Report: Major changes needed to reach 4.5 million tourists

E&Y presents 5-year plan for the tourism industry.

A major overhaul of the Israeli tourism industry designed to more than double inbound tourism by 2011 would focus on improving infrastructure, long-term marketing, attracting investors and adopting a more liberal aviation policy according to recommendations outlined by consulting firm Ernst & Young. "The hard images that dominate the media do not reflect the reality that exists today that Israel has a range of diverse, one of a kind attractions on offer which need to be the focus of its marketing," said Brian Tress, senior manager at Ernst & Young's Hospitality and Tourism Advisory Services Group at Tuesday's release of a report prepared about the state of the local industry. "By implementing our recommendations, we believe Israel can achieve 4.5 million tourist arrivals regardless of geopolitical developments." Doubling the number of visitors in five years would generate an additional NIS 18 billion in international travel and tourism receipts, E&Y said, boost GDP by NIS 15b. and create nearly 45,000 new jobs in Israel. The government commissioned the report just over a year ago under then tourism minister and current Finance Minister Avraham Hirchson and finance minister at the time Binyamin Netanyahu. Tourism Minister Isaac Herzog said at a press conference in Tel Aviv to present the findings that he intends to adopt the main recommendations of the report and that he will submit it to the Finance Ministry and Cabinet for approval. "The report indicates that there is a need to invest further in tourism and long-term marketing efforts," Herzog said. "For the first time, we are being presented with a comprehensive plan for Israel's tourism industry. Implementation of the plan will, of course, depend on full assistance of the Treasury." The report, which divides the challenges Israel's tourism industry faces into four areas including infrastructure - organizational and physical - the investment environment, aviation policy and marketing strategy, offering solutions to overcome each of these obstacles. E&Y stressed that major improvements need to be made to the organizational and physical infrastructure in order for Israel to become competitive. The first priority, in upgrading Israel's lodging, would be to renovate existing hotels and then to develop new ones. Compared to the competition, Tress noted, Israel's hotels tend to be less inspiring and inviting structures. The report also outlined the poor condition of the country's attractions and public tourist areas singling out the Old City in Jerusalem, the Tel Aviv beachfront, the Eilat promenade and the Tiberias city center as areas in need of an upgrade and better maintenance. "Development efforts should be concentrated in Israel's primary tourism areas to make those destinations truly exceptional," the report said listing Jerusalem, Tiberias, the Galilee, Tel Aviv and Acre as areas with substantial growth potential. E&Y also recommended the establishment of a Tourism Investment Board, a separate entity under the umbrella of the Tourism Ministry that would take responsibility for all tourism investment, grants, incentives and partnerships with the private sector, "based on a clear long term strategy." Having dominated the headlines over the last two years, E&Y urged Israel to further liberalize its aviation market which it believes could boost foreign tourist arrivals by 580,000 and create 10,300 jobs in the next five years. The firm recommended that the government ease restrictions on airlines' capacities and frequencies, extend the rights for a second Israeli carrier to fly international routes and pursue allowing charter and low-cost airlines to operate in Israel. "Israel is the perfect market for low-cost carriers to connect to," an E&Y representative said. The process of liberalizing Israel's aviation policy has been a sensitive issue as a balance has been sought so as not to over-burden the local industry, particularly El Al, and as some question the commitment of charter companies, which are receiving financial incentives from the government to fly to Tel Aviv. The fourth focus area the report centered on developing a long-term sustainable marketing program with a budget of $50m. a year as a means of maintaining the country's image as an attractive destination. The research exposed an untapped interest potential in visiting Israel and suggested that the marketing initially focus on the six "high potential markets" - the US, UK, Germany, France, Italy and Sweden, and then on Russia and China. Together, they have an interest potential of 17.9 million visitors, E&Y said with current annual visitation from these eight priority markets at 1.2 million. "The marketing needs to follow a mid-priced strategy and concentrate on a core "tour" product," the firm added. Last month the cabinet gave its backing to a $150m. budget over the next three years designated to market Israel abroad after the industry aimed its criticisms at the ministry for not initiating a stronger response to lift the country's image after the war in Lebanon. While the month-long conflict has caused a significant stagnation in tourism in the second half of the year after a near-record first six months, E&Y stressed that its research was not influenced by the war and that its strategy remained unchanged throughout. "In the event that a similar occurrence should happen, you take a step back from the program but return to the program in order that the overall strategy for tourism should be maintained," Tress said. "Even considering political setbacks, we believe 4.5 million visitors is a realistic target for 2011."