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Restaurants and Hotels Struggling to Survive in Post-Lockdown Israel
The Dan Panorama Hotel in Tel Aviv, June 10, 2014. (Dr. Avishai Teicher/Pikiwiki Israel)

Restaurants and Hotels Struggling to Survive in Post-Lockdown Israel

They are now relying on domestic tourism to stay open, but for many places it is not enough

A year after the coronavirus pandemic shut down the tourism and entertainment industries in Israel, hotel owners and restauranteurs breathed a collective sigh of relief in February and early March as hotels reopened for holders of a green pass – proving vaccination or recovery from the coronavirus, and restaurants were permitted to operate indoors at 75% capacity. For the 200,000 Israelis usually employed in the tourism sector, tentative whispers of a “return to normalcy” began to spread.

But a report by the Bank of Israel updated last week reveals that the country’s hospitality sector was hit particularly hard by the lockdowns to prevent the spread of the coronavirus, with the number of Israelis employed in accommodation, services and restaurants falling from 174,500 in 2019, to 139,900 in 2020.

It has become clear that an easing of lockdown restrictions has not provided the certainty that hotels and restaurants so desperately need.

For many hotel chains around Israel, survival during the COVID-19 pandemic relied upon functioning as so-called “quarantine hotels.” In that capacity, visitors would pay a fixed price and stay in their rooms for the duration of the required 10-day isolation period.

This was not an ideal situation, with reduced facilities meaning that many hotels were running on a skeleton staff and, naturally, customers isolating in their rooms were not spending money on spa treatments and expensive meals. Nevertheless, operating as a “quarantine hotel” provided a level of stability.

Now that visitors to the country can avoid isolation by showing a negative COVID-19 test and testing positive for antibodies, hotels are back to relying on tourism.

Current government guidelines permit only those visiting a first-degree relative or traveling as part of a designated group into the country. As such, most hotels are relying on domestic tourism in order to remain open.

An employee at the Herbert Samuel Jerusalem Hotel told The Media Line that it receives guests only on weekends, when Israeli tourists arrive.

He explained that “Israeli tourism is really hard, because it’s different people with a different mentality. Of course, when they are coming, they come just for the weekend. They are not even spending money.”

While some larger hotel chains have been able to subsist as quarantine hotels, the smaller, independent hotels “are having a hard time. Some of them are closed all week. Some of them are open just two days a week,” he said.

You can count the tourists on your fingers

The situation for restaurants appears to be just as dire. For Orit Dahan, owner of the Jerusalem-based Italian restaurant, Piccolino, there are simply not enough tourists for business to continue as usual.

Echoing the concerns of hotel owners, she explained: “At the weekends, we have Israeli people. But tourists? None. You can count the tourists on your fingers.”

Moreover, Dahan told The Media Line that many businesses are struggling to convince their employees to come back to work. Since the government has been compensating hospitality workers for the hours they are laid off, many workers are reluctant to return.

“My staff came back because they care about me, but I know everyone else found it very tough to open their kitchen and restaurant,” she said.

For many restaurant owners, she said, “when they ask [their employees] to come back to work, they don’t want to because they get a salary, they sit at home, they can go to the sea.”

This general sentiment is reflected in data published by the Bank of Israel, which show that the average number of weekly hours worked by Israeli hotel and restaurant employees fell from 33.5 hours in 2019 to just 23.2 hours in 2020.

Yet some experts are optimistic that the hotel and restaurant industry can bounce back from the lockdown. Dr. Alex Coman, an expert in entrepreneurship at Tel Aviv University, explained that, for hotels, hiring and firing employees around the Jewish High Holidays when there are more tourists is a necessary part of the business.

“Operations are not going to be the bottleneck. External tourism is going to be more important,” he said.

My staff came back because they care about me, but I know everyone else found it very tough to open

Coman also is confident that the restaurant industry will be revitalized due to “a phenomenon of increasing prices, and so restaurants will open because there is a vacuum.”

He suggested that Israel currently exploits a tiny proportion of its tourism potential, and that “the new government under Naftali Bennett is very anxious to prove itself and show that [former Prime Minister Binyamin] Netanyahu is not the only one who can deliver.”

The government recently pushed back the date when Israel will reopen fully to tourists, to August 1, subject to individual requirements. Until then, the hospitality sector struggles on by relying on domestic tourism and government aid.

Israel’s government has promised to continue aiding businesses in the hospitality sector by allowing them to expand their outdoor seating areas, granting tax rebates to small- and medium-sized businesses, and offering monetary grants to pay for fixed expenses like rent, electricity, and water.

Aron Rosenthal is a student at the University of Edinburgh and an intern in The Media Line’s Press and Policy Student Program.

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