As rockets continue to fall on northern Israel, there's an all too familiar feeling in the tourism industry that each Katyusha attack brings another blow to what had promised to be the busiest summer in years and the industry one step closer to the paralysis experienced five years ago. "After the last four very difficult years, we finally showed high expected occupancies for July and August, with strong bookings for the rest of the year, and now we're completely empty," said Ruthie Oren-Rachman, manager of the Gai Beach Hotel in Tiberias this week. "It's like a child learning to walk who tries so hard to get up and, when he finally makes it, you knock him down with a hammer." Oren-Rachman noted that the hordes of tourists who fled the city last weekend when the rockets began raining down on the resort town were mainly local vacationers and that the hotel was still fully booked for November with reservations from overseas visitors. If the violence continues for more than two weeks, however, she said the hotel can expect to start receiving further cancellations. With Friday marking day-10 of Hizbullah attacks on the North, the empty hotels and rows of taxis parked opposite a deserted promenade in Tiberias are indicative of the general state of tourism in the area. And as each additional day of violence passes without sign of a let-up, fears grow that the effect will not be short-term and that it will spread to the rest of the country. This concern stems from the outbreak of violence in Jerusalem in September 2000, with the start of the second Intifada. Although Israel still had its strongest year ever for tourism that year with some 2.7 million visitors, only 1.2 million tourists braved the country in 2001 and no more than 861,900 in 2002. Travel-related businesses began to see some light last year as close to 2 million people arrived in the country and the industry has looked forward to a 2006 reminiscent of the 2000 peak. Indeed, earlier this week the Central Bureau of Statistics reported that over 1 million tourists arrived in the traditionally slower first half of the year. Now the similarities between the two years have taken on a deeper significance with the possibility that this time, too, violence could spoil the party. A spokesman for the tourism ministry, however, on Thursday said it has not revised its estimates for the year and that it still expects its 2.4 million estimate for 2006 will be achieved. "We still see the situation as temporary and hope that the next five months will correct what has happened in the last two weeks," she said. Cancellation clocking-in While Tourism Minister Isaac Herzog and industry professionals have thus far repeatedly assured that there have not been en-mass cancellations in the first two weeks of fighting, that is now expected to change. "From our part, lots of people are calling to cancel their upcoming trips, whether they are scheduled for now or for next month, even though they don't know what's going to be then," said Miriam Saalkind, customer services manager at New York-based Do-All Travel, which specializes in travel to Israel. Mark Feldman, managing director of Jerusalem-based ZionTours, added that the cancellations have come amid increasing talk of Israel possibly launching a ground attack on Lebanon. "Worse than that is the ripple effect that is now taking place. It's not just a question of cancellations, we're off the radar for tourism in the future," Feldman said. "People are not coming and they're not planning on coming, so those who were thinking of being here for Pessah or Easter next year are waiting before making their reservations. That's a far more dangerous thing that has taken place. The damage is severe, it's deep and it appears to be long-lasting." Feldman added that future mid-term bookings - three to six months in advance - are non existent at the moment and that these will be much tougher to bring back. This is exactly the trend the industry feared would occur from the outset of the violence. "July and August are not the main issue," Ami Etgar, director general of the Israel Incoming Tour Operators Association, said earlier this week. "We are looking further to see if reservations for the fourth quarter will materialize and we believe they will if this crisis comes to an end in the next few weeks." Etgar added there was still an inflow of "loyal tourists" from the French and US orthodox communities that will ensure the tourist presence on the streets will not disappear completely - a flow, Feldman said, was the start of a new trend. "Already there is talk about solidarity missions, which mean that the feeling is that this operation will take months to complete and not weeks, which is a change from a week ago," Feldman said. He noted that in addition to the lack of incoming tourism, there has been a wave of Israelis canceling their trips abroad either because they have loved ones in the army or they have family in the North. "So, both incoming and outgoing has been hit tremendously hard," he said. Airline confidence breaker This all comes as a serious blow for an aviation sector that is now looking at bleaker times after confidently increasing its capacity by some 20 percent this summer in response to the growing popularity of the Tel Aviv route. It's a double blow for El Al, which has been hard fought to deal with the increased competition it faces. The airline, this week, said it expects to post a loss for the year because of increased competition, higher fuel costs, adding that the recent developments in Israel's security situation have heightened their concern. One industry source said foreign airlines' local offices are now worried their respective headquarters will, in a few months time, look at their reservations and start to question the need to have the extra planes they just added. "All this brings us back to the downward cycle that we experienced in the Intifada when airlines started to cut down their operations here, some even pulling out altogether," he said. This time it's different Some in the industry, however, draw a clear distinction between the two conflicts and the effects the current one will have on their businesses. "It's not like the Intifada when there was terror inside the country, which deterred tourists from coming," said Gidon Rachmani, a taxi driver operating in Tiberias. "The main fighting is across the border and won't influence in the same way." Avi Friedman, chairman of the Foreign Airlines Association and general manager of Continental Airlines, added that while the Intifada had a long-term impact, he believes the current situation would be resolved in the short-term and thus not deter tourists in the long run. "We see this also from our passengers who are waiting to see what happens before they cancel their September bookings," Friedman said. Meanwhile, taxi driver Rachmani was one of a number of small business owners biding their time in Tiberias and who all agreed that the immediate impact of the violence was unprecedented. "We have never seen such quiet as this before where we don't even get a phone call to our shop," said Tal Shavit, owner of the Pizza Arena take-away store. "I don't believe it will end soon. Tourists won't come back for a while." The North traditionally enjoys its busiest period in July and August from Israeli travelers and again in the fall and winter when it becomes popular among foreign tourists, particularly Christian pilgrims visiting the Kinneret. "The fact that Katyushas have fallen on places of significance like Tiberias has a tremendous psychological effect on foreign tourists who would have come," said Avi Zandberg, Chairman of the Tiberias Hotels Association. "This also has a major economic effect on the city for which tourism is the main source of income." Despite the dire impact on their operations, businesses in Tiberias expressed overwhelming support for the Israeli military operation in Lebanon. "We talk about the economic impact but we are strong here and believe that the Government is doing the right thing," Zandberg said. "They must do what they need to ensure there will be quiet for a long time." Unexpected boom In contrast, the last two weeks have been particularly busy for hotels in the rest of the country. A spokesperson for the Israel Hotels Association said that as of Thursday, occupancy in Eilat and Dead Sea hotels were over 90 percent, while those in the Center, including Tel Aviv, Netanya and Herzliya, were at between 75% and 80% while Jerusalem hotels were currently operating at around 75% occupancy. She stressed, however, that it was impossible to estimate what would happen next week as the current traffic was still reflecting the excess of tourists who had moved from the North, and since more foreigners would be leaving next week with no one replacing them. In a sign that the problem was spreading from the North, Motti Verses, a spokesperson for Hilton International in Israel, said reservations at the group's Tel Aviv hotel had come to a standstill as people were waiting to see how the situation pans out before booking. Mixed feelings for tourists Meanwhile, those tourists who found themselves in the country when the violence broke out greeted the unexpected situation with mixed reactions. "There have been times when we have been a bit nervous and probably would not have come had the violence started before we left the US," said Sam Bogen of Delmar, New York. Sharing that sentiment, first-time visitors Steven and Lori Greenwood of Toronto said they felt almost guilty for leaving the country in the middle of the conflict. They were impressed, they said, by how busy Jerusalem had stayed throughout the crisis. Taking the show of solidarity a step further, a lone tourist walking the streets of Tiberias with her American-Israeli hosts, Missy Martin, of Wisconsin, said that while she did not feel threatened by the situation she "trusted the judgment of her hosts" in traveling up North. "We didn't want to change our plans and wanted to show our support for the businesses that have such difficult times now," said her host Eddie Beckford. Martin, meanwhile, said she was dealing with family back home in the US, who had expressed concern for her being in Israel. Similarly, Do-All Travel's Saalkind said the agency had received many calls from people wanting to bring home relatives who are in Israel. Despite the many vacationers who elected to stay-out their trips, many albeit with a somewhat changed schedule, troubles are still ahead for the industry, which will have a difficult time replacing them. "The long-term effect will be as long as Katyusha rockets fly into Israel. I can't equate it to the Intifada ... this is a war!" ZionTours' Feldman said. "I think rational people believe that the war can't continue for months and that once it stops, the terror ends. When I talk long-term, I talk six months. Beyond that I wouldn't want to prophesize." Meanwhile, the tourism industry holds its breath that history will not repeat itself - at least not so soon.