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Holy Land Deserted by Tourists as Fighting Empties Hotels

July 24 (Bloomberg) –- The conflict in Gaza shows no sign of ending. Israel's tourism industry is already reeling from flight bans. Other businesses appear to be surprisingly reslient. Our Middle East Editor, Elliott Gotkine, has been visiting companies near the Gaza border, to see how they're managing. (Source: Bloomberg)

Omer Benjoya took a job this summer selling drinks, snacks and postcards on a hill that offers one of the most breathtaking panoramic views of Jerusalem.

Now all the 17-year-old needs are customers. Since hostilities flared this month between Israel’s army and Palestinian militants in Gaza, tourists have been scarce.

U.S. aviation regulators delivered a further blow this week, temporarily banning flights to Tel Aviv by American carriers for the first time since 1991, while their European counterparts also recommended a suspension after a rocket fired from Gaza landed about a mile from the city’s airport. The decisions came just days after a Malaysian Airlines plane was shot down in Ukraine’s war zone.

“Look around, see how empty it is,” Benjoya said next to the bright red truck his employer uses as a refreshment kiosk. “Normally, there’d be one or two hundred people standing here,” he said, gesturing to the near-empty stone-paved promenade that overlooks the walls of the Old City, the Dome of the Rock and the Mount of Olives.

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While Jerusalem is calm, fighting that has left hundreds of Palestinian and more than two dozen Israeli families grieving their dead is threatening the livelihoods of many more. Almost a third of foreign visitors expected in Israel in July have canceled, according to a top trade association. An industry that welcomed a record 3.5 million overseas visitors last year is facing substantial damage.

Photographer: Thomas Coex/AFP via Getty Images

Tourists take pictures outside the Dome of the Rock in the al-Aqsa mosque compound, in Jerusalem. Tourism accounts for 7.3 percent of Israel’s economy and employs nearly 1 in 13 of the workforce, the World Travel & Tourism Council says. Close

Tourists take pictures outside the Dome of the Rock in the al-Aqsa mosque compound, in... Read More

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Photographer: Thomas Coex/AFP via Getty Images

Tourists take pictures outside the Dome of the Rock in the al-Aqsa mosque compound, in Jerusalem. Tourism accounts for 7.3 percent of Israel’s economy and employs nearly 1 in 13 of the workforce, the World Travel & Tourism Council says.

Air Strikes

Israel intensified its air strikes on Gaza on July 8 after weeks of rocket fire from Hamas fighters, and later sent troops into the territory in an operation it says aims to destroy a network of infiltration tunnels militants dug under the Gaza-Israel border.

Tourists will be reluctant to fly to Tel Aviv until the threat of rocket attacks ends, said Nicole Adler, head of the business school at Hebrew University of Jerusalem, who sits on the advisory board of the Journal of Air Transport Management.

“This will sadly ruin the summer holidays of incoming tourists,” she said. “Generally people don’t rush back.”

Persuading fickle tourists it’s safe to return takes time, said Ofer Klein, head of economics and research at Harel Insurance & Financial Services Ltd.

Slow Recovery

“Past experience shows that recovery begins only after four or five months,” Klein said. During a 23-day conflict with Hamas militants in Gaza in 2009, tourism declined by as much as 39 percent, he said. A 2006 war with guerrillas in Lebanon led to a fall of 53 percent. Hamas is considered a terrorist organization by Israel, the U.S. and European Union.

In a sign both of the economic and symbolic importance of the flights, Israel opened a small southern airport near Eilat to international airlines as an alternative to Tel Aviv.

More than 20 flights were scheduled to take off and land from Ovda Airport today, with passengers traveling by bus for four hours to catch their flight.

El Al Airlines continued flights as usual and Offer Gat, global sales vice president, told Bloomberg TV that pilots felt “100 percent safe.” Many of El Al’s pilots are still active in the air force, so some are flying military missions in between civilian flights, he added.

The conflict in Gaza escalated after the breakdown of U.S.- brokered peace talks between Israel and the Palestinians in April. Palestinian President Mahmoud Abbas responded to that by reaching an accord with Hamas for a unity government, ending a seven-year rift and enraging Israel. The kidnap and murder of three Israeli teenagers, and the suspected revenge killing of a Palestinian youth, added to tensions.

Hotel Occupancy

Until violence surged, hotels, restaurants and resorts were headed for a record year with arrivals up an annual 17 percent in the first five months. Tourism accounts for 7.3 percent of Israel’s economy and employs nearly 1 in 13 of the workforce, the World Travel & Tourism Council says.

Now about 30 percent of those expected this month have decided to stay away, said Ami Etgar, general manager of the Israel Incoming Tour Operators Association. Hotel occupancy is down to as low as 30 percent in some areas, the Israel Hotel Association estimates.

“This is an economic drama,” its director general, Shmuel Zurel, said. “From record figures to a painful crash.”

Pilgrims account for about two-thirds of visitors to religious sites in Israel, and as many as 95 percent of those touring the Palestinian territories.

‘No Money’

Tourism thrives in regions with few other employment opportunities, such as Galilee in Israel’s north where visitors flock to New Testament sites, and Eilat on the Red Sea popular with sun-starved Europeans in winter.

Business is almost non-existent, said Khalil, 44, a Muslim taxi driver in Jerusalem, about 75 kilometers (46 miles) northeast of Gaza, who declined to give his last name.

“There’s no money in Jerusalem without tourism -- buses, shops in the Old City, hotels, taxis -- we all need the tourists,” he said. “Money from tourism goes around in a circle touching every one of us. I’ve only had one or two customers a day.”

The West Bank, parts of which are controlled by the Abbas administration, is feeling the strain.

On a recent Sunday in Bethlehem, Manger Square near where Christian tradition holds Jesus was born, was almost empty. Only a handful of tourists walked through the Church of the Nativity.

TV Fears

“People stopped coming,” said Khalil Yousef, 49, who sculpts nativity scenes from olive wood for sale in his shop. “They watch TV and think all Palestinians are running around with guns killing people. We understand them but it’s hard for us.”

Vacationers are one of the main sources of income in the West Bank, and money spent in Bethlehem’s hotels, restaurants and shopping centers typically accounts for about a third of all Palestinian tourism revenue.

A record 2 million people visited the town last year and about the same were expected this year, said Fayrouz Khoury, deputy general director of the Bethlehem Chamber of Commerce.

“If the clashes go on for months, we can’t expect even 500,000,” Khoury said.

To contact the reporters on this story: Alisa Odenheimer in Jerusalem at aodenheimer@bloomberg.net; Caroline Alexander in London at calexander1@bloomberg.net

To contact the editors responsible for this story: Andrew J. Barden at barden@bloomberg.net Mark Williams, Karl Maier

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