Israel to build 8,000 new hotel rooms by 2023 as tourism ramps up

The Israeli Tourism Ministry has made commitments to build some 4,500 new hotel rooms this year, with another 4,000 or so next year, as travelers return to the country and the tourism industry picks up again following the aftermath of the pandemic.

By contrast, just around 5,000 rooms in total came to market in the five years preceding the outbreak of COVID-19.

The ministry said this week that it is working to speed up the building of new rooms (through extensions to existing hotels and the creation of new hotels) to enhance competition in the market, and ultimately to make holidaying in Israel more affordable.

“Adding rooms will allow us to host more tourists, who will bring a lot of money into the economy. Successful marketing of land [for hotels] is another step on our way to meet the goal I set for tourism in Israel: hosting 10 million tourists a year by 2030. We will continue to act to encourage and accelerate the establishment of tourist accommodation rooms in Israel, and to remove more and more barriers in the industry,” said Tourism Minister Yoel Razvozov.

A number of tenders for hotel development are currently open in Ashkelon, Kiryat Shmona, Kiryat Motzkin, and Katzrin. They are part of 2022 plans to add 770 rooms across the north of the country, 2,100 rooms in the South, and 1,650 rooms around the Dead Sea.

The Tourism Ministry said that it has also seen a dramatic increase in the number of bids for each tender, suggesting real estate entrepreneurs see a good business opportunity in the hotel expansion plan.

Tourist numbers are not yet where they stood pre-2019 but hotel stays have been rising steadily through the year. According to the Central Bureau of Statistics (CBS), 17.1 million hotel night stays were recorded between January and September this year compared to 19.5 million over the same period in 2019.

Overall, hotel occupancy so far this year is estimated at 61% compared to 70% in the first nine months of 2019. The Jerusalem market has been most affected (at 53% occupancy) while the north has been the most popular region with occupancy rates of 69%.

The greater shift is in the balance of foreign tourists compared to locals. Overseas tourists made up 45% of the total stays in 2019. In 2022, 72% of hotel nights were Israelis “staycationing.”

With more travelers coming in since Israel’s skies reopened to foreign tourists in March, hotel stays could well end the year at something very close to pre-pandemic levels.