The number of Israelis seeking staycations in the Jewish state has risen because most children cannot as yet be vaccinated against COVID-19, and therefore cheaper options overseas require that they enter quarantine upon return.
The cost of vacations within Israel is rising, driven by supply and demand, and the price of hotels is only expected to surge higher as the country begins opening to individual foreign tourists on July 1.
Mark Feldman, CEO of Ziontours, says the prices of hotels in Israel have risen from their pre-COVID levels by at least 20%. He attributes this to the two-week quarantine (the duration can be shortened to 10 days if two test results are negative) families with young children face upon return from abroad, as kids under the age of 12 are too young to be vaccinated.
“Israeli families know that to go to Greece or Cyprus, they will spend much, much, much less money but all of their unvaccinated kids will have to come back and go into quarantine,” Feldman told The Media Line. “The parents would rather spend more money at an Israeli hotel in Eilat, or at the Dead Sea, or up North, rather than bring the kids back and be stuck at home for 10 to 14 days, so that’s the economic decision why they’re paying these prices.”
He is talking about families like that of Shir, who declined to give her last name and has three children under the age of seven. The Tel Aviv-based family of five is paying approximately $475 a night to stay in a hotel at the Dead Sea.
“The prices are outrageous, but this is the price we have to pay in order to go on vacation,” she told The Media Line. “I know that if we went to Greece or Eastern Europe, it would be a lot less expensive.
“But no amount of money we save is worth having my kids unable to leave the house,” Shir added.
Feldman said that even the cost of a bed and breakfast, a less expensive alternative to hotels, has risen since pre-COVID times, and the most popular ones are anyway full up for the summer.
He attributes the high cost of hotel rooms to a combination of more Israelis wanting to vacation in the country and limited inventory.
“It’s really is a basic thing of supply and demand. If the hotels can get the price, they’ll charge the price. If they couldn’t get the price, they wouldn’t be charging the price,” Feldman said.
“There are enough Israelis willing to pay the money to keep the hotels with a very high occupancy,” he added. “Some of the places in Eilat have already sold out this summer … with temperatures as high as 105 to 110 degrees [41 to 43 degrees Celsius].”
Even middle-class families are willing to pay exorbitant prices for hotels, Feldman said.
“The average middle-class Israeli family lives on overdraft, so yes, unfortunately, they pay their hotel off in six or seven payments,” he said.
Feldman expects the cost of hotel rooms to only rise as international tourists start once again entering Israel.
“We’re seeing such an explosion in demand from people wanting to come to this country and I think you’re going to find hotels overwhelmed by requests … from foreign tourists in July, August, September. They’re not going to lower their prices. In fact, it’ll be the opposite,” he said. “They may raise the prices for the Israeli market, preferring to focus on the overseas market that tends to spend more money on hotels than Israelis, so this isn’t going away so quickly,” he said.
“As long as you have people willing to pay these five-star hotels $500, $600 a night, they will continue to charge it, unfortunately,” Feldman added.
Uri Avrouskine, general manager of Sar-El Tours & Conferences, which brings foreign tourists to Israel, has also observed a jump in hotel prices. He believes hotels are hiking up prices “because of losses they had during the coronavirus” and says that some are blaming the increased prices on the shekel/dollar exchange rate.
“Some hotels insist this are really the [proper] prices; some say, ‘We’ve had to adjust the price because of the devaluation of the dollar,’ and I’m saying whatever happens with dollars and shekels has nothing to do with the client who paid $2,000 for a tour package; he doesn’t know that now you want him to pay $2200, $2400 because of the rate of exchange,” he told The Media Line. “We are not foreign currency traders; we are in the tourism business.
“Many hotels are making the mistake of trying to take advantage of the situation and raise prices. We have all suffered, we are all coming back from the ruins [caused by the pandemic], but this is no excuse, because the clients who are coming from overseas, their flights, medical checks to get into Israel, travel and health insurance are all increasing [in price],” Avrouskine added.
He believes this could cause vacationers to visit less expensive countries than Israel, which would hurt Israel’s tourism sector in the long run.
“Our job is to make it affordable to the client to come back because otherwise, he can choose to go to another country,” Avrouskine said, saying that it is a “daily battle,” fighting to keep the prices of hotel rooms as close to what they were before COVID-19, to encourage tourists to choose Israel over countries like Greece and Cyprus.
“For the next couple of years at least, it’s going to be a buyer’s market, so why lose the business? Why shoot ourselves in the foot?” Avrouskine asked.