Israeli Tourism Sector Faces Severe Crisis as Stock Prices Plunge Amid War Impact
Since October 7, the Israeli tourism industry has been in a deep crisis, with company stocks in the sector sharply declining throughout 2023. According to the Central Bureau of Statistics, only 430,000 tourists entered Israel from January to July, a steep drop from the 1.95 million visitors during the same period in the record year of 2019. This downturn has turned what was once a hot investment sector into a loss-making one, especially as the Tel Aviv 25 and 125 indices rose by 13.2% and 10% respectively since the start of the year.
The war initially caused a significant drop in overnight stays, totaling 8.5 million so far this year compared to over 12.5 million in 2019. Travel agencies and airlines were also hit hard, forced to suspend flights amid military operations and attacks. Hotel chains traded on the Tel Aviv Stock Exchange have seen notable stock declines: Dan Hotels fell 19.5% this year and 14.3% over three years; Fattal Hotels dropped 1% this year and 72.4% over three years; Isrotel declined 24% this year and 61% over three years; Israel Canada Hotels, listed for only a year, showed no gains.
Hotel occupancy averages less than 50% nationwide, with Tel Aviv recording a particularly low 43% room occupancy, reflecting its damaged reputation as a business and tourist destination. Airlines also suffered losses, with Israir down 17% this year and 16% over three years, and Wings down 9.3%. The exception is El Al, whose stock surged 15% following excellent Q2 results, recovering all losses this year and rising 276% over three years, largely due to its role in evacuations during the war.
Travel wholesalers were not spared either, with Issta down 15.7% and Aviation Connections down 2.25% this year. Industry forecasts remain pessimistic due to ongoing war threats and Israel’s classification as a high-risk destination by many countries. The sector fears that global hostility and negative perceptions of Israel will continue to deter tourists for an extended period.
