Tourism takes hit from weaker dollar

October 10, 2006 10:24

Consumers book trips to America, leave Israeli hotels wanting.

2 minute read.

new york 88

new york 88. (photo credit: )

Dreams of a white Hanukka in New York are quickly turning into a potential reality for many Israelis benefiting from lower prices as a result of the continuing plunge of the dollar. Travel agents, meanwhile, are seeking ways to make up for lost profits. "A lot of people are now making bookings for November and December, for example, to travel to New York for Hanukka," said Zvika Karpel, general manager of local travel Web site Gulliver. "While before people would make advanced reservations but pay nearer to the time of travel in a let's waitand-see attitude, they are now making bookings followed by immediate payment to benefit from the weak dollar." As a result of the change in the dollar rate of between 30 and 41 agorot compared with last year, an average family booking and paying their trip to New York for Hanukka could now save about NIS 1,000. While the cheap dollar makes overseas trips for Israelis more attractive, however, most travel agencies and other tourism professionals are hesitant to report greater demand for flights and hotel stays from Israel. "On the back of the weak dollar, we are seeing more and people making flight purchases now for December and January to benefit from the situation, but this trend does not necessarily mean that there is a stronger demand for flights than before," said Ronen Carasso, deputy marketing manager at tour operator Issta Lines. "The drop in the dollar has a double affect on our industry. Prices have dropped by about 9 percent, but labor costs denominated in the strong shekel remain high as before, which will be denting revenues and thus profits." Yossi Fatael of the Israel Tourism & Travel Agents Association pointed out that the drop in the dollar rate compounds the troubles of the industry. "This summer holiday season has already seen one of the lowest price levels for travelers and still seats remained empty," he said. "The weakening of the dollar just adds to the loss of revenues and profits of travel agents, which make 45% of their annual revenues during the summer and holiday months." Meanwhile, the local hotel industry, which already has been hit hard this year by the war in Lebanon, is getting another smack in the face by the weakness of the US currency. "As the dollar weakens, revenues in the hotel industry are naturally coming down, harming profits as labor expenses are going up, which the industry up to now has translated into a 10% discount on hotel rooms," said Roni Pivko, vice-president of the Israel Hotels Association and CEO of Club Hotel. Pivko added that there had been some consolation with bookings from foreign visitors for the holidays but nothing like last year as the effects of the war in Lebanon continued to scar the previously booming industry. "Against the weakening of the dollar trend, the euro actually strengthened against the shekel, creating very favorable conditions for European travelers coming to spend their holidays in Israel," said Pivko. "However, European travelers have not taken advantage of cheaper hotel stays in the country as the security situation continues to scare them off." Nevertheless, IHA president Eli Gonen said he doesn't believe the weak dollar will have a major effect on tourism. "Traffic has never been affected by price but rather by the geopolitical situation," he said. Avi Krawitz contributed to this report.

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