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'This is an emergency'

Ailing tourism sector takes another hit, as Israel bars tourists to curb variant

Tourism minister demands compensation plan for industry workers as restrictions barring entry to foreign nationals poised to take effect

Ricky Ben-David is The Times of Israel’s Startups and Business editor and reporter.

Travelers seen at the Ben Gurion International Airport, on November 28, 2021. (Avshalom Sassoni/Flash90)
Travelers seen at the Ben Gurion International Airport, on November 28, 2021. (Avshalom Sassoni/Flash90)

Israel’s ailing tourism sector is set to take another hit starting Sunday, when fresh restrictions barring entry to non-citizens for two weeks are poised to take effect to prevent the spread of the COVID-19 Omicron variant.

Israeli Tourism Minister Yoel Razvozov said Sunday that the government will formulate a “compensation outline” for those working in the tourism industry within a week, a day after Israel ministers approved the new restrictions.

Razvozov said he had asked the government to approve a decision for a “compensation outline plan within a week for those in the industry, including tour guides, tour operators, and hotels that work with incoming tourists.” The minister said there was widespread agreement and work on the plan would begin in cooperation with Finance Ministry.

Razvozov also said the compensation plan may include funds for Israelis who have had to cancel upcoming flights and travel packages. On Sunday, the head of the Israeli branch of travel solutions firm Amadeus, Avishay Cohen, told Ynet that fewer than 10 percent of trips booked with the company have been canceled since South African officials raised the alarm about the variant late last week. However, he noted that there has been about a 50% drop in the number of new trips being booked.

The new travel restrictions are set to take effect Sunday night at midnight and will see foreign nationals barred from entering Israel for 14 days unless they receive special permission from a government panel. Ministers on Saturday night also expanded mandatory quarantine for vaccinated Israelis arriving from abroad and gave the Shin Bet security agency the go-ahead to resume tracking people infected with the new variant.

The move dealt another blow to Israel’s tourism and aviation industries, which have been devastated by the pandemic and accompanying restrictions, and have not had time to recover. The vast majority of tourists have effectively been banned from entering Israel since right before the country’s first pandemic lockdown in March 2020.

Israel only reopened its skies to foreign tourism in early November, allowing in people who have been vaccinated or who have recovered from the disease.

The decision to reinstate an entry ban on foreign travelers is “very grave because we just recently reopened the skies and the industry needs stability,” Razvozov said Sunday.

Yesh Atid party member Yoel Razvozov speaks to supporters in Tel Aviv, ahead of general elections, on February 20, 2020. (Tomer Neuberg/FLASH90)

At the same time, Razvozov said the decision was warranted given that even vaccinated Israeli returning from abroad will have to quarantine under the new restrictions.

Medical authorities have said they need about two weeks to get a better grasp of the threat posed by the Omicron variant.

Under the new restrictions, vaccinated citizens — who under the existing rules had to take a coronavirus test upon landing and remain in isolation until receiving a negative result — will now be required to enter quarantine for 72 hours and take another COVID test on the third day after they arrive. Unvaccinated Israeli travelers must remain in quarantine for at least a week, and can leave isolation upon receiving a negative test result conducted on the seventh day. Israelis coming from high-risk “red” countries have to quarantine in designated state-run hotels until they receive a negative virus test result.

“If we impose quarantines on Israelis, we have to impose them on tourists and there is no tourist who wants to come here and sit in quarantine,” said the minister.

Razvozov also said that the upcoming Miss Universe pageant, which Israel planned to host next month in Eilat, would go ahead as planned. He said participants would be granted waivers and would possibly have to undergo PCR testing every 48 hours.

“This is an event that will be broadcast in 174 countries — a very important event,” Razvozov said.

‘This is an emergency’

In a letter to the Finance and Tourism ministries on Sunday, the president of the Israel Hotels Association, Avi Nissenkorn, wrote that “as long as entry barriers are not removed, hotels that cater to incoming tourists will not recover.”

Nissenkorn, who previously served as justice minister in the last government, said that the sector “needs help to survive this critical period until the tourists come back. For us, this is an emergency… For the infrastructure of hotels that work with tourists not to be fatally harmed, an updated outline must be established and assistance must be provided to [the sector] immediately.”

Before the pandemic, the tourism industry employed about 140,000 people (as of the end of 2019, according to the Tourism Ministry) and contributed over 2% to the gross national product.

The number of incoming tourists dropped by 80 percent in 2020, a plunge from record numbers in 2019 that were worth $7.2 billion to the economy when a 4.55 million visited that year.

Travelers arrive at Ben Gurion Airport as Israel opens its borders and allow tourists to enter the country after months of keeping its borders closed due to the COVID-19 pandemic, November 1, 2021. (Tomer Neuberg/ FLASH90)

In the midst of the pandemic, the government announced a stimulus package of about NIS 300 million ($85 million) in June 2020 to help the ailing tourism sector but it is unclear how much of the amount has been dispensed.

Separately, the Finance Ministry last week announced an additional bailout plan for Israeli airlines harmed by the pandemic, approving an aid plan that would not exceed $44 million and would come in the form of three-year bonds that do not accrue interest.

The plan came on the heels of another aid package for national carrier El Al, approved in March, to purchase $210 million worth of advance tickets for security personnel.

El Al posted a massive half-a-billion-dollar loss in 2020, as its passenger flights were grounded for most of the year due to the pandemic. The troubled airline put most of its staff on furlough with the onset of the pandemic and has since cut about 2,000 jobs. The company was acquired by Kanfei Nesharim, controlled by Eli Rozenberg, last September.

Markets spooked

Global markets reacted sharply on Friday to the discovery of the new Omicron variant and its spread across the world as the European Union and the UK both announced travel restrictions from southern Africa. After the market closed, the US also put travel restrictions on those coming from South Africa as well as seven other African nations. Israel followed a day later with the announcement of a ban on all non-Israeli citizens starting Sunday at midnight.

Stocks sank Friday, with the Dow Jones Industrial Average briefly falling more than 1,000 points. The S&P 500 index dropped 106.84 points, or 2.3%, to close at 4,594.62. It was the worst day for Wall Street’s benchmark index since February.

A screen above the floor of the New York Stock Exchange shows the closing number for the Dow Jones Industrial Average, Friday, Nov. 26, 2021. The Dow Jones Industrial Average lost 905 points. The S&P 500 index fell 2.3%, its worst day since September and the Nasdaq composite also had its worst drop in two months. (AP/Richard Drew)

The index was dragged lower by banks, travel companies and energy companies among others as investors tried to reposition to protect themselves financially from the new variant. The price of oil fell about 13%, the biggest decline since early in the pandemic, amid worries of another slowdown in the global economy. That in turn dragged down energy stocks.

In Israel on Sunday, the Tel Aviv 35 index of the top 35 traded companies dropped 1.5% by end of day. The Tel Aviv 90 index, comprising 90 stocks with the highest market value on the Tel Aviv Stock Exchange, dropped by 1.9%, according to financial daily Globes.

These figures were mild compared to March 2020 when, right before the government imposed a national lockdown, the Tel Aviv 35 plummeted 8% and the Tel Aviv 125 index dropped more than 7%.

Among the Israeli companies hardest hit on Sunday was the Fattal hotel chain, whose shares plunged by over 8%.

Globally, investors moved money into companies that largely benefited from previous waves, like Zoom Communications for meetings or Peloton for at-home exercise equipment. Shares in both companies rose nearly 6%.

Airline stocks quickly sold off, with United Airlines dropping 9.6% and American Airlines falling 8.8%

The coronavirus vaccine manufacturers were among the biggest beneficiaries of the emergence of this new variant and the subsequent investor reaction. Pfizer shares rose more than 6% while Moderna shares jumped more than 20%.

Shoshanna Solomon and AP contributed to this report.

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