in popular tourist areas

Some 5,000 new hotel rooms will be built in Israel within five years as part of a new plan to expand existing hotels, the Israel Hotel Association (IHA) said Tuesday.


According to the IHA, the plan's implementation will add 410,000 tourists a year and 12,500 jobs, as well as a profit of NIS 28 billion (about $8 billion) to the gross domestic product in one decade.


The plan aims to deal with the hotel room shortage in Israel and takes into account the small number of building starts in the country. According to the IHA's inquiry, the reasons for this situation are a high risk level and non-profitability alongside expensive land prices and a shortage of available land.


"A hotel investor reviewing the industry's performance will be disappointed, and will mostly prefer to invest his capital in more profitable industries or in building hotels abroad," says IHA President Ami Federman.


"We are close to exhausting the existing hotel supply. In such a situation we won't be able to utilize the tourist potential to the fullest, and the State will lose income as well as potential workplaces."


The IAH's inquiry also revealed that a significant change in the economic environment and the construction of new hotels will provide a solution for the room shortage in only eight years or more. Officials warn that in the meantime, the existing number of hotel rooms will prevent an ongoing growth in tourism.


Fear: Shortage from 2015

The Tourism Ministry has been warning of an expected shortage of thousands of hotels rooms for quite a while. According to the "optimistic" forecast, the shortage will begin in 2015 and will stand at some 19,000 missing rooms, in accordance with an expected arrival of five million tourists a year.


According to figures released by the Central Bureau of Statistics, only 1,700 new hotel rooms have been added in the past decade and Israel currently has a total of 47,400 rooms.


The IHA's plan includes an expansion and upgrade of existing hotels in popular vacation areas, in two stages: Adding 2,000 rooms in the first three years and 3,000 in the following two years.


"An addition of rooms in existing hotels in the popular areas will significantly improve their profitability level and will provide a quick solution to the room shortage," says Federman. "It's good for the country and for the investors, and even for the environment compared to new construction."


According to the IAH president, a double amount of new hotels rooms can be built with the Tourism Ministry's grant budget by expanding existing hotels rather than building new ones.



פרסום ראשון: 05.20.11, 14:30
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