Amidst the backdrop of rising inflation and interest rates in Israel, there is a discernible hesitancy among Israelis to secure summer vacations, leading to a surplus of unsold inventory for tourism companies. In response, these companies are employing innovative strategies to offload their products, such as offering enticing promotions like complimentary child stays or free additional nights for families booking multiple nights.
Avishai Cohen, CEO of Amadeus Israel, the leading provider of systems used by most Israeli agents, highlighted the downward trajectory of prices compared to the previous year. Previously characterized by limited availability and exorbitant costs, the landscape has now shifted, resulting in a decline in vacation package prices.
"As the cost of living becomes increasingly apparent, individuals are prioritizing saving, leading to a shift in focus," he says. "Numerous suppliers have made commitments to hotels and flights without considering the economic repercussions and the surge in actual airline flight offerings.
"Consequently, there is an approximate 20% discount compared to 2022; however, this year's prices remain approximately 10% higher than those in 2019. Despite market dynamics in the tourism sector, preventing a sustained downward trend in prices, the Israeli hotel industry is yet to reduce its rates."
An illustration of a price reduction implemented through an innovative promotion can be observed at Eshet Tours, which introduced a "child for free" sale for various family-oriented destinations.
Shirley Cohen Orkaby, Vice President of Eshet Tours, highlighted in a discussion with Ynet that "the prevailing economic and political climate prompts Israelis to postpone their summer vacation bookings, resulting in price reductions that favor Israeli tourists. For families with two children, this offer translates to a substantial discount of approximately 25%."
For example, an organized trip encompassing Paris, Brussels, and Amsterdam, along with visits to renowned theme parks, will be priced at $1,275 per person for couples with two children, courtesy of the "child for free" promotion. This marks a significant reduction of over $400 per person from the original price of $1,699, delivering a substantial discount.
Ilan Shalev, marketing director of the "Daka 90" tourism company, emphasized the impact of economic concerns and a preference for affordable and nearby vacations on booking patterns in Israel. Shalev stated to Ynet, "Recognizing Israelis' inclination for cost-effective and closer holiday options this summer, we have collaborated with Greek airline Blue Bird Airways to offer flights starting at 69 euros to popular destinations such as Crete, Rhodes, and Kos."
Additionally, Daka 90 has secured vacation packages from a tourism wholesaler, enabling immediate bookings for nearby destinations like Antalya, Crete, Rhodes, Kos, and Burgas. Prices for these packages start at 199 euros per person, covering flights, transfers, and three nights' accommodation. Shalev expressed their commitment to providing competitive prices for both local and distant bookings during the summer period, ensuring an affordable and competitive summer in 2023.
Hadar Carmel, the director of the vacation division at the Amsalem Tours group, highlighted the growing significance of price considerations in booking vacations abroad. Carmel stated, "Compared to the past, the price has become a primary factor when deciding on a vacation.
"Israeli travelers might not be willing to relinquish their annual getaway, but they do seek creative cost-reducing options. This includes considering more affordable destinations, being flexible with travel dates even if it means missing school days for children, opting for less convenient flight times, shortening the duration of the stay, and adjusting expectations regarding accommodation standards."
Sarit Sharvit, the CEO of Ayala Travel & Tours, acknowledged the Israeli consumer's more relaxed approach towards the summer of 2023. Sharvit expressed concern, stating, "Unfortunately, alongside the appealing prices, we are witnessing economic instability and a dramatic rise in the dollar exchange rate. This situation has led many to hesitate about going on vacation this summer or to consider purchasing packages abroad only at the last minute, hoping that the dollar will have weakened by then."
Sharvit further explained, "The prices of summer vacations have not increased compared to last year, and in fact, there is a range of destinations available at lower prices than last year. For instance, we currently have an offer for the upcoming weekend in Karpathos, which includes three nights with bed and breakfast, starting at 469 euros per person. Last year, a similar deal was priced at 640 euros."
Domestic tourism equally compromised
In a conversation with Ynet, Danny Amir, chairman of the Incoming Tour Operators Association in Israel, emphasized the impact of the cost of living on inbound tourism. Amir stated, "Undoubtedly, the rising cost of living is another factor harming inbound tourism.
"In the past, there used to be between 17 and 20 charter flights to Eilat, but now Aqaba, Sharm el-Sheikh, and Saudi Arabia have emerged as significant and preferred tourist destinations, leaving Eilat all but deserted. Unfortunately, there is no going back."
Amir further pointed out that "vacations in Israel have become considerably more expensive for the average tourist. The Jordanian side of the Dead Sea has become more attractive to tourists, while the tourism in the Dead Sea on the Israeli side is mainly focused on retirees and patients seeking psoriasis treatment programs.
"There is already a noticeable influx of tourists to the Palestinian Authority territories, particularly in the cities of Ramallah and Jericho. According to him, protests and roadblocks negatively impact Israel's image and deter tourists from visiting."
When it comes to booking hotel rooms directly abroad, bypassing travel agencies, there are two primary options: utilizing international search engines like Booking.com or visiting the hotel's official website. Generally, the price discrepancy between the two is minimal.
Hotel websites have limited freedom to manipulate vacation prices, and their strategy to entice customers to book directly on their platform is by offering "hidden value benefits." These perks are not immediately visible in the initial package price and require customers to explore the hotel website to discover them.
These value benefits include options such as a complimentary night's stay, the inclusion of two children at no extra charge, room upgrades, or additional daily meals. For instance, Louis Hotels, the largest hotel chain in Cyprus, advertises a family vacation (2+2) for six nights (July 7-13) at the Louis Paphos Breeze Hotel in Paphos, priced at approximately $2,944.
In comparison, Booking.com presents the same vacation package for approximately $3,100, resulting in a negligible difference of around $156. This disparity stems from the hotel's limitations in openly offering competitive packages compared to its international marketing channels.