The summer vacation has begun and many Israelis are expected to flood hotels across the country. Ahead of the opening of the peak tourist season, we spoke with Lior Raviv, CEO of Isrotel, the second largest hotel chain in Israel that is currently expanding to Europe as well.
In a conversation with the chain's CEO, Lior Raviv, he answers the question of high hotel prices, why aren't there enough tourists in Eilat and where do we fail where other places succeed?
The coronavirus is behind us, but tourists are still not arriving in the same numbers as in the past, do you feel it in your hotels?
"The first quarter of this year was indeed weak and the situation in Tel Aviv is not as good as in Jerusalem, but we are seeing a significant improvement in tourist arrivals into Israel, so much so that I think we will reach the tourist numbers of 2019. Demand is growing and we feel that tourism is starting to return to itself.
"The whole issue of the reform has had a significant impact on the number of tourists coming to Israel, and now that things have calmed down a bit, it's helping. The security situation is starting to stabilize or at least feels that way, the businessmen have returned and we see them in large numbers in our hotels. When business people return it means that we are in a good direction, they are always the first to return.
"On the issue of tourist arrivals, we are optimistic, I'm not saying we're in a perfect situation, but we're heading in a good direction. In the first quarter we were troubled, I admit, you hear that tourists are coming back all over the world, so why isn't this happening here? There are many reasons for this and I hope it ends soon."
Lior Raviv, CEO of the Isrotel chain // Photo: Talo Lauren
Marketing as a supreme value
Most tourists come to Tel Aviv and Jerusalem and very few come to Eilat compared to the past, what is the reason for this?
"Eilat needs to be branded, marketed and sold much more massively abroad. In the past it was budgeted much more seriously than it is now. The State of Israel has built an international airport in Eilat, anywhere else in the world it should bring a lot of traffic, but unfortunately this is not happening with us.
"Eilat is an amazing city, three and a half hours flight from winter in Europe to the best weather. If we look at the countries that compete with us in this arena, we see how they have made branding and marketing a supreme value. For example, Aqaba, Sharm El Sheikh and other destinations. In the State of Israel, this is not a priority and as a result, Eilat lives during the winter months from groups of mainly Israelis. The good prices in Eilat are naturally during these months, from November to March, the prices there are super attractive and the weather is comfortable."
Still, hotel prices in Eilat are high, why do those who come to vacation in the city have to pay so much?
"The beauty of tourists is that they are supposed to arrive in our Low Season, between November and April, when Europe is frozen and the weather in Eilat is very pleasant. It's a very cheap season for tourists. Now we see that there are far fewer tourists in Eilat in the winter and we are completing the occupancy in groups of Israelis at very low prices. The high prices of hotels are a mirror of the cost of living in the country.
Everything that we as citizens pay dearly, I as a hotel also pay dearly: municipal taxes, food, manpower, water, electricity and more. It is very difficult to compare it to Sinai, Antalya or Aqaba. Do you think I want to sell expensive? If I could fill a hotel at lower prices of course I would, believe me.
The regulation here is very complex and although all kinds of committees are being done here to ease the regulation, in practice – it takes 10 years to build a hotel, it's crazy, in other places it takes less than half the time. Construction costs here are very expensive and we are a business, we also need to make a profit. The issue of the duration of the construction of hotels is also a factor, the supply here is limited due to this method, demand is high, supply is low and prices are rising, this is the way of the world."
Isrotel Yam Suf Hotel in Eilat, Photo: Liron Almog
Good competition
Soon you are expanding to Europe as well, when will we see Isrotel hotels outside of Israel?
"After developing throughout the country, we are going abroad. In my estimation, we will open 3-4 Isrotel hotels in Rome, three hotels in Athens and one in Thessaloniki and we will continue to develop in Greece towards the islands.
"I believe that we will continue to develop in other places in Europe as well, and we are examining a great many deals, examining the possibility in Portugal and London, and advancing and examining deals throughout Western Europe. The hotels abroad will not be called Isrotel, we are working on the branding of the company that will work abroad, at the moment it is called Eurotel but it will have a new name soon."
A lot of tourists are already less looking for the big and expensive hotels, but a place to lay their heads and go out and explore the city, especially in cities like Tel Aviv and Jerusalem, do you feel this trend?
"We're operating city hotels today, and we're going to do it further. For example in Rome, one of the hotels will have 37 rooms. We also have them in Tel Aviv and we will continue to develop more of them, more accessible hotels in terms of price designed for those who come to explore the city itself. We understand that sometimes the story is the destination and not the hotel, Tel Aviv, Rome, London and more. This is definitely a trend that can be seen, and the hotel industry is making its adjustments according to the destination, and of course so are we."
Large chains such as Six Senses, Kempinski, Mandarin Oriental and more have entered Israel and have been difficult competition for you and the Israeli chains, how will you manage to compete with them?
"I see this trend happening in Europe as well, and it stretches us to be more competitive, with a better level of service. We see the hotels of the international chains and we stand in front of them in the level of service. We are a very strong brand and we have the advantage of a very deep knowledge of the local market. We don't fall short of any brand in the world. We ran the Lewis family's hotel in Palm Beach after the Ritz-Carlton and doubled our profits there. Of course, it will require us to always keep improving, and that's good for everyone."
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