Israeli Hotels Report Record 2023 Revenues Amid War-Driven Changes
The Israeli hotel industry concluded 2023 with revenues of approximately 14 billion shekels and profits around 3.1 billion shekels, according to data released by the Central Bureau of Statistics. The year began with a recovery from the COVID-19 pandemic but was dramatically altered after October 7, when the outbreak of the Iron Swords war led many hotels to close in conflict zones and repurpose their facilities to accommodate evacuees from southern and northern Israel.
Until September 2023, tourism steadily rebounded with increasing demand from both foreign visitors and domestic travelers. However, following the war's onset, tourist overnight stays sharply declined, while overnight stays by Israeli residents rose significantly due to the hosting of displaced persons. Overall, the sector recorded about 26 million overnight stays in 2023, up from 22 million in 2022, reflecting a shift from international to local clientele.
Eilat remained the leading city in hotel revenues, followed by Tel Aviv and Jerusalem, with these three cities accounting for roughly 60% of the industry's income. Despite rising expenses, hotels improved profitability, with profit margins increasing to 22% from 20% in 2022. Labor costs continued to be the largest expense, representing about one-third of total revenues.
The 2023 figures stand out compared to previous years, especially 2020 when the pandemic caused revenues to plummet by more than half. The Central Bureau of Statistics noted that revenue data from October onward includes payments for hosting evacuees, highlighting the hotels' critical role during the conflict. Due to the extraordinary circumstances and war impact, the bureau has postponed publishing similar estimates for 2024 and 2025 until further financial analyses are completed.
In summary, 2023 was an exceptional year for Israeli hotels, marked by strong recovery, high profitability, a significant shift in guest composition, and a new national role amid wartime conditions.
