Tourism Ministry Director-General, Noaz Bar Nir, warned Tuesday of an expected shortage of thousands of hotel rooms in the coming years. Bar Nir spoke at the Knesset State Control Committee on Tuesday during deliberations on the future of the Palmachim beach resort.
"The existing supply of hotel rooms of various types does not match the demand that is expected to renew and increase in the coming years and months as we gradually move out of the global economic crisis. The Tourism Ministry will continue to encourage entrepreneurs from Israel and abroad to build hotels in Israel and increase the accommodation supply, thereby reducing prices and meeting the expected demand," said Bar Nir.
Bar Nir added that the Tourism Ministry is working towards building an additional 2,500 rooms beyond the existing 48,000.
During 2009, 337 hotels operated in Israel. Jerusalem is home to 69 hotels with 9,000 rooms. Eilat has 50 hotels with 11,000 rooms. Tel Aviv has 49 hotels with 6,000 rooms. The Dead Sea has 15 hotels with over 4,000 rooms, and in the Tiberias and Sea of Galilee area there are 45 hotels with a total of 6,000 rooms.
Occupancy rates at hotels in 2009 fluctuated between 44% in January and 72% in August. Last year, which was a record-breaking year in terms of incoming tourists, saw occupancy rates reach a high of 73.5% in May.
The Tourism Ministry is currently completing the process of transferring the tourism investment center from the Ministry of Industry, Trade and Labor to the Tourism Ministry. Such a move would help simplify bureaucratic procedures, which are some of the main impediments to the new investment. In addition, Bar Nir said the ministry is working towards increasing budgets for encouraging capital investment for new hotel construction, locating and marketing land, and providing grants to help entrepreneurs.
First signs of new hotel industry activities came in the form of an announcement earlier this month that international hotel chain Ritz Carlton will be opening a new hotel in Herzliya. The 12-story luxury hotel will have 110 suites and an additional 85 units for sale to private owners. The company had originally planned to build a hotel in Tel Aviv in 2000, but the plan was canceled when the second Intifada broke out that year. The new hotel is planned to be opened in March 2012.
In a press conference last week, Tourism Minister Stas Misezhnikov said he had presented his three-year plan to Prime Minister Netanyahu and the cabinet, where it received wall to wall support. "We have a real partner with this government. Everybody realizes that tourism is a major engine of growth for this country and have offered their support."
Misezhnikov said that the focus for development would be Jerusalem and the periphery regions, which the ministry has identified as the places where most tourists desire to visit.
"The Tourism Ministry is an economic portfolio. As such it is measured according to two main parameters: creating jobs and balancing income with expenses. For every 100,000 tourists, 4,000 jobs are created and 450 million shekels are invested in the Israeli economy," said Misezhnikov.
During the debate on the Palmachim resort, Bar Nir noted that the Tourism Ministry will continue to support the project as long as natural and environmental values and legislation are maintained, alongside the entrepreneurs' commitment that the project will be reserved for hotel use exclusively.
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