Israel Hotel Market – Overview & Growth, and Grant Programs
The Israeli Hotel and Travel and Tourism Sector
The travel and tourism industry in Israel has been experiencing consistent growth in the past few decades, particularly in recent years: between 2016 and 2019, the Israeli tourism industry recorded a compound annual growth rate (CAGR) of 16.2%. As the industry continues to recover from the COVID-19 pandemic, growth is expected to reach new records of volume and revenue by 2025. Though the travel and tourism industry suffered losses during the pandemic, the Israeli economy recovered fairly quickly in comparison to other OECD countries. This allowed many luxury and leisure industries, particularly international travel, to recoup their activities.
Growth and recovery of the Israeli travel and tourism industry are made possible as a result of a robust national economy and increasing volume of international and domestic tourists. Moreover, in recent years the Israeli government has invested in the development of the tourism sector in Israel with larger allocated budgets and innovative programs to encourage improvement in the sector.
Hotel Performance in Israel and Emerging Opportunities for U.S. Hotel Brands
In line with the growth in the tourism industry prior to the pandemic, hotel entrepreneurship and investment in Israel also reached exceptional peaks. That trend continued almost uninterrupted during the pandemic; although with a few delays, hotel projects moved forward as planned, with the support of the government. As a result, hotels recorded a rather quick recovery of revenues after the pandemic, and revenue per available room (RevPAR) continues to rise to pre-pandemic levels and is expected to surpass them.
In order to accommodate the increasing demand, both international and domestic, thousands of rooms must be added to the existing inventory. This creates many opportunities for U.S. hotel brands in the Israeli market, with tenders for new projects published each year in leading tourism destinations such as Tel Aviv, Jerusalem, Eilat, and the Dead Sea.
Government Grant Program to Encourage Foreign Investors
As part of the government of Israel’s investment in the tourism sector, the Israeli Ministry of Tourism has launched programs to support and assist foreign hotel entrepreneurs who invest in projects in Israel. In accordance with the Encouragement of Capital Investments Law 5719-1959, the government of Israel offers foreign investors grants valued at 20% of the investment for:
- The construction of new hotels or expansion of existing ones
- The restoration and conversion of structures for hotel use.
Furthermore, additional funds are granted for projects in regions of special interest. For example, projects in the city of Tiberias are qualified for special administrative addition of 8% (total of 28% grant) or special administrative addition of 13% (total of 33% grant) for projects in popular lodging facilities.
For more information on hotel projects and opportunities in the Israeli tourism industry, please contact Commercial Assistant Inbar Marom at: Inbar.Marom@trade.gov