Israel at a glance

A record uptick in international arrivals drives hotel and air expansions.

Spending on business travel to, from and within Israel amounted to almost US$7 billion (24 billion new shekels) in 2017, according to BCD Travel analysis of Tourism Economics data. Trips by Israelis going overseas for business accounted for 56% of that spending. The rest is evenly split between domestic and inbound travel. Business travel spending rose 7% per year, on average, from 2012 through 2017, driven by outbound trips. Future expansion is predicted at 6% per year through 2022, and what’s driving it will change. Industry economists expect spending growth of just 4% for outbound travel, while domestic and inbound trips are forecast to accelerate 7% to 8% per year. That trend is expected to weigh on total business travel spending, which is forecast to rise an average of 6% per year through 2022.

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• Israel is the Middle East’s fourth-largest economy, behind Saudi Arabia, Iran and the U.A.E. But its economic output per person is second in the region only to Qatar and is similar to that of France.
• Services make up about 80% of Israel’s economic activity. The industrial sector is dominated by high-tech manufacturing, including computing, defense and pharmaceuticals. Gas discoveries mean Israel also has the potential to become a notable energy player, as production ramps up starting in 2019.
• The economy expanded by 3.3% in 2017, as wage growth and low inflation supported consumer spending. Economic growth is expected to hit 3.5% in 2018, as consumer spending remains strong and the tourism sector recovers, according to Oxford Economics.
• Escalation of the conflict between Israel and Hezbollah remains an ever-present risk to the economy.

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• International travelers made more than 11 million trips to and from Israel in 2017. Since 2012, international travel has grown, on average, by 8% per year.
• In 2017, arrivals increased by more than 25% to a record 3.6 million people, according to data from Israel’s Central Bureau of Statistics. The U.S. is the main source of inbound travel, accounting for 23% of arrivals in 2017. Israel is also growing in popularity among French travelers.
• Flights to Israel are concentrated into Tel Aviv’s Ben Gurion International Airport, where flag carrier El Al is the largest operator. It faces some competitive disadvantages, as it does not operate seven days a week and is not allowed to fly over some countries.
• Low-cost carrier services to Israel are expanding rapidly, and now account for more than a fifth of the flights at Tel Aviv. EasyJet, Ryanair and Wizz Air are particularly active.
• Financial incentives from the country’s tourism ministry have encouraged airlines to open new routes to Tel Aviv and Eilat. The ministry also has collaborated with online travel agencies to promote Israel as a destination.

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• After a long period of stagnation, demand for hotel accommodation increased by 16% in 2017, as Israel attracted a record number of visitors.
• Hotels are struggling to meet demand, especially during peak periods, because supplies are limited. Between 2012 and 2016, just 45 new hotels opened, adding fewer than 4,000 rooms, according to the Israeli Statistics Bureau. Over the next two years, 4,000 new rooms are scheduled to become available across Israel, including 1,500 in Tel Aviv, 950 in Jerusalem and 500 in Haifa.
• Hotel accommodation in Israel can appear expensive compared to other Mediterranean destinations, like Cyprus, Greece or Malta. BCD Travel’s latest 2018 Industry Forecast update predicts average daily rates will rise 1% to 3% in 2018.
• The five largest hotel chains are all local. Fattal Hotels, has a nationwide portfolio, including luxury Herods and U Hotels properties and upper upscale Leonardo hotels. Its nearest rival, Isrotel, operates mainly in Eilat and near the Dead Sea. Atlas Hotels, Prima Hotels and Dan Hotels compete for third place in the market, mainly offering properties in Tel Aviv and Jerusalem.