Executive Summary

Israel potentially could be successful

The official tourist slogan of Israel is "no one belongs here more than you". However,many tourists watching news channels may view this statement with some scepticism. Judging from thereporting, people in Israel do not seem to get along very well and, because of this, many touristsview Israel as a hostile place to visit and not particularly suitable for a relaxing vacation. Thiswas supported by arrival statistics over the review period, with tourist arrivals collapsing sincethe outbreak of open hostilities between the Israeli state and the Palestinians.

The intifada or public uprising began in 2001 and the situation only recently improved to theextent that tourists started to return again. Israel has many elements to attract tourists. It isthe holy land for Jews and the birthplace of Christ, including historic locations such as Jerusalemand the Dead Sea. It has a friendly and well-educated population and a high standard of roads,hotels and infrastructure. It is close to Europe and has immense potential as a destination.However, over the review period a lot of that became irrelevant, as tourists were confronted withthe threat of terrorism and a bad image of Israel as a destination.

Towards a new dawn

During 2003 and especially in 2004, the political situation calmed down in Israel. Arrivalfigures responded by growing by 30% in 2004 over 2003. After a series of bombings, the Israelgovernment chose to erect a security fence or "a wall" as it is called by the media, inorder to block off tourist territories. This measure upset much of the worlds media and probablyalso many tourists.

However, since the wall was constructed, terrorist activity decreased and tourist arrivalsstarted to increase once again. The tourist industry hopes that this will be the beginning of a newand brighter period for Israeli tourism, which saw record years before the intifada broke out.

Religion and loyalty

Travel and tourism in Israel is uniquely supported by religious tourism. Both Jews and Christianswant to visit Israel due to its religious importance. Among the Jewish tourists, there are also manywith family ties to Israel, with many Jewish families living in the US or France with grandparentsor grandchildren in Israel. Jewish religious tourists combining visits to relatives are a much morerobust consumer bass than mass tourists. This helped the industry maintain strong volumes ofarrivals, ever during the toughest years of intifada.

Escape, if just for one day

During times if trouble, such as the review period, many Israelis prefer to get away from Israelon vacation, even if only for a weekend. A change of environment is in demand due to depressingpictures from terrorist bombings, shootings or riots constantly being aired. This causes a doublenegative effect for Israels travel accommodation and domestic tourism, which obviously want theIsraelis to enjoy domestic holidays to compensate for the loss of foreign tourists.

The intifada meant a real blow to tourism and during the first year of 2001 arrivals fell by 51%,with numbers continuing to drop by close to 30% in 2002. However, the disturbances and increasedterrorist threat not only made people cancel trips to Israel but also impacted tourist attractionsand locations with a strong reliance on domestic tourism. Jerusalem was affected badly by terrorismand many Israelis began to view it as an unattractive destination.

Eilat - beach made in Israel

One destination was less affected by the drop in incoming tourism and by terrorist activities.Eilat is a large resort by the Red Sea with extensive beaches and diving areas. The area issheltered from the most problematic Palestinian areas and, because of this, tourists feel safe. Thedestination is a head-on competitor with beach resorts all over the world targeting Israeli touristsand the only beach resort of Importance in Israel. It had problems with price competitiveness duringthe review period but during 2004 prices were adjusted in an attempt to make Israelis chose Israelibeaches. The government also intervened with marketing funds to boost the resorts profile withdomestic tourists.

Security, security, security

The theme of security and terrorism is hard to escape in Israel. Travel and tourism has becomeinseparable from security concerns. The national airline El Al is famous for its extensive securitychecks and interrogation of tourists travelling to Israel and, sadly, the terrorism against Israelitravellers in Israel and abroad shows that this security is necessary. However, securityrequirements create extra costs for Israeli companies in travel and tourism compared withcompetitors in other countries and makes everyday life for the tourist more of a hassle, with lotsof waiting and regulations.

El Al, a national institution goes private

In 2003, El Al Israel Airlines was privatised and floated on the TASE, Tel Aviv Stock Exchange.In 2004, its competitor and partner Arkia received permission to buy 40% of the share in order totake control of El Al but with important conditions.

No business like tourism

For Israel, tourism is the most important industry, even as technological companies, researchcompanies and the service industry are growing. Tourism remains crucial, however, as it has suchimportant spin-off effects on other industries and also promotes Israel to the world. Because of theimportance of travel and tourism, it benefits from government support it. However, as the governmenttries to control travel and tourism, developments can be unpredictable, such as with theprivatisation of the El Al.

Israeli passport, world citizen

The Israelis like to travel. Many earn high wages enabling travel and many also have ties toother countries, such as Europe, the US, Russia or North Africa. Israel was initially created as asafe haven and homeland for the worlds Jews after the Second World War and consequently manycitizens have parents or grand parents that grew up in another country.

The future looks brighter but uncertainty rules

After the collapse of travel and tourism over the review period, players are once again makingpositive forecasts. There remains great potential for growth. Even a return to the levels around1999 and 2000 would mean an explosive growth for tourism. It is, however, very hard to make aforecast when terrorism is largely unpredictable and could ruin all hopes of a recovery. There iscurrently no stable peace inside Israel and the outcome of the US-led war in Iraq is uncertain,while Iran is possibly trying to build a nuclear bomb. The future in Israel may change any day anduncertainty rules.

• 1. EXECUTIVE SUMMARY
• 2. OPERATING ENVIRONMENT
• 2.1 GDP
  • Table 1 GDP 1999-2004
• 2.2 Disposable Income
  • Table 2 Disposable Income 1999-2004
• 2.3 Leisure Expenditure
  • Table 3 Consumer Expenditure on Leisure 1999-2004
• 3. INDUSTRY ISSUES
• 3.1 Political and Legislative Environment
• 3.2 Terrorism and Security
• 3.3 Sustainable Tourism
• 3.4 Positive Growth Factors
  • Summary 1 Positive Growth Factors
• 3.5 Negative Growth Factors
  • Summary 2 Negative Growth Factors
• 4. DEMAND FACTORS
• 4.1 Leave Entitlement
  • Table 4 Paid Holiday and Public Holidays 2004
• 4.2 Holiday Taking
  • Table 5 Levels of Holiday Taking 1999-2004
• 15. Length of Trip
  • Table 6 Holiday Taking by Length of Trip 1999-2004
• 16. Seasonality
  • Table 7 Month in which Holidays Are Taken 2004
• 5. TOURISM PARAMETERS
• 5.1 Incoming Tourism Receipts
  • Table 8 Incoming Tourism Receipts: 1999-2004
  • Table 9 Incoming Tourism Receipts % Growth: 2000-2004
• 5.2 Outgoing Tourism Expenditure
  • Table 10 Outgoing Tourism Expenditure: 1999-2004
  • Table 11 Outgoing Tourism Expenditure % Growth: 2000-2004
• 5.3 Balance of Tourism Payments
  • Table 12 Balance of Tourism Payments: Value 1999-2004
• 21. Number of Arrivals
  • Table 13 Total Arrivals: 1999-2004
• 22. Mode of Transport
  • Table 14 Arrivals by Mode of Transport: 1999-2004
  • Table 15 Arrivals by Mode of Transport: % Breakdown 1999-2004
• 23. Purpose of Visit
  • Table 16 Arrivals by Purpose of Visit: 1999-2004
  • Table 17 Arrivals by Purpose of Visit: % Breakdown 1999-2004
• 24. Country of Origin
  • Table 18 Arrivals by Country of Origin: 1999-2004
  • Table 19 Arrivals by Country of Origin: % Breakdown 1999-2004
• 25. Per Capita Expenditure
  • Table 20 Per Capita Expenditure per Arrival: 1999-2004
• 26. Number of Departures
  • Table 21 Total Departures: 1999-2004
• 27. Mode of Transport
  • Table 22 Departures by Mode of Transport: 1999-2004
  • Table 23 Departures by Mode of Transport: % Breakdown 1999-2004
• 28. Purpose of Visit
  • Table 24 Departures by Purpose of Visit: 1999-2004
• Table 25 Departures by Purpose of Visit: % Breakdown 1999-2004
• 29. Destination
  • Table 26 Departures by Destination: 1999-2004
  • Table 27 Departures by Destination: % Breakdown 1999-2004
• 30. Per Capita Expenditure
  • Table 28 Per Capita Expenditure per Departure: 1999-2004
• 31. Number of Trips and Expenditure
  • Table 29 Total Number of Domestic Trips: 1999-2004
  • Table 30 Domestic Tourist Expenditure: 1999-2004
• 32. Trips by Mode of Transport
  • Table 31 Domestic Trips by Mode of Transport: 1999-2004
  • Table 32 Domestic Trips by Mode of Transport: % Breakdown 1999-2004
• 33. Trips by Destination
  • Table 33 Domestic Trips by Destination 1999-2004
  • Table 34 Domestic Trips by Destination: % Analysis 1999-2004
• 34. Per Capita Expenditure
  • Table 35 Per Capita Expenditure Per Domestic Trip 1999-2004
• 5.18 Tourism Spending
  • Table 36 Spending on Tourism 1999-2004
  • Table 37 Spending on Tourism: % Breakdown 1999-2004
• 36. Method of Payment
  • Table 38 Method of Payment for Tourism Spending: % Breakdown 2003
• 6. TRAVEL ACCOMMODATION
• 6.1 Market Size
  • Table 39 Travel Accommodation Market 1999-2004
  • Table 40 Travel Accommodation Market: % Growth 2000-2004
• 6.2 Sales by Sector
  • Table 41 Travel Accommodation Value Sales by Sector: Value 1999-2004
  • Table 42 Travel Accommodation Value Sales by Sector: % Value Breakdown 1999-2004
• 6.3 Outlets by Sector
  • Table 43 Travel Accommodation Outlets by Sector: Units 1999-2004
  • Table 44 Travel Accommodation Outlets by Sector: % Volume Breakdown1999-2004
• 6.4 Hotels by Region
  • Table 45 Hotels, Rooms and Beds by Region 2003
• 6.5 Hotels by Star Ratings
• 6.6 Hotels by Ownership
  • Table 46 Hotel Sales by Independent vs Chained Outlets:
• Value 1999-2004
• 6.7 Internet Transaction Trends
  • Table 47 Travel Accommodation Internet Transactions Sales: Internet Transaction Value 1999-2004
• 6.8 Emerging Products
• 46. Mergers and Acquisitions
  • Summary 3 List of Mergers and Acquisitions 2002-2004
• 47. Revenue Rankings
  • Table 48 Key Players by Revenue 2003/2004
• 48. Market Share
  • Table 49 Hotel Companies by Market Share 2001-2004
• 49. RevPAR
  • Table 50 Key Hotel Players by RevPAR 2003/2004
• 6.13 Forecast Sales by Sector
  • Table 51 Forecast Travel Accommodation Sales by Sector: Value 2004-2009
• 6.14 Forecast Outlets by Sector
  • Table 52 Forecast Travel Accommodation Outlets by Sector:Units 2004-2009
• 7. TRANSPORTATION
• 7.1 Market Size
  • Table 53 Transportation Market 1999-2004
  • Table 54 Transportation Market: % Growth 2000-2004
• 7.2 Sales by Sector
  • Table 55 Transportation Sales by Sector: Value 1999-2004
  • Table 56 Transportation Sales by Sector: % Value Breakdown 1999-2004
• 7.3 Airline Capacity and Utilisation
  • Table 57 Airline Capacity by Type 1999-2004
  • Table 58 Airline Utilisation by Type 1999-2004
  • Table 59 Airline Utilisation by Type : % Breakdown 1999-2004
• 7.4 Airline Sales by Seat Class
  • Table 61 Airline Volume Sales by Seat Class: % Breakdown 1999-2004
• 7.5 Airline Sales by Distance
  • Table 62 Airline Volume Sales by Distance: % Breakdown 1999-2004
• 7.6 Internet Transaction Trends
  • Table 63 Transportation Sales: Internet Transaction Value 1999-2004
• 7.7 Emerging Products
• 60. Mergers and Acquisitions
  • Summary 4 List of Mergers and Acquisitions 2002-2004
• 61. Revenue Rankings
  • Table 64 Key Players by Revenue 2003/2004
• 62. Passengers Carried
  • Table 65 Key Players by Numbers of Passengers Carried 2003/2004
• 63. Market Share
  • Table 66 Airline Companies by Market Share 2001-2004
• 7.12 Forecast Sales by Sector
  • Table 67 Forecast Transportation Value Sales by Sector: Value 2004-2009
• 8. CAR RENTAL
• 8.1 Market Size
  • Table 68 Car Rental Market: 1999-2004
  • Table 69 Car Rental Market % Growth: 1999-2004
• 8.2 Fleet Size and Number of Operators
  • Table 70 Structure of Car Rental Market 1999-2004
• 8.3 Sales by Sector and Location
  • Table 71 Car Rental Sales by Sector and Location: Value 1999-2004
  • Table 72 Car Rental Sales by Sector and Location: % Value Breakdown 1999-2004
• 8.4 Rental Duration
  • Table 73 Car Rental Average Duration by Sector 1999/2004
  • Table 74 Average Car Rental Duration: % Breakdown 1999/2004
• 8.5 Time of Booking
  • Table 75 Time of Booking: % Breakdown 2004
• 8.6 Internet Transaction Trends
  • Table 76 Car Rental Sales: Internet Transaction Value 1999-2004
• 8.7 Emerging Products
• 73. Mergers and Acquisitions
  • Summary 5 List of Mergers and Acquisitions 2002-2004
• 74. Revenue Rankings
  • Table 77 Key Players by Revenue 2003/2004
• 75. Fleet Size
  • Table 78 Key Players by Size of Fleet 2001-2004
• 76. Average Daily Rate
  • Table 79 Key Players by Average Daily Rate for Car Hire 2003
• 77. Market Share
  • Table 80 Key Players by Market Share 2001-2004
• 8.13 Forecast Sales by Sector and Fleet Size
  • Table 81 Forecast Car Rental Sales by Sector: Value 2004-2009
  • Table 82 Forecast Car Rental Fleet Size 2004-2009
• 9. TRAVEL RETAIL
• 9.1 Market Size
  • Table 83 Travel Retail Market: 1999-2004
  • Table 84 Travel Retail Sales: % Growth: 2000-2004
• 9.2 Outlets by Sector
  • Table 85 Travel Retail Outlets by Sector: Units 1999-2004
  • Table 86 Travel Retail Outlets by Sector: % Volume Breakdown 1999-2004
• 82. Services
  • Table 87 Travel Agency Value Sales by Service: % Breakdown 1999-2004
• 83. Type of Holiday and Destinations
  • Table 88 Travel Agency Value Sales by Type of Holiday: %Breakdown 1999-2004
  • Table 89 Travel Agency Value Sales by Destination: % Breakdown 1999-2004
• 84. Exchange Services
• 85. Source of Sale
  • Table 90 Tour Operator Value Sales by Source of Sale: %Breakdown 1999-2004
• 86. Type of Holiday and Destinations
  • Table 91 Tour Operator Value Sales by Type of Holiday: %Breakdown 1999-2004
  • Table 92 Tour Operator Value Sales by Destination: % Breakdown 1999-2004
• 87. Sales by Outlet and Type
  • Table 93 Exchange Service Value Sales by Outlet: % Breakdown 2003
  • Table 94 Exchange Services Value Sales by Currency vs Travellerscheques: % Breakdown 2003
• 9.9 Online Travel Agencies
  • Table 95 Travel Retail Sales: Internet Transaction Value 1999-2004
• 9.10 Emerging Products
• 90. Revenue and Market Share
  • Table 96 Travel Agencies: Revenue Rankings 2003/2004
  • Table 97 Travel Agencies: Market Share 2001-2004
• 91. Revenue and Market Share
  • Table 98 Tour Operators: Revenue Rankings 2003/2004
  • Table 99 Tour Operators: Market Share 2001-2004
• 92. Revenue and Market Share
  • Table 100 Exchange Services: Revenue Rankings 2003/2004
  • Table 101 Exchange Services: Market Share 2001-2004
• 9.14 Forecast Sales and Outlets
  • Table 102 Forecast Travel Retail Value Sales: 2004-2009
  • Table 103 Forecast Travel Retail Outlets by Sector: Units 2004-2009
• 10. TOURIST ATTRACTIONS
• 10.1 Market Size
  • Table 104 Tourist Attractions Market: 1999-2004
  • Table 105 Tourist Attractions Market % Growth: 1999-2004
• 10.2 Sales by Sector
  • Table 106 Tourist Attractions Sales by Sector: Value 1999-2004
  • Table 107 Tourist Attractions Sales by Sector: % Value Breakdown 1999-2004
• 10.3 Visitors by Sector
  • Table 108 Tourist Attractions Visitors by Sector: 1999-2004
  • Table 109 Tourist Attractions Visitors by Sector: % Breakdown 1999-2004
• 10.4 Internet Booking Trends
• 10.5 Emerging Products
• 100. Visits
  • Table 110 Major Tourist Attractions by Visitors 2002-2004
• 10.7 Forecast Sales and Visitors by Sector
  • Table 111 Forecast Tourist Attractions Sales by Sector:Value 2004-2009
  • Table 112 Forecast Tourist Attractions Visitors by Sector: 2004-2009
• 11. KEY STRATEGIC ALLIANCES
• 11.1 Trends
  • Summary 6 Key Strategic Alliances 2000-2004
• 12. GROWTH COMPANY PROFILES
• 12.1 El Al Israel Airlines Ltd
  • Summary 7 El Al Israel Airlines Ltd: Key Facts
  • Summary 8 El Al Israel Airlines Ltd: Summary of Key Events 2001-2004
  • Table 113 El Al Israel Airlines : Financial Summary 1999-2004
• 12.2 Fattal Hotel Management Ltd
  • Summary 9 Fattal Hotel Management Ltd: Key Facts
  • Summary 10 Fattal Hotel Management Ltd: Summary of Key Events 1999-2004
  • Table 114 Fattal Hotel Management Ltd: Financial Summary 1999-2004
• 12.3 Natour
  • Summary 11 Natour Ltd: Key Facts
  • Summary 12 Natour Ltd: Summary of Key Events 2001-2003
  • Table 115 Natour Ltd: Financial Summary 1999-200413. FUTURE OUTLOOK
• 13.1 Market Opportunities
  • Summary 13 Opportunities for Growth and Investment
  • Table 116 Forecast Incoming Tourism Receipts: 2004-2009
  • Table 117 Forecast Outgoing Tourism Expenditure: 2004-2009
• 13.3 Balance of Payments
  • Table 118 Forecast Balance of Tourism Payments: Value 2004-2009
• 13.4 Number of Arrivals
  • Table 119 Forecast Visitor Arrivals: 2004-2009
• 13.5 Number of Departures
  • Table 120 Forecast Visitor Departures: 2004-2009
• 13.6 Travel and Tourism Markets
  • Table 121 Forecast Sales by Travel and Tourism Markets: Value 2004-2009
• 13.7 Developments in Internet Transaction Sales
  • Table 122 Forecast Internet Transactions Sales by Travel and Tourism Markets: InternetTransaction Value 2004-2009
• 14. DEFINITIONS