Ministry of Tourism Requests 400 Million Shekel Loan Fund from Finance Ministry

The Ministry of Tourism is attempting to promote the establishment of a loan fund under state guarantees in the amount of 400 million shekels for the purpose of expanding existing hotels and establishing new projects. The Director General of the Ministry of Tourism, Michael Itzhakov, appealed to the Deputy Accountant General at the Ministry of Finance, Ori Shasha, with a request to examine the establishment of a dedicated loan fund for hotel entrepreneurs, arguing that financing difficulties in the industry have become the central barrier delaying the construction of new hotels.

Itzhakov wrote that the hotel industry has been dealing in recent years with an "unprecedented sequence of crises, which have significantly damaged its ability to recover and return to a path of growth" — from the coronavirus pandemic, through prolonged periods of security instability, to the Iron Swords war and the fighting against Iran. In his letter, Itzhakov explained that entrepreneurs are currently finding it difficult to raise credit and complete the financing structure required for new projects.

"The industry is experiencing a sharp decline in business activity, erosion of the entrepreneurs' equity, and damage to the ability to raise credit for new ventures and the expansion of existing activity," he wrote. The appeal was sent against the backdrop of the government's goal to expand the supply of guest rooms in Israel, in order to enable the accommodation of 7 million tourists in 2030. The goal was set based on an assessment that the existing number of hotel rooms is not sufficient for tourism needs in the coming years.

However, at this stage, inbound tourism to Israel is still far from the levels recorded before the war. Just last week, the Israel Hotel Association published data on tourist overnight stays in hotels and guesthouses, which indicated a decrease of approximately 75% in the first half of 2026 compared to the first half of 2023, before the war. Despite the decline in activity, the Ministry of Tourism is seeking to prepare for better days and the expansion of demand in the future, both from tourists and from Israeli guests.

According to the ministry, current economic conditions do not allow many entrepreneurs to invest in the construction of new hotel rooms. "In practice, many entrepreneurs are currently finding it difficult to complete the financing structure required for the construction of new hotels, even when it comes to projects with economic feasibility and state support through capital investment encouragement grants," wrote Itzhakov. According to him, "market conditions, the rise in financing costs, and the caution shown by financial institutions regarding the industry create a significant barrier that delays new investments."

For this reason, Itzhakov is asking the Ministry of Finance to examine the establishment of a dedicated loan fund under state guarantees. The goal, according to him: "to enable hotel entrepreneurs to receive supplementary financing under conditions that will facilitate the promotion of new projects and the completion of projects that are in the execution stages."