Tourism Crisis Hits Israel: Stock Declines and Plummeting Visitor Numbers

The tourism industry in Israel has been in a severe crisis since October 7, 2023, and shares of companies operating in the sector have recorded sharp declines since the beginning of the year. According to data from the Central Bureau of Statistics, the number of tourists who entered Israel between January and July totaled only 430,000 — a dramatic decrease compared to the peak year of 2019, when 1.95 million tourists were recorded in the same period. The sector, which was previously considered a hot investment, has become a source of loss for its investors, especially in light of the fact that since the beginning of the year the TA-25 index has risen by 13.2% and the TA-125 index has risen by 10%.

The war first hit the number of overnight stays in Israel, which totaled 8.5 million since the beginning of the year, compared to more than 12.5 million overnight stays in the corresponding period in 2019. Subsequently, travel agencies and airlines were also affected, as they were forced to ground flights during the operations and attacks. Monitoring the performance of hotel chains traded on the Tel Aviv Stock Exchange shows the following:

• Dan Hotels shares have fallen by 19.5% since the beginning of the year, and by 14.3% over the last three years.

• Fattal shares fell 1% since the beginning of the year, and have plummeted by 72.4% over the last three years.

• Isrotel shares fell by 24% since the beginning of the year, and by 61% over the last three years.

• Israel Canada Hotels recorded a zero return since the beginning of the year.

According to the Israel Hotel Association, the average occupancy in Israel is less than 50%. The aviation sector also recorded declines: Israir shares fell by 17% since the beginning of the year, and Knafaim shares fell by 9.3%. The exception is El Al shares, which jumped 15% yesterday following excellent reports for the second quarter, recovering all the decline recorded since the beginning of the year. Over the last three years, the stock has soared by 276%, after the company transported the residents of Israel almost alone during the war. Travel wholesalers also did not escape the crisis: Issta shares fell by 15.7% since the beginning of the year, and Keshet Teufa shares fell by 2.25%.

The forecast for the recovery of the sector is still not optimistic. The threat of war, or another round against Iran, is still present, and many countries classify Israel as red or orange — a classification that means a warning against arriving in the country. But the greater fear among those in the industry is that the tarnished image of Israel in the world will prevent tourists from arriving for a long time to come. Tel Aviv, a destination that business people avoid, is recording a low in room occupancy since the beginning of the year — with an average of only 43%.