Israel’s tourism industry halts as hotels pivot to emergency relief

As of Sunday morning, approximately 9,000 Israelis had been evacuated from their homes to hotels, according to data from the Center for Local Government. Unlike during the Swods of Iron War, this time the evacuations are being coordinated by local authorities in partnership with the National Emergency Authority (RAHEL). Municipalities are now responsible for making hotel reservations and covering the costs or issuing formal letters of commitment on behalf of evacuees who meet the eligibility criteria outlined in a new procedure issued by RAHEL and the Tax Authority.

A Calcalist investigation with major hotel chains found that, as of Sunday, several still had vacant rooms in central Israel, the area most affected by the current wave of attacks and which has generated the greatest demand for evacuations. However, some hotels in central locations, especially Tel Aviv, are nearing full occupancy. In contrast, hotels outside the center remain largely vacant. The large hotel chains are reporting a sharp decline in tourism demand and numerous cancellations due to the security situation, prompting many to shut down parts of their operations.

At Israel Canada Hotels (which also includes the Brown Hotels group), occupancy in Tel Aviv is nearing 100%. “Most families whose homes were damaged want to stay close to home, which is why demand in Tel Aviv is so high. We’re nearly full,” Ilanit Afari, the chain’s VP of Sales, told Calcalist. “We have around 550 rooms across seven active hotels in the city, and occupancy is already above 95%. That’s why we’ve started redirecting inquiries. For example, we offered our Jerusalem hotel to the municipality of Rehovot, and they accepted. Occupancy there is about 50%, so there’s still availability.”

The chain also operates a hotel in Ashdod that is currently hosting about 20 evacuees, and a few families have been sent to hotels in Eilat and the Dead Sea. “Out of our 22 active hotels, only our property in Tiberias has been closed for now, but we’re prepared to reopen it within hours if needed,” said Afari. “Municipalities are constantly calling to check availability. Each evacuation is handled individually, and we receive formal commitments for each guest. It’s very different from the mass evacuations after October 7, when entire communities were relocated all at once. This time it’s a slower trickle, people from damaged buildings.”

The Atlas boutique hotel chain, with 15 hotels totaling about 1,000 rooms in Tel Aviv, Jerusalem, and Eilat, is currently hosting evacuees in eight of them. “Additional hotels are on standby if needed,” said Lior Lipman, co-CEO of Atlas. As of Sunday, occupancy across the chain was about 49%, a figure expected to rise following Sunday morning’s missile barrage on central Israel. “About 300 rooms are currently hosting evacuees, and another 200 are occupied by ‘regular’ guests, tourists stuck in Israel or locals who lack proper shelter and are seeking safety near reinforced structures. We’re offering special rates for them as well,” Lipman noted.

He added that Atlas has not closed a single hotel since the war with Iran began. “Closing a hotel is an extreme measure. It leads to high long-term costs and staffing losses. It would mean placing employees on unpaid leave, for which there are currently no state provisions. We expect to host more evacuees as the war drags on, and if that doesn’t happen, at least we’ll be ready to return to some form of routine.”

In contrast, the three publicly traded hotel chains - Dan, Isrotel, and Fattal - have closed a significant portion of their properties since the war began. Of the three, only Dan Hotels has reported the closures to investors.

Dan Hotels, which operates 16 hotels across Israel, announced last week that it had shuttered about half of its properties due to a “significant decline in occupancy, cancellations, and a lack of new bookings.” The decision was made to mitigate financial losses, with most staff now on leave. The chain warned investors that the war would have a “material adverse impact on the company,” both during the conflict and in its aftermath, due primarily to the expected decline in foreign tourism.

Isrotel, which operates 25 hotels in Israel, currently has just 14 open, including locations in Eilat, the Dead Sea, Tel Aviv, Jerusalem, the Negev, and Mitzpe Ramon. Eleven hotels have been temporarily closed. The chain continues to host evacuees from Kiryat Shmona and residents displaced by missile attacks in Tel Aviv and Eilat. Some tourists who are unable to leave the country are also staying in the chain’s hotels. Despite high occupancy in several locations, there are still vacant rooms. In response to the crisis, Isrotel has accelerated the opening of its new Daroma Hotel to provide additional shelter capacity.

The Fattal chain, which has 66 hotels in Israel (less than 20% of its global portfolio), has also closed several properties due to the war. Of approximately 8,000 rooms currently operating, about 4,000 are occupied, 1,700 of them by evacuees. Fattal is hosting displaced families in Tel Aviv, Jerusalem, Netanya, Be’er Sheva, and Rehovot. “There’s no shortage of rooms; we still have plenty of capacity,” a company spokesperson said. Hotels have been closed in Haifa, Tiberias (two), Tel Aviv (two), the Dead Sea (two), and Eilat (several). Initially, seven of Fattal’s nine Eilat hotels were closed, though three have since reopened. Many closures followed mass cancellations from security forces, police, and other organized groups.