Jerusalem, an important business center

A basis for Israel's tourism, government and much commercial activity, Jerusalem employs more then 50,000 people.

By JOHN BENZAQUEN
Crowne Plaze Hotel lobby (photo credit: Rami Solomon)
Crowne Plaze Hotel lobby
(photo credit: Rami Solomon)
Jerusalem is famous the world over as a religious, historical and cultural center; consequently, it is a city with vast tourist potential. Jerusalem is also a center of learning and government, and this creates a high level of commercial activity and many business opportunities. These three sectors together employ more than 50,000 people. In the past few years Jerusalem has become home to a thriving and growing science-oriented sector that is adding high-paying jobs to a city whose economy was based almost entirely on low-paying jobs.
To the outside world, Jerusalem may not be perceived as a business center, but in fact it is an important one. Tourism, learning administration and science-oriented industries create business opportunities and circles of economic activity.
As business opportunities in Jerusalem abound, the city an important destination for the business traveler.
Jerusalem has great business potential, and government and municipal authorities are promoting the capital as a center for science based industries. This policy may solve two serious problems – one is demographic and the other is economic.
Over the past years, there has been a significant population drain in Jerusalem. Young people are not keen to remain in the capital because most of the job opportunities are not exciting enough, and the salaries tend to be low. Salaries in science oriented companies are much higher than the average. Employment in hi-tech, biotechnology or medical devices can be very appealing for university graduates. So if this type of industry is promoted in Jerusalem, it may stem the young brain drain and, in addition, attract educated young professionals from other areas.
Another reason the central and local governments are promoting the hi-tech industry is that salaries in government and tourism tend to be low; consequently, Jerusalem is a poor city. One of the ways to improve its economic profile is by increasing the number of well-paying jobs.
Most of the promotion of Jerusalem as a business entity is undertaken by the Jerusalem Development Authority (JDA). Moti Hazan, director general of the JDA, says, “We have been promoting economic activity in general and science-oriented industries in particular for a number of years and have had considerable success. The number of science oriented companies that have relocated to the city has risen substantially as has the number of such new companies that have chosen Jerusalem as their venue. Consequently, the number of relatively interesting and well-paying jobs has risen. We are offering very attractive financial incentives to such companies, which is one of the reasons for their increasing numbers. Science-oriented companies are given grants according to the space they occupy and the number of employees. It adds up to NIS 400 per square meter and NIS 80,000 to NIS 95,000 for each employee. In addition, employees moving to Jerusalem receive a rental grant of NIS 30,000 for two years.”
Last year, the government inaugurated a new plan called Marom and earmarked an additional NIS 290 million in grants to promote economic growth in the city.
Through the JDA, the municipality and the government are promoting economic development in all fields. The incentives for entrepreneurs include grants to finance land development costs, local government tax and more. The JDA also gives grants to individuals relocating to Jerusalem.
The JDA is also promoting tourism and low-tech industries. Jerusalem is designated as Development Area A, which makes it eligible for government grants and tax breaks.
The government and the municipality pride themselves on their promotion work, but how does the business sector view their activities? Yitzhak Hirshberg, the owner and manager of the Tamar Laboratory supply company, is not overly impressed. He believes the JDA is doing a good job of promoting science-oriented industries but thinks it should come to the aid of commerce especially in the downtown area.
“Their help is very lopsided,” he says. “They are willing to assist industry -- and not just all industry but rather the science-oriented industries -- and they call that promoting the economic well-being of the city. Science-oriented industries are just one part of the economy of Jerusalem. There are other areas, such as commerce, that are completely ignored. They seem to ignore that commerce is what holds an economy together; it is the link between the producer and the consumer. A well balanced economy does not consist of industry only it also includes commerce. They should also take this into account”.
Jerusalem has also created a large infrastructure to cater to the needs of the business traveler. It has many luxury class hotels, as well as more modest hostelries that cater to the business traveler.
Haim Alkobi is the general manager of the Crowne Plaza Jerusalem Hotel. It is one of the capital’s leading luxury hotels, with magnificent public areas and ultramodern guest rooms. It is close to the Binyenei Ha’uma, the capital’s premier convention center. With regard to Jerusalem as a business center, Alkobi says, “Jerusalem is an important business center, especially in science oriented industries. It is also an important global convention center and the center of government.
Business persons from all over the world with business dealings with the Israeli government must come to Jerusalem. The hotel is very well located for a business person. It is a few minutes’ walk from the Binyenei Ha’uma convention center, within walking distance of the government office district and a few minutes’ drive from the Har Hotzvim science-oriented industrial park. We are very much geared toward the business traveler. The hotel has a business lounge with panoramic views, free Internet connection and much more.”
The Crowne Plaza Jerusalem is not the only hotel in Jerusalem that focuses on the needs of the business traveler. Most of the capital’s first-class and luxury class hotels cater to this clientele as well.
Bruno Deschuyter, general manager of the Inbal Hotel, says, “The business guest is a very important segment of our clientele. They are not the majority of our guests, but they generate an element of stability.”
The business of tourism
The fact that Jerusalem is a world-famous historical city has created a large tourist-oriented business sector of hotels, restaurants, shops and services, such as guides and transportation facilities. The tourist industry in Jerusalem employs approximately 30,000 Jerusalemites. It is big business, and there are plenty of business opportunities. Around 90 percent of tourists who come to Israel visit Jerusalem, and the numbers are growing. Recently, there has been a marked increase in the number of one-day tourists. These include passengers from cruise ships and visitors, especially from Eastern Europe, who take a holiday in one of the neighboring countries and come to Israel for a one-day trip to visit the holy sites. These three million tourists must be lodged, fed, entertained and guided around the historical and religious sites. This means hotels, restaurants, coffee shops, taxi drivers and souvenir and gift shops. And that means a lot of business and a lot of opportunities.The Tourism Ministry partly finances the building of new hotels with grants of 28% of the required investments. The ministry also partly finances attractions and other tourist facilities. Ilanit Melichor, who is in charge of tourism at the JDA, says, “The Tourism Ministry puts up the cash, but we at the JDA help entrepreneurs dot the i’s and cross the t’s. We also help them with the bureaucracy involved in setting up a tourist-oriented enterprise, whether it is a multimillion-dollar luxury hotel, a shop, a pub or a transportation business.”