Israel: Adapting to unrest By Johanna Jainchill / February 24, 2009 Share 1 -- More on IsraelTravel Weekly reporter Johanna Jainchill recently spent a week in Israel and sent back reports on her visit. Israel dispatch series • Dispatch, Israel 1: Violence threatens tourism after big year• Dispatch, Israel 2: This time, the rockets are far from Haifa• Dispatch, Israel 3: Those who keep the faith are hardy travelersIn addition, view our Dispatches from Israel slideshow to see some of the highlights.TEL AVIV -- In the years before 9/11, military action like Israel's recent incursion into the Gaza Strip could have spelled disaster for tourism in the Holy Land. "If something like this happened 15 years ago, we would have had mass cancellations and people demanding their money back," said David Nyce, president of Morgantown, Pa.-based Pilgrim Tours, which has been operating in Israel for 22 years. "We live in a whole different world now. This time, maybe four to six parties canceled. Everyone else is going." The shift in response to military activity in this region is attributable to many factors, but two stand out, according to tourism officials and tour operators. One is the global spread of terrorism. Few countries have been spared violence, and people now accept that most parts of the planet face security issues. An equally important factor is that Israel's security issues are mostly confined to areas that do not affect tourists. "People who are determined to go understand that for the most part, the world is not a safe place," Nyce said. "This generation is more hardened to it. When you are realistic about it, it's more likely you'd have trouble in Los Angeles or New York City than in Israel, and I think people know that." Nevertheless, the country's tourism industry is continually challenged to maintain equilibrium amid never-ending cycles of peace and violence. The Gaza offensive, for example, began just days after tourism officials announced that a record 3 million people had visited Israel in 2008, a 32% increase over 2007. More than 600,000 of those visitors came from the U.S., Israel's largest single source of tourists. The source market registering the biggest increase was Russia, which grew 84%, to 356,000, while visitors from Germany jumped by 40%. While 2009 is not expected to be as successful, Arie Sommer, Israel's tourism commissioner for North and South America, predicted that the country's biggest challenge would not be violence but "the world economy and the economy in the U.S." "There will be a decrease in the number of Americans traveling," Sommer said, "but it won't be a disaster in terms of numbers." Israeli tourism officials do not underestimate the impact of violence and security concerns. Before 2008, the country's previous record year for visitors was 2000, when almost 2.7 million arrived. Then, over the next two years, the second Palestinian intifada took a drastic toll on tourism, with arrivals plunging to 800,000 in 2002. With the signing of a cease-fire in 2005, arrivals were back to 1.9 million, and the stage was set for Israel's record 2008. If there is any lesson to be learned from these cycles, it is that complacency is not an option; inevitably, history will repeat itself. Almost exactly 20 years ago, on Feb. 19, 1989, the New York Times reported, "Tourism officials ... agree that Israel's tourism woes will not be solved until its political problems are." However, in Israel's 60-year history, permanent political solutions have eluded the country and the region. So Israel's tourist sector has adapted, pushing on despite the certainty that there will be intermittent flare-ups with one or more of the country's many hostile neighbors. The industry's strategy -- in fact, its only recourse -- is to push forward consistently despite the inevitable setbacks. As it recovers from the effects of the Gaza incursion, Israel is moving quickly to ramp up its tourism marketing and investments in infrastructure, even as it faces another challenge: the worst global recession in the young nation's history. "We intend to increase our [marketing] budget and go to those geographic areas in the U.S. that can afford to travel and to those populations that still travel," Sommer said. "To build infrastructure is a question of years. You cannot stop and go. Our goal is to bring 1 million Americans and 5 million worldwide by 2012. To accommodate these tourists, we need to improve our infrastructure by adding more hotels and improving the existing hotels. You can't wait with tourism." In Israel's hottest tourist spots -- Jerusalem, Galilee and Tel Aviv -- hotel occupancies reached 95% during parts of 2008. Tourism officials don't expect to match those numbers this year, yet some see opportunity in the falloff. "We have to improve our position in the market and our infrastructure," said Uri Taub, a Jerusalem-based marketing director with Israel's Ministry of Tourism. "You can't renovate a hotel when it's full. When times get tough, you can pull out or you can invest and gain market share and build the demand." As he walked around Jerusalem, where excavation of the city's ubiquitous ruins is constantly under way and where the low skyline is now broken by cranes hovering over several hotel projects, Taub asserted that a slowdown would enable not just hotels but popular tourist sites as well to undergo much-needed renovations. "There is a dilemma in a down economy: to market or not," he said. "We've marketed more. It's an opportunity to build up demand." Most destinations worldwide are reporting that tourism has been down since the financial crisis peaked late last year, and Israel is no exception. Eli Nahmias, director of overseas marketing and tourism projects for the Jerusalem Tourism Authority, said in late January that tourism was down about 15%, a trend that had started in November. Ilana Apelboim, senior vice president of operations and COO of Isram World, said that Israel tours, which Isram has been operating since 1967, were down 30%. Even so, that is not as bad as some other destinations that are down as much as 50%, she said. In fact, she said, "Israel is doing somewhat better. We are still seeing busloads on weekly tours. The numbers per bus could have been in the high 30s but are now in the high 20s." To adapt to people's spending habits in the new economy, Isram has added shorter tours that visit the same number of sites and has added insurance plans that enable travelers to cancel for any reason up to 48 hours before the trip. Isram noted a decrease in new bookings during the Gaza offensive, but Apelboim said that people didn't cancel. New bookings fell by 50% but then caught up. She said she was thankful the incursion was over quickly. Apelboim, Nyce and other operators echoed what Israeli tourism officials have been saying from the start: The Gaza conflict was tightly confined to the Gaza Strip and the Israeli communities just over that border. "People understand that Gaza is not in Israel, and what happens in Gaza does not affect the rest of the country," Sommer said. "It is a very isolated area. For the last eight years, the cities around Gaza were bombarded [by rocket attacks] from Gaza. But people didn't even notice it, and '07 and '08 were the best years ever to Israel." Nobody paid much attention to the violence, he said, until "the Israeli army went into Gaza to stop it." While Gaza is a name synonymous with unrest, Gazans had developed the hotels along their beachfront in the late 1990s to accommodate what they hoped would be a tourist influx. Nahmias recalled: "I did a fam trip to Gaza before the intifada, to the beaches and the hotels, and I believed that in a few years they would be able to compete with us. All that ended in the intifada." Tourism officials here point out that Palestinians have as much interest in a stable tourism market as Israelis do, and they have traditionally collaborated in that regard. "Together with Palestinians, we have worked hard to make sure the crossing to Bethlehem is safe and easy," Sommer said. "They need the tourism as badly as we need it, and they understand that." The numbers bear that out. The economic publication Middle East Business Intelligence reported that 1.3 million tourists visited Palestine in 2008, compared with just 400,000 in 2006. Like Israel, Palestine is investing heavily in new hotels and museums, with $510 million in investment plans for West Bank tourist sites. That investment will be challenged by the economy and by the tensions created by the Gaza campaign, which claimed more than 1,300 Palestinian lives. Nahmias constantly works with Israeli Arabs in East Jerusalem and with Palestinians across the border. He said that despite their many differences with Israel, tourist interests in both groups have traditionally cooperated. "Tourists were never hurt in this country, because it is in the interest of Palestinians as well to keep tourism flowing," he said. That cooperation is obvious when spending any time in Jerusalem's Old City, where many of the souvenir stands and restaurants are Arab-owned. "Of course we want peace; we live from visitors," said Rami, an Arab shopkeeper whose family has owned an Old City souvenir stall for several generations. "But it is not up to us to make peace or not. We can only hope." Paradoxically, as places such as New York, London and Madrid have suffered terrorist attacks over the last decade, Israel's reputation as an unsafe destination has diminished. Tourists here generally agree that Israel is as safe as any destination, and some find it to be even more secure. "I still wouldn't ride a bus here," one California woman said while visiting Jerusalem last month. "I have too many associations with buses and bombs. But I feel safer here than in most places I visit. Every restaurant has security. You see soldiers walking around with guns. You feel safe." Since the intifada, the only security issue that seems to have deterred travel to Israel was the Lebanon war in the summer of 2006. In that conflict, the violence affected only northern Israel destinations such as Galilee and Haifa, causing a dip in tourist arrivals -- 1.8 million in 2006 compared with 1.9 million in 2005. But arrivals quickly rebounded, jumping to 2.3 million in 2007. "People forget quickly and come back," said Lior Ben Ari of the Haifa Tourist Board. "After 2006, people moved on, and 2007 was a good year. ... The hard part is to get people here for the first time. They are always surprised at how safe it is." The major downturn in tourist arrivals between 2001 and 2004 was a direct result of the second intifada, which began in September 2000 and did not abate until 2005. During that time, suicide bombers killed many hundreds of Israeli civilians on buses, in restaurants and at nightclubs. In one particularly brutal attack in 2002, 30 people were killed at a hotel during a Jewish holiday. The 2005 cease-fire, coupled with Israel's construction of a concrete wall cutting off the West Bank, cut suicide attacks to the point where they are now almost nonexistent. "Certainly intifada is the worst scenario," Apelboim said. "It's quite unpleasant to tour in any area where there are suicide bombers. Thankfully enough, we haven't seen that since the intifada days." El Al, the Israel national airline, also reported that the effects of the Gaza campaign were "marginal" compared with earlier conflicts. "I guess that people understood this is not the part of the country that they are going to," said Yoav Weiss, El Al's deputy chief executive for marketing in North and Central America. El Al has no choice but to deal with swings in business resulting from cycles of violence. "When it's not peace and quiet, then of course our business is affected," Weiss said. "We are used to it. I wish we had a stable market like the Bahamas, but we don't. But there are ups and downs everywhere. We all get more resilient to the realities of the world." To handle the volatility of the Israel market, Pilgrim Tours has for years insisted that people pay a nonrefundable deposit. "We need to have some kind of fee to deal with it on a regular basis," Nyce said. "We initiated it because of all the cancellations and changes and people becoming fearful of things and wanting to rebook a year later. We initiated that fee, and I've seen other people follow since." Besides concerns that people will cancel or decide not to book in the first place, these operators always have to be ready to handle problems while their tours are ongoing. "In Israel, there is always a contingency plan," Nyce said. He sees downturns in his Israel business like anyone else, but being in the religious pilgrimage tour business gives him an advantage: Religious pilgrims are not nearly as easily deterred by security issues as other tourists are. Pilgrims, including Jews, Christians, Muslims and followers of Baha'i, come here in droves each year. Of Israel's record 3 million tourists last year, 1 million were Christian pilgrims, which is double the number who visited in 2007. During the intifada, Nahmias said, Christian pilgrims kept Israeli tourism alive. "They are the most resilient of religious travelers," he said. Nahmias said that because Jerusalem's religious and historical significance gives it a timeless appeal that few other cities can match, he is not deterred by the challenges of any particular moment in time. "Jerusalem is the eternal city," he said. "We are not working for tourism today or tomorrow."