Israeli Hotel Industry Declines as Domestic Tourism Drops and Regional Gaps Widen
The Israeli hotel industry continues to struggle in 2026, with 10.6 million overnight stays recorded from January to July, down from 11.4 million during the same period in 2025. Domestic tourists accounted for 9 million stays, representing 84% of the total, but this is a decline from 9.9 million stays by Israelis in early 2025. Meanwhile, foreign tourist stays slightly increased to 1.7 million from 1.5 million the previous year. The average national hotel room occupancy rate fell to 47.3%, compared to 50.5% in the first seven months of 2025, indicating nearly half of hotel rooms remained empty on average.
Regional disparities are significant. The Southern District, led by Eilat, recorded the highest occupancy at 63%, with Eilat itself reaching 87.6% in July. The Dead Sea area also showed relatively strong occupancy at 58% in July. In contrast, the Central District saw occupancy drop to 47.9% from 57.8% last year, and Tel Aviv-Jaffa's July occupancy fell to 51.4% from 59.5%. The situation is more severe in Jerusalem and the Northern District, with occupancy rates of only 34.2% and 32.1%, respectively, both declining from the previous year.
July, typically a peak month, saw 2.2 million overnight stays, mostly by Israelis (1.8 million), while foreign tourist stays reached 395,000, up from 165,000 in July 2025. The industry continues to face challenges from recent security events, including the "Iron Swords" war and the "Roaring Lion" operation in early 2026, which caused sharp occupancy drops, particularly in March. For example, occupancy in Jerusalem and Tiberias plummeted to 14.9% and 5.1%, respectively, during that period.
Despite some stabilization in foreign tourist numbers between May and July, domestic demand remains unstable, with a monthly average decline of 1.8% in Israeli overnight stays. As of June 2026, Israel has 443 hotels with approximately 52,000 rooms, but the sector is still far from a full recovery, especially in areas reliant on international tourism.
