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 Up Front With Martin B. Deutsch

martin BUSINESS TRAVEL AS USUAL
IN POST-WAR ISRAEL


BY MARTIN B. DEUTSCH

August 31, 2006 -- In the unreal world of the Middle East, visitor traffic from the United States to Israel is almost back to normal.

The month-long war, which ended with the fragile, UN-brokered cease-fire between Israel and Hezbollah guerillas operating in nearby Lebanon, did break a 39-month winning streak for Israeli hotels. After more than three years of occupancy gains, hotels in Israel suffered a 20 percent decline immediately after the war's outbreak on July 12.

The north of the country, which was under constant missile fire from Hezbollah, obviously suffered the most. For example, tourist overnights fell 45 percent in Haifa, Israel's third-largest and most northerly major city. However, the decline was less dramatic in Tel Aviv, the business capital. The Israel Hotel Association reports that occupancy there dropped 22.5 percent in July compared to July of 2005.

But the continuing strength of U.S-originating travel to Israel, even during the war, is proven by the actions of the major carriers flying to Tel Aviv. In previous years, any unrest would have led to massive cancellations or even a temporary suspension of flights to Israel. Not so this time.

Continental Airlines, which flies twice a day from Newark to Tel Aviv, cancelled just one flight between June 15 and August 15, according to FlightStats.com. Delta, which flies from Atlanta to Tel Aviv, operated all 61 of its scheduled flights in the same period. And El Al, which flies from several U.S. gateways, operated without notable interruption.

While the situation could change from day to day, Arie Sommer, the tourism commissioner for North and South America for the Israeli Ministry of Tourism (IMOT), told me that "he hopes and expects the cease-fire to hold." On his second tour of duty for IMOT in New York, Sommer underscored the assertion that tourist and business travel to Israel from the United States had returned to normal, virtually from the day that the conflict ended.

Here are some of Sommer's comments, as well as some other last-minute news bearing on the situation:
   In the north of Israel, which took the brunt of the Hezbollah attacks, "the flow of tourists was immediately back to normal which is really unbelievable." (Sommer defines Israel's north as a region that includes Haifa and the Galilee and runs 100 miles north from Netanya to the Lebanese border.) Sommer says that people who had booked vacations to Israel came as scheduled, but avoided going up north. Now, he says, "the North is open for business with hotels and roads all back to pre-war conditions. Hotels were not damaged by the rocket attacks."
   "Pilgrim travel" from the United States, generally defined as visits from Evangelical Christian, stayed strong during the crisis, with few cancellations. But "a modicum of concern remains among the potential Pilgrim groups, so, in the next few weeks, we have 40 pastors coming to Israel to assess the situation for themselves." For decades, Sommer says, pilgrim travel accounted for nearly 60 percent of the flow of U.S. traffic to Israel. That figure has fallen to 25-30 percent in recent years with a comparable increase from America's Jewish community. Next year, however, Israel anticipates a record number of visits from the U.S. Christian community, even if its percentage of the U.S. visitor count doesn't return to previous levels.
   Israir, Israel's second designated international carrier, has yet to start scheduled flights because of a shortage of aircraft, Sommer says. It continues to fly charters, however, and Sommer is confident that Israir will launch scheduled flights to New York/Kennedy in the near future.
   In these post-war weeks, Sommer admits that "those of us promoting Israel in the United States have to work even harder to maintain and grow the volume of visitors to Israel." For example, there is a major campaign underway for Haifa. It focuses on a third night free for anyone booking two nights. "Our Day After plan, now awaiting approval, will allow us to spend an extra $6 million in the United States to intensify our promotion of Israel, particularly the North. This campaign would run from 8-to-10 weeks on television and radio, as well as in magazines and newspapers."
   Looking to the future, Sommer believes there is "an endless opportunity" in travel to Israel. Last year, for example, 478,000 Americans came. The projections for 2006 expect 500,000 visitors. From January through the end of July, Sommer says Israel registered a record 335,000 in-bound Americans. By the year 2009, the target is one million.

Speaking of business travel, Sommer points out the obvious: the North has not generally been a destination for business travelers. "Business travelers to our commercial centers have often scheduled a vacation add-on to that popular tourist region." Sommer explains. "During the recent conflict, these post-vacation trips were, not unexpectedly, canceled."

But business activities in the North are on the rise. Warren Buffet, the mega-tycoon known as the Sage of Omaha, recently chose northern Israel as the location of his first international investment. His Berkshire Hathaway operation paid $4 billion to buy an 80 percent share of Iscar, a highly profitable cutting-tool company located near Nahariya.

Buffet made the investment in the spring, before the outbreak of hostilities. And Iscar was forced to close for several days during the height of the Hezbollah missile attacks. But the company is back at full strength now and Buffet recently told Israeli newspapers that he hasn't regretted the deal for a moment.

This column originally appeared at JoeSentMe.com

Copyright 2001-2006 by Martin B. Deutsch. All rights reserved.