Foreign Tourism in Israel Plummets Amid War and Regional Escalation

Sada News - The Israeli economic newspaper Calcalist reported that the tourism sector in Israel is facing an unprecedented crisis as the war on Gaza and military escalation with Iran continue, directly impacting the results of the "Fattal" hotel chain - the largest hotel chain in Israel and a reflection of the sector's overall situation - during the second quarter of 2025, forcing it to lower its annual revenue forecasts.

According to the report, the occupancy rate in "Fattal" hotels within Israel dropped to only 58% compared to 72% in the second quarter of 2023 and 2024, despite this quarter traditionally being a strong season due to the spring holiday and Passover.

The newspaper noted that "this decline reflects a near-total absence of foreign tourists," at a time when accommodating local displaced persons is no longer able to save the results as it did last year.

Increasing Operating Losses

Calcalist explained that the company's core operating profits in the Israeli market fell by 25% to 113 million shekels (about 30.5 million dollars), estimating that the direct damages caused by the war last June amounted to about 50 million shekels (about 13.5 million dollars).

The newspaper mentioned that some hotels were forced to temporarily close, while cancellations from tourists and foreign groups increased.

Additional Pressures Abroad

Despite improved revenues in some European markets due to increased accommodation prices, "Fattal" faced rising labor costs due to increases in the minimum wage and social security contributions, especially in the UK and Ireland where operating profits dropped by 10%.

Calcalist indicated that the company has lowered its annual revenue forecasts to a range of 8.1 to 8.3 billion shekels (between 2.18 and 2.24 billion dollars), with operating profits between 2.75 and 2.9 billion shekels (about 742.5 to 783 million dollars), instead of previous estimates ranging from 8.2 to 8.5 billion shekels (about 2.21 to 2.29 billion dollars) and 3 to 3.2 billion shekels (between 810 and 864 million dollars) respectively.

The newspaper concluded by emphasizing that "the absence of a return of foreign tourists in the near future poses significant challenges for the Fattal hotel chain," noting that additional revenues from European hotels or real estate investment trusts may not be sufficient to compensate for this loss.

Source: Israeli Press