Tourism plan aims to drop vacation prices in Israel 20% in five years

Plan would classify hotels as "national infrastructure" for the first time, which will cut time for building approval and make it easier for new hotels to go up.

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November 11, 2015 18:52
2 minute read.
The Tel Aviv Hilton Hotel

The Tel Aviv Hilton Hotel. (photo credit: PR)

 
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A plan to boost the number of hotel rooms and increase competition in the tourism market aims to bring the cost of vacation down by 20% in the next five years, according to Finance Minister Moshe Kahlon and Tourism Minister Yariv Levin.

The plan, which the ministers announced Wednesday and will be brought for cabinet approval Sunday, classifies hotels as “national infrastructure” for the first time, which will cut time for building approval and make it easier for new hotels to go up. National infrastructure can be approved by a fast-tracked National Infrastructure Committee.

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“This is a step that will be felt in the pocket of each and everyone of us,” Levin said. “The program will ensure that entrepreneurs will not be forced to go through the bureaucratic ordeals, and the construction of a hotel in Israel will no longer be a dream.”

According to Levin, the plan will help add 15,000 hotel rooms within five years and 27,000 hotel rooms in 10 years.

In the past decade, just 3,000 new rooms were built, leading to a supply shortage that boosted prices some 70%.

An added benefit for Kahlon, who is trying to increase residential units to bring down the cost of housing, is a clause that would allow independent local committee to approve rights for residential hotel additions up to 20% of the hotel.

“Strengthening the tourism sector in these times in particular is in the national interest,” Kahlon said. “Shortening the procedures for planning and construction in the industry joins the other initiatives in the housing market that we are leading, by removing the obstacles and reducing unnecessary bureaucracy.”

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Israel Hotel Association president Eli Gonen welcomed the move, but said that there are government-approved decisions that could bring down prices in the next year instead of five years down the road. Specifically, he cited plans approved (but not legislated) in 2012 and 2014 that would ease regulation, which he said is more cumbersome in Israel than in the average OECD country.

“In order not to have a rerun of the Golan Telecom syndrome, it’s very important to reduce bureaucracy and reduce costs to help entrepreneurs build hotels, but it’s also important to increase the number of tourists to allow the hotels to survive,” he said.

The reference to Golan Telecom was a jab at Kahlon, whose cellular reform allowed Golan to enter the mobile market and reduce costs, but has agreed to a buyout by competitor Cellcom.

The sale would likely reverse some of the consumer benefit of the reform.

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