New report ranks Israeli hotels as third most expensive

Israel is the third most expensive country in the world when it comes to hotel rates, according to a biannual report of the Hotel.com website. Jerusalem is the 10th costliest city in the five-star hotels category. The Hotel Price Index (HPI) is an extensive survey based on reservations in more than 140,000 hotels in major city destinations across the world.

According to the report, the first half of the year recorded a 3% increase in hotel rates worldwide compared to the same period in 2010. Jerusalem's hotel rate, however, soared 30% during the same period, with an average room rate reaching $195 – bringing the capital to the 10th place in the world. Jerusalem ranked 10th in the five-star hotels category, with the average rate standing at $327. Israel came in third in the comparison of prices between countries, after Switzerland and Russia. According to the report, the average rate of a hotel room in Switzerland stood at $223, compared to $219 in Russia and $208 in Israel. The average price of a hotel room in Israel is higher than in Brazil, Singapore, Norway, Italy, Sweden, the United Arab Emirates and Denmark. The United States ranked 15th, France – 19th, Japan – 30th, and Germany – 32nd.

A committee appointed by Tourism Minister Stas Misezhnikov to look into the prices of tourism products in Israel met this week with representatives of the Israel Tourism and Travel Agents Association and the Israel Hotel Association to discuss vacation prices in Israel, both for foreign and Israeli tourists. The Travel Agents Association representatives – led by Chairman Kobi Karni, CEO Yossi Fattal and deputy chairman of the Incoming Tourism Unit, Yossi Fischer – presented a position paper blasting hotel rates in Israel and noting that "the concentration level in the hotel industry in the country is one of the causes for the hike in tourism products' prices.

"The Eilat area, for example, is controlled by two chains: Fattal and Isrotel, which own two-third of four and five-star hotel rooms. The Dead Sea area is controlled by the Fattal chain, which owns more than 50% of all rooms." The Incoming Tourism Unit added that another reason for the expensive hotel rates in Israel was the room shortage. Only 1,700 new hotel rooms have been built in the past decade, while the number of tourist rose from 1.2 million to 3.45 million. According to the Incoming Tourism Unit, "We must encourage international hotel chains to boost their activity in Israel, encourage significant construction of hotels in popular areas with different levels of accommodation, supervise and regulate mergers and acquisitions of existing hotels by chains which already hold a significant market share, especially in the Dead Sea, Tiberias and Eilat."

Israel Hotel Association representatives noted during the meeting that the costs of operating hotels in Israel are among the highest in the world, mostly due to manpower costs, property tax and additional expenses which other hotels in the world are not forced to deal with. "Israel is the only country which requires hotel security, estimated at some NIS 180 million ($48 million) a year. A hotel with 200 to 300 rooms must employ seven or eight guards, with the cost of one security post standing at some NIS 300,000 ($80,000) a year. "Moreover, Israel is the only country which requires kashrut supervisors, who cost some NIS 74 million ($20 million) a year. Only in Israel employees are paid more for working on Shabbat, and Israeli hotels are the only ones in the world which must have a lifeguard during all opening hours of the swimming pool, a fitness instructor and a pool operator." The hoteliers claimed that the additional manpower expenses in Israeli hotels make up 6.2% of their income turnover.

Source Ynet