(photo credit: AP )
With the euro reaching new lows against the shekel, Israeli businesses are adapting to new realities. As exporters face dwindling demand and major losses, those in the outgoing tourism market seek to capitalize on the inviting exchange rates.
“The euro crisis presents opportunities for the Israeli tourist, and we are currently witnessing a trend whereby many people are rushing to place reservations for hotels during the summer holiday, to take advantage of the favorable exchange rates. Those who choose to travel to Europe this summer will enjoy the shekel’s strength vis-a-vis the euro and will pay less shekels for lodging, shopping and restaurants, especially compared to 2009 when the exchange rate stood at NIS 5.5 per euro,” Aladdin Travel marketing director Eyal Shtark said on Wednesday.
The Bank of Israel set the rate at NIS 4.7294 per euro on Wednesday afternoon.
Shtark said that while continuing devaluation of the euro could present even more attractive prices for consumers, no one knows what the future holds. He recommended that prospective travelers take advantage of the current window of opportunity and place their orders.
“We are already witnessing a clear trend of people booking hotel rooms in places like Rome, London, Paris and Berlin, as well as family vacation packages across Italy, Spain and France,” he said.
Galit Zakai, director of marketing for Eshet Tours, said Israelis usually reserved their summer vacations in June, but that this year, because of the euro’s poor performance, people were rushing to buy.
While those visiting Europe may enjoy cheaper prices, those who do business with Europe stand to lose.
Heshi Rubin, CEO of the Maon region agricultural cooperative, said the
euro’s devaluation might lead to substantial cuts to the regions’
produce exports. The cooperative, which is among Israel’s largest
potato and vegetable exporters, could lose up to 30 percent of export
potential, leading to 15,000 dunams (1,500 hectares) remaining
uncultivated and leaving many families with no livelihoods, Rubin said.
“We are dealing with a market with small [profit] margins. A sudden and
sharp drop in the value of the euro turns a profitable growing season
into a losing one. The local market is unprepared to absorb excess
produce that was meant for export,” he said.
“Soon the farmers will have to decide on the scope of planting for the
next season. Under the current situation, we will not be able to take
upon ourselves the risk that further exchange rate fluctuations will
bring about heavy losses,” Rubin said.
Amos Shalev, chairman of the export department for the Kibbutz
Industries Association, said the abrupt devaluation of the euro was
expected to cost the association’s members NIS 600 million this year.