Israeli Tourism Ministry Proposes 400 Million Shekel Loan Fund to Boost Hotel Development
The Israeli Ministry of Tourism has requested the Finance Ministry to establish a 400 million shekel state-guaranteed loan fund aimed at expanding existing hotels and launching new projects. Michael Yitzhakov, Director General of the Tourism Ministry, addressed Uri Shasha, Deputy Accountant General at the Finance Ministry, urging the creation of a dedicated loan fund for hotel entrepreneurs. Yitzhakov highlighted that financing difficulties have become the main obstacle delaying new hotel construction.
In his letter, Yitzhakov detailed the unprecedented series of crises the hospitality sector has faced in recent years, including the COVID-19 pandemic, prolonged security instability, and the Iron Swords war alongside tensions with Iran. These challenges have severely impacted the sector's recovery and growth potential. He noted that entrepreneurs are struggling to secure credit and complete the necessary financing structures for new projects, with a sharp decline in business activity and erosion of equity hindering their ability to raise funds.
This initiative aligns with the government's goal to increase Israel's accommodation capacity to host 7 million tourists by 2030, addressing the current shortage of hotel rooms. However, tourism levels remain far below pre-war figures, with the Hotels Association reporting a 75% drop in overnight stays in the first half of 2026 compared to the same period in 2023. Despite this downturn, the Tourism Ministry is preparing for future demand growth from both international tourists and Israeli guests.
Yitzhakov emphasized that current economic conditions prevent many developers from investing in new hotel rooms, even for economically viable projects supported by state investment grants. He pointed to rising financing costs and financial institutions' cautious stance as significant barriers. The proposed loan fund would provide complementary financing under eased conditions to accelerate new hotel projects and complete those underway.
He concluded that such a fund could leverage much larger private investments, speed up hotel construction nationwide, strengthen the tourism sector's resilience, and contribute to economic growth, employment, and regional development. Yitzhakov called for a joint task force between the Finance and Tourism Ministries to quickly formulate the loan fund framework.
