The hotel industry has been hit hard in its pockets as a result of the sharp devaluation of the dollar against the shekel, causing a loss of some NIS 1.1 billion in revenues, the Israel Hotel Association said Monday. "The devaluation of the dollar is damaging profits diminishing the positive effect created by the growth in incoming tourism," said Eli Gonen, President of the Israel Hotel Association, at a conference in Tel Aviv on the profits of the local hotel industry over the past decade. "Losses in revenue absorbed by the hotels in 2007 and 2008 stands at about NIS 1.1b., which is akin to a loss in value of about 230,000 incoming tourists." Gonen added that the hotel industry was also exposed to the increase in food and energy prices. "These days we are also dealing with the wave of prices hikes in the economy weighing on profits," said Gonen. "Taking into account the price increases up until May this year, food costs for hotels are expected to grow by NIS 136 million this year in annual terms, while wage costs are estimated to grow by NIS 115m. At the same time, local hotels will be paying an additional NIS 64m. for water and energy consumption." On a positive note, Gonen pointed out that increasing numbers of tourists visiting the country in 2007 and beginning of 2008 was an encouraging and promising sign for the potential development and profitability of the local hotel industry. But he added that the rate of tourism depended solely on government policy. Meanwhile, the Tourism Ministry said last week that tourism to Israel this year stands to break records. Tourism from January to May of this year has risen 60 percent since 2007 and is on pace to approach 3 million tourists for year, which would break the previous record, set in 2000. In view of this development, Gonen urged the government to significantly change its policy to secure years of prosperity in the tourism industry. "The first step towards making a change must be the expansion of the marketing budgets of the state of Israel in the world while centralizing marketing activity in the hands of a national marketing association," Gonen demanded. "In addition, the government should focus on removing the obstacles obstructing the development of the tourism industry such as open sky policy issues and the lack of incentives for developers." At the conference, the association's economic division presented figures analyzing the profitability of hotels in Israel over the past 10 years. In the years 1998 to 2007, the annual yield on investment in hotels stood at an average of only 3.9%. An area by area analysis showed that over the same period, the lowest annual yield on investment in hotels - 0.8% - was recorded in Tiberias, compared with 6.7% in Tel Aviv. In the wake of growing incoming tourism numbers over the past year, the annual yield rate on investment in the hotel industry nearly doubled to a national average of 6.8% with the lowest yield on investment in hotels in Tiberias (3.9%) and the highest in Tel Aviv (11.9%).