How the Hamas war is impacting the Israeli tourism industry - interview

While Israel’s economy takes a myriad of hits as the Israel-Hamas war rages on, one industry that is bleeding hundreds of millions of dollars, both within Israel and abroad, is the nation’s tourism sector.

“I estimate that the war in Israel will lead to a loss of at least 5 billion shekels in earnings from inbound travel,” Dr. Eran Ketter told the Jerusalem Post. Dr. Ketter is a senior tourism advisor and the head of the Tourism and Hospitality Management department at Kinneret College in northern Israel.

Dr. Ketter lays out different types of tourism that are currently being affected, and will continue to be impacted, because of the war.

Inbound travel

Inbound tourism, for example, has suffered painful blows recently, Dr. Ketter notes. “Inbound tourism means tourists coming to Israel,” he explains.

This is something that the shifting diplomatic landscape will impact greatly. As relations with Russia continue to sour, Dr. Ketter points to China as a country that may fill in a tourism niche that the Russians are vacating.

“It wasn't such a large market before the war, but it has been a very promising market. China, to remind you, is the largest tourism source market in the world,” he said.

This, however, will also heavily depend on the attitudes of the Chinese leadership as tourists from China only visit government approved countries.

Domestic travel

Domestic tourism, that is, residents of Israel traveling within the country, is another critical leg of the tourism sector.

“For each inbound tourists we have in Israel, we have about five to six domestic travelers,” Dr. Ketter said. This consists, for example, of people from Tel Aviv going to visit Jerusalem, or people from Jerusalem going to spend a weekend at the Dead Sea or Eilat.

“Most hotels in Israel's resort cities, which are Eilat, the Dead Sea area, and Tiberias, don’t really act as hotels now,” he emphasized. “They are being used as shelters for keeping people who've been evacuated from their homes.”

This group of Israelis who have been displaced from their homes numbers in the tens of thousands.

This domestic travel is critically important for numerous places in Israel. In fact, without it, some local economies are in serious danger. One of these places is the upper Galilee, near the Lebanon border in Israel’s north. 

“This is a very touristic area,” Dr. Ketter said. “A very important part of the economy of this region is based on tourism, and over 90% of it is based on domestic tourism.”

Still, it’s domestic travel that the tourism expert expects to recover the fastest. Compared to tourists coming from outside Israel who may need time to make the determination that Israel is safe, or even in the best of times, just to plan a trip, domestic travelers are far more spontaneous and their planning horizon is far shorter.

Outbound tourism

Additionally, outbound tourism, or tourism comprised of Israelis traveling abroad, has suffered. Traditionally, Israel punches way above its weight class in this regard.

“Israel is currently ranked as the second most important long-haul travel market to Europe,” said Dr. Ketter. “In 2022, some 4.5 million Israelis traveled to Europe. And although they're about 1% of the local travel to Europe, they are considered to be a very important segment.”

This is large part because there are economic niches across Europe including places such as Prague, Budapest, Bucharest, Batumi, Anatolia, Istanbul, and even Rome or Vienna, that rely economically on catering to Israeli visitors.

As a result, businesses such as hotels and restaurants, while hundreds or thousands of miles from the war in Israel, have been hurting from its economic consequences.

In terms of numbers, in October, outbound departures from Israel were slashed by at 50%. The trend continued into the first weeks of November as well.

By early November, already “we are talking about a loss of over half a billion euros for European businesses from the loss of Israeli business,” Dr. Ketter estimated. By the end of the war, these European markets will have lost far more.

Recovery

Even if outbound and domestic travel recover as quickly as possible, the five-billion-shekel loss the wounded inbound tourism sector inflicts on the Israeli economy will be felt.

However, Israel can act to speed the recovery of inbound travel. Dr. Ketter suggested that this can be thought of in two segments.

“One of them is the usual suspects. That is the Jewish community and the very devoted Christian communities,” he said. “This is a good place for Israel to exercise community marketing. You communicate with members of the community, you explain to them the situation, you maintain close touch with them. You nurture their passion for [Israel].”

These people will be the first to return after the war is over, he explains. The second segment refers to the general public.

“These are the people who come to Israel less as a spiritual home, and more as a destination of where East meets West. For these audiences, the day following the war, it will be very important to communicate a very convincing, ‘back to business, business as usual’ message,” said Dr. Ketter. “People, especially people unaware of Israeli society, might expect that a large part of Israel might be destroyed, and that we don't have normal life in Israel.”

While Israel will need to take steps to address the inbound travel deficit, outbound travel, Dr. Ketter predicts, will virtually take care of itself. After the war, Israel will likely see an increase in outbound travelers as its citizens depart on trips abroad in order to recover emotionally and deal with the stress accumulated from the war.