The data in these tables indicate that all hotels in Tel Aviv have fully recovered after being temporarily closed at the height of the COVID-19 crisis, while new hotels have also opened. Jerusalem, on the other hand, has not yet recovered, and the number of hotels in the city is somewhat smaller than in 2019 (before the pandemic).

In terms of the number of overnight stays, it is evident that Jerusalem is also recovering, although the city’s hotel sector has yet to return to the levels recorded in 2019. This is due to a decrease in the volume of inbound tourism, which does not yet show the same significant signs of recovery as domestic tourism, where the overall trend is showing a return to normalcy.

The situation in Tel Aviv is quite similar: the number of overnight stays in Tel Aviv also signals the city’s recovery since the onset of the pandemic in 2020, but the hotel sector has not yet returned to its 2019 levels, mainly due to the decline in inbound tourism.

Interestingly enough, both cities show a recovery in domestic tourism, although, in Tel Aviv, this trend contributes more to the overall recovery of the hospitality industry than in Jerusalem.

However, according to the last five-year plan for the development of tourism in Jerusalem (for 2016-2021), Jerusalem has met and even exceeded its goals (at least in 2019, right before the pandemic), both in terms of tourist stays and the number of hotel rooms. As a result, in 2019, Jerusalem became the leading city in Israel in terms of overnight stays by inbound tourists, with 80.3% of the total number of tourists, compared to Tel Aviv, which ranked second with 74.0% of the total number.

A review of the changes in the industry, alongside an analysis of OTA Insight data provided exclusively to Fact Stories, points to some fascinating trends. These strengthen our assessment that Jerusalem is set to enjoy a new and improved status in tourism in the coming years, even though its recovery from the pandemic is more moderate compared to Tel Aviv.

1. Jerusalem was on its way to becoming the next Tel Aviv and maybe even surpassing it, but COVID halted this trend. On the other hand, Tel Aviv came out of the crisis much stronger, mainly thanks to domestic tourism, as the increase in the number of hotels and rooms clearly shows.

2. From an annual point of view, the hotel sector in Tel Aviv and Jerusalem showed signs of recovery, and the trend intensified as the year progressed. To date, price levels in Tel Aviv and Jerusalem are similar to levels in 2019. However, at the beginning of 2022, hotel room rates in Tel Aviv and Jerusalem were lower than in 2019 (the last “normal” tourism year before the outbreak), possibly because there was still no return of major MICE tourism.

3. In 2022, the average rate at a Jerusalem hotel was higher in June (7%), July (22%), and August (15%), compared to the corresponding period in 2019. Some possible explanations are high demand against a relatively low supply of hotels that are again fully operational as well as “revenge spending” by Israeli tourists, which has sent prices upward.

In Tel Aviv as well, the average hotel room rate was higher in June (4%), July (10%), and August (5%) than in the corresponding period in 2019. At the same time, the rate of the average price increase in Tel Aviv was lower than in Jerusalem.

4. If this recovery trend in tourism in both cities continues, we now predict that prices in 2023 will be even higher than in 2022 and 2019. Moreover, price levels may even receive another ‘boost’ with the return of the MICE industry, as well as Asian tourism, especially from China.

5. As for forecasting hotel room rates in 2023, compared to 2022, an upward price trend can already be detected both in Tel Aviv and Jerusalem. However, in the coming six months, Jerusalem will be the one to benefit the most from this trend. This might be due to the prediction that Jerusalem will be a more attractive alternative for tourists during these months than Tel Aviv, which mainly attracts tourists in the summer.

In June and July 2023, the upward trend is expected to stop and even reverse in both cities: room rates in Jerusalem are expected to decrease by 10% in July, compared to 2022, while in Tel Aviv, they are expected to decline by only 2%. As of August, hotel room rates in Tel Aviv are expected to rise again, while in Jerusalem, the downturn in prices will continue.

6. Comparing the forecast for hotel room rates in 2023 with data from 2019 shows that an increase in hotel prices in Jerusalem can be expected only from May to August (5-10%). Moreover, although these months show a rise in Tel Aviv as well, on average, the increase there is lower than in Jerusalem. In other words, even according to this forecast, Jerusalem will benefit the most. As for the remaining months, hotel room rates are expected to decrease in both cities, except for a localized increase in October and December, as far as hotel prices in Tel Aviv are concerned.