Tourism Derailed

Hamodia

January 2test graphThe tourism industry in its widest sense — including hotels, restaurants, tour guides and other ancillary sectors — is a vital part of the Israeli economy. It is the largest single source of employment in the private sector, because it is very labor-intensive. True, most of the jobs are low-paying, but that makes them all the more important for people with low educational and other qualifications, especially if they live in the country’s peripheral regions.

Tourism is also a major earner of foreign currency, not just in quantity but also in quality — what economists term “added value”, meaning the difference between what it costs to generate income and the income actually generated. Because tourist services don’t need big capital investments and use relatively cheap labor, the economic profit they generate from each dollar of income is very high.

That’s the economic rationale behind having a large tourist sector. The non-economic rationale is that by encouraging Jews to visit Israel, tourism contributes in many ways not measurable by money — mainly by strengthening the Jewish identity and connection with Am Yisrael as a whole of Jewish tourists, whatever their pre-existing level of commitment.

The latter argument is still true, as the phenomenal success of the Birthright program shows. But Jews comprise a steadily-declining share of total tourism to Israel — hardly surprising since there are only 6-7 million Jews in the Diaspora and one thousand times as many non-Jews. Despite the negative media coverage, many non-Jews do want to visit Israel — for many reasons. Christians of all types have religious motivations, other Europeans (especially from Eastern Europe) come for vacations in the sun, and lots of people have friends and family — Jewish or not — whom they want to visit.

But the long-term growth of Israeli tourism has been periodically disrupted by what the foreign media generally refer to as “the cycle of violence” and what Israelis call simply “ha-matsav”. In plain language, every now and again — unfortunately, far too frequently — a major terrorist incident, or terror campaign, or a large-scale military operation or even a war, occurs.

When that happens, the impact on the tourism sector follows a clear pattern. Immediately — almost overnight — tourist arrivals plunge. Then, when the ‘event’ is finished, there begins a process of recovery which, typically, takes between one and three years before things get back to where they were. Only then can the long-term growth trend re-assert itself.

The year just ended was a classic example of this destructive dynamic at work. The first half of the year saw strong growth in the tourism industry and it looked as though 2014, like the two preceding years, would set new records for number of arrivals, of hotel-nights and of all the other statistics that measure activity levels in the industry.

Then came Operation “Tsuk Eitan” (called “Protective Edge” for foreign consumption), which lasted a long time and generated very fierce negative reactions in Europe and the US. Damage to the tourist sector was aggravated by the fact that the fighting took place in July-August, the peak tourist season. The results were exactly as expected: latest data show that the 20% rise in tourist arrivals in the first half of 2014, compared with the same period in 2013, have now been offset by an 18% drop in July-November, again compared with the parallel year-earlier period.

The only positive aspect is that the damage has been concentrated in specific types of tourism. The number of cruise ship passengers making brief visits during a multi-country Mediterranean cruise has collapsed by two-thirds (!) this year. Similarly, the number of ‘day-trippers’ who come and go the same day (mostly Russian tourists in Egyptian Sinai or Jordan who cross into Israel for a day) is down by almost half.

‘Regular’ tourists, who arrive by air for a stay of at least several days have been less prone to cancel, with a drop of ‘only’ 20-25%. The proportion of Jews in this group is much higher as is, presumably, their understanding of the degree of danger — and the importance of their coming, davka in times like these.

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