COVID-19: How 'Open Skies' impacted Israel's tourism industry

“My wife Rona founded the company in 2003, and I joined later. Rona holds a bachelor’s degree in physical education and a master’s degree in administration and leadership in education. We specialize in extracurricular activity programs (known in Israel as “Talan”) for municipal kindergartens. Before COVID-19, we were working with around 50 local councils and employing 150 freelancers specializing in different things. We are a highly professional and well-respected organization, and our music program is considered ‘green’ and has been recommended by the Ministry of Education. Last March we launched a project involving all the kindergartens in the city of Netanya. We recruited and trained teachers and staff—and then the coronavirus came along and everything we had built went down the drain.

“During the first lockdown, our activity was reduced to zero from one day to the next, and we furloughed all of our staff. Since then, work has picked up here and there, but ultimately we had no choice but to close our offices and start working from home. We tried to run the programs online, but it only worked in very few places. Around that time, we joined forces with a company called Sportygan, and together we set up a company for Ninja Warrior obstacle courses made of thermoplastic, which is a non-slip material. The ‘Street Ninja’ courses are designed for children between the ages of two and 14, and the idea is that the child or their parents scan a barcode and receive instructions for age-appropriate exercises and courses. We have already installed close to 20 of these units in parks and public spaces. At the same time, we are running summer camps in several local councils.

“The situation is not easy, because we have had no significant income streams for over a year, but I hope that after the Tishrei holidays, the extracurricular activity programs will return to the kindergartens. Until then, we are training new staff to replace those who have left the profession. Fortunately, a few years ago we opened a company to important sports and musical equipment for kindergartens, schools, shops and councils. There we are seeing some activity, albeit not on the scale we are used to, but in times like these, that is also an important source of income for us.”

“Together with two partners, I have built two large theme park attractions on the promenade in Eilat over the last decade: Tarantula, which is a 53-meter-high carousel, and Booster, which is 50 meters and spins like a windmill. At the same time, myself and another partner own a company that manages five restaurants in the city. In Eilat, you lose money in the winter and earn it in the summer, which meant that the coronavirus caught the city at the worst possible time—the end of winter and start of summer, when the cash registers are still empty. The first lockdown coincided with Passover, which meant we had to close the two attractions for two and a half months and furlough all the employees.

“The worst impact was felt by the restaurants, which shut down for the duration. The attractions were not as bad because they have no significant fixed expenses. The first thing we did was to re-evaluate our finances, including with the landlords who own the sites we rent for the attractions and the restaurants. The first lockdown ended on 27 May, and between then and Rosh HaShanah, Eilat experienced a boom in sales unlike anything we’d seen for many years. It’s important to understand that Eilat has been in decline since the Open Skies policy came into effect in 2013, because Israelis prefer to travel abroad, as it is a lot cheaper and also offers a different atmosphere and culture. When it became clear that it would not be possible to leave the country—everyone came to Eilat. That helped us to refill the coffers and to overcome the subsequent lockdowns.

“We reopened on 7 March of this year, and since then Eilat has been full of visitors, and our attractions and restaurants are running smoothly. At the same time, the demographics of the visitors to the city have changed. Young people are no longer coming like they used to, partly because of the extortionate prices, and in all my years in the city I cannot remember the promenade being shut by 11. Now there is talk about lockdowns over the Tishrei holidays, and we are starting to worry. We are looking after ourselves and we understand that it’s not over yet.”

“More and more business owners are trying to build digital communities around their business and their sector, knowing that by doing so, they are creating their own client base over time. They provide it with content and with a space to learn more about their services. It’s always difficult at first, but when the client base starts to build up and to benefit from the content over a period of several years, life becomes easier for the community managers. Often, they decide to hand over the responsibility for the bulk of the content to the community itself, thereby strategically shaping the same audience for themselves that others pay to create through paid promotion.

“The decision to build a community is a strategic one, and the end goal is to build your own audience, one that you can always communicate with organically and that establishes you as an authority in your field. That way, you will be able to maintain relationships with your clients over a period of several years, and the moment there is a crisis or a shift in your professional activity or services—you can access them quickly and at a low cost.”

“As a city dependent on tourism, Eilat is highly seasonal in its business activity, and if that isn’t enough—COVID-19 caused significant harm to businesses and the local population employed in the tourism sector. There is no doubt that the return to activity has brought Eilat back to life—visitors are flocking back to the city and domestic tourism is booming. 

At the same time, we have to remember that this is the time to provide the highest level of service in order to retain domestic tourism clients, so that they keep coming back to the city, not only as a last resort during the COVID-19 restrictions. For me, the approach must always be ‘give the customer more than what they are expecting to receive.’

“Furthermore, every business has peaks and troughs. That is why it is vital to stay ahead of the game, to manage the cash flow, to save on costs by purchasing in bulk, to make the most of a positive cash flow and set some of the money aside for a rainy day—literally and figuratively. In short, long-term investments relying on long-term financing rather than cash flow. Banking credit structure and financing must be aligned with the investment structure.”

As the economy continues to tackle the challenges resulting from the pandemic, Ma’ariv and Bank Hapoalim are running a special feature, sharing and following stories of businesses in different regions and sectors and offering insight and support in coping with the current crisis and uncertainty. Every week, we will share practical tools, as well as offering insight and guidance into opportunities for financial and business development and growth in this challenging environment. The information contained herein is accurate as of the day of publication and should not be understood as an alternative to professional consulting services that take into account the specific circumstances of the individual and are tailored to meet their needs. The aforementioned should not be understood as an offer for credit, loan provision and/or deferred repayments, subject to the terms and conditions and approval of the bank. Inability to keep up with payments may incur charges on interest in arrears or repossession proceedings.