The combination of the ever-evolving internet and low-cost flights is transforming the tourism industry worldwide. Israel’s tourism industry must focus its attention on individual travelers in order to thrive in the tourism 2.0 era.
> by Yadin Roman
Tourism to Israel has been changing profoundly for the past decade. This started in the first years of the twenty-first century and has been gathering momentum from year to year. Organized tourism to the State of Israel started only a decade after the founding of the state. David Ben-Gurion, the first prime minister, was against creating a “service” industry, as he called. However, in 1958, Ben-Gurion finally relented and agreed to allow Teddy Kollek, who was the director-general of the Prime Minister’s Office at the time, to open the young state’s first government tourism office. It was called the Department for the Betterment of the Landscape, was part of the Prime Minister’s Office, and was responsible for organizing the events to celebrate Israel’s tenth anniversary.
For the next 10 years, tourism to Israel developed slowly. Until 1967, only about 250,000 tourists entered the country each year and nearly all of them came on a group tour sponsored by a Jewish organization.
The scene changed completely after the Six Day War in June 1967. It was fueled mainly by Christian pilgrims bent on seeing the Holy Land. Eastern Jerusalem, Bethlehem, Jericho, and other biblical sites were now under Israeli control and a visit to these places could be combined with a visit to the sites around the Sea of Galilee where Jesus had lived, preached, and ministered to the faithful. This was especially attractive to evangelical communities in the US, who largely saw Israel’s victory in the Six Day War as a divine miracle. Large tour groups of evangelicals began flocking to Israel.
The tour groups, whether their participants were evangelical Christians from Arkansas or Reform Jews from Ohio, tended to follow a set route, visiting specific areas for specific amounts of time (for example, four days in Jerusalem, one day at Masada and the Dead Sea, and three days in the Galilee). All the participants in a group would visit the same sites and attractions together, stay at the same large hotels, travel together on chartered buses, eat their meals together at the same big restaurants, and even shop together for souvenirs at the same major shops. While some tourists might wander off the route briefly to buy a Coke or an eye-catching knickknack, they tended to contribute little to small businesses and to make very few decisions on their own about where to spend their time and money. Such decisions were left to the discretion of the tour organizers and guides, who often developed ongoing relationships with the hotels, restaurants, bus companies, or souvenir shops they patronized. The tour organizers also generally made reservations far in advance, providing companies with plenty of time to prepare for each group.
Over the years, the number of tourists coming to Israel on organized group tours grew fivefold. By the year 2000, Israel was hosting two million and four hundred thousand tourists a year. The number of tourists dipped in the wake of the second intifada, which began in September 2000 and lasted for four years. In 2005, tourism started to grow again. The number of tourists reached a new high in 2013 of over three million and five hundred thousand. The first half of 2014 also showed a lot of promise, until Operation Protective Edge (Tzuk Eitan) began in July in Gaza, stopping tourism in its tracks. By the first quarter of 2015, the number of tourists arriving in the country seemed to be rebounding.
Until about 2000, tourism to Israel was predominantly groups – and predominantly Christian groups. According to the figures collected by the Israeli Central Bureau of Statistic (CBS), Jewish visitors to Israel made up only 20 percent of the total arrivals in the country. When tourism plummeted due to the second intifada, the ratio of Jewish tourists rose to 42%. Since 2006, as the total number of tourists began to grow again, the percent of Jewish visitors has declined again. By 2013, Jewish travelers made up only 26% of all the tourists to Israel. Jewish tourists comprised a large segment of the visitors from France that year (63%) as well as from the US (45%), while they made up only 15% of tourists from Russia and 10% of visitors from Germany and Italy.
The CBS figures also reflect the changing character of the traveler to Israel. Since 2004, the number of visitors traveling on their own and not as part of an organized group has been on the rise. Known in the tourism industry as FITs (Free or Foreign Individual or Independent Travelers), by 2013 their numbers grew to 40% of total travelers to Israel, up from less than 20% in the first decade of the twenty-first century. The ratio of FITs to group travelers continued to rise dramatically in 2014 and 2015.
The CBS statistics on the “purpose” of visits to Israel is also an indicator that the number of FITs is rising. Christian pilgrims, who almost always come in groups, generally state that their visit is for “religious purposes” and the percent of travelers stating that the purpose of their visit is pilgrimage or religious is declining dramatically. From a high of 50% in 2010, it declined to 22% in 2013. During the same period, the number of visitors declaring they are coming to Israel for “a vacation” has risen to 40%. The number of those visiting relatives in Israel has stayed more or less constant, at 20%, while business visitors are on the rise, reaching 10% of the total number in 2013. Another interesting figure is the rise in first-time visitors, which reached 55% in 2013 in contrast to visitors who had visited Israel a number of times. Another noteworthy phenomenon is the rise in the number of visitors to Tel Aviv. While Jerusalem is still the number one destination for the traveler to Israel – with 79% of all travelers spending time there in 2013, according to the CBS – the number of visitors to Tel Aviv has risen dramatically, with 66% of all visitors to Israel in 2013 hitting Tel Aviv.
Ratings and Reservations in the Internet Age
The most significant of all these recent changes are the rise in the number of FITs, the increasing number and ratio of first-time visitors, and Tel Aviv’s ascent as a tourist destination.
The FITs are nothing like the tourists who participate in group tours. They have different needs, different desires, and spend their money differently, generally patronizing a wide range of small businesses.
Tourists nowadays are more spontaneous in the way they plan their trips, notes Dr. Yaniv Belhassen, a senior lecturer in the Department of Hotel and Tourism Management at Ben-Gurion University of the Negev. They do not make hotel reservations in advance thanks to the many apps that enable them to book accommodations at the last minute for a reasonable price. This naturally makes the work of hotel managers much more complicated. In the past, the reception department knew about reservations at least a week in advance and had time to prepare for guests. Today hotel managers only know that many of their guests will book at the last minute.
Another key change is that it is a buyers’ market – the customer has much more power, he adds. The opportunity to write a review on a variety of platforms empowers each individual customer. Plus reviews have a greater impact since more and more decisions are being made by individual tourists who are visiting a place for the first time and not by tour organizers who are familiar with the place and its tourism services.
The internet also is blurring the border between vacation and home, Belhassen notes. Tourists’ connection with home while on vacation already is changing the way people share their travel experiences. They take photographs and share experiences online (via Facebook, WhatsApp, Twitter, etc.) in real time and receive immediate reactions from people at home, so their vacation also becomes an online experience.
All this is part of the changing scene of world tourism, in which the internet helps make a plethora of new destinations available. Travelers today, who have a lot more free time available, can surf the internet to find interesting new destinations that they had not considered before, build an itinerary and make reservations for everything from hotel rooms to lunch over the internet, and buy low-cost plane tickets online. Then all that is left to do is to hop on the flight and enjoy the new destination.
For travel destinations, this means that learning how to increase visibility on the internet is a vital new art that must be mastered to succeed.
The two main engines generating FIT travel are search engines, such as TripAdvisor, and reservation sites, such as Expedia, Booking.com, and Hotels.com. Much of TripAdvisor’s popularity stems from the reviews that travelers post of places that they have been to, from hotels to restaurants to archaeological parks. While crowd evaluation can be helpful, it also is problematic if, like on TripAdvisor, anybody can enter his or her impressions of a place, whether he visited it or not and whether she is affiliated with it or not. Naturally, if a site has hundreds or thousands of reviews, it is difficult for biased or fictional reviews to sway the results. However, the fewer comments and evaluations of a place there are, the easier it is to do this. TripAdvisor tries to prevent fake reviews, but it still is possible to skew the results.
This may be one reason reviews on reservation sites are becoming such a force as a tourism generator. The main sites only allow people who have actually made a hotel reservation and paid for it via the site to enter a review of a hotel. On the other hand, for flight reservations, there are rarely reviews since the main issue is finding the cheapest and most convenient flight to the desired destination for the desired dates.
“Everyone wants a good deal,” says Alex Treynker, Expedia’s market consultant in Israel.
Expedia owns Hotels.com, which together with its competitor Booking.com generates the largest number of internet hotel bookings in Israel. Both companies offer hotels an easy-to-use back office system, which feeds directly into the hotel’s reservation system.
“The rise in hotel reservations over the internet has been dramatic in the last two to three years,” Treynker says. “2013 saw a doubling of internet reservations and the first half of 2014 doubled again in comparison to the first half of 2013.”
The move to internet reservations enables new hotels to promote themselves much more rapidly than they could in the past, furthermore, when the basic criteria after location become price, then the only way to decide which hotel to choose is via a reservation site’s rating system.
“Hotels strive to raise their rating by offering better service,” Treynker says, adding that the difference between a rating of 8.9 and a rating of 9.0 is dramatic.
“The way in which we consume information today is changing rapidly. In the past, hotel promotion was done with colorful brochures, travel events, and travel agents. This world is being transformed. The internet and the access to it via smart phones are creating a world where the user opens many screens at once. He may be comparing the beds in two different hotels, looking at an offering at different sites, and more,” Treynker remarks. “The demographics of the people who reserve over the internet is also shifting. Of course, the younger generation is internet adept. If you came [to Israel]on Taglit when you were 18, you will use the internet to return or look for the places that interested you before. But the generation that grew up without the internet is also joining in. Today the majority of reservations over the internet are made by the 30s to 50s age group – but this is changing. In addition, even people who will not make a reservation over the internet will surf the net to find the best deal.”
The seemingly infinite number of options available on the internet means that internet promotion and marketing now must deal with inspiration – sparking the potential visitor’s interest in a country, region, event, or hotel.
Another growing trend is taking advantage of the constantly increasing opportunities reservations sites offer to order travel packages. Fly and Drive is a popular option already on Expedia. Throwing in an order for tickets to performances, such as an opera at Masada, appears to be the next step. An all-inclusive package is not there yet, but it is on the way, Treynker says. The day is not far off when each traveler will be able to build his or her own individual tour package on a single site, making reservations for a flight, hotel, restaurants, guided tours, and visits to sites all at once from a single platform and paying for everything in a single online credit card payment.
The dramatic change in internet orders is very clear from the Expedia statistics. The number one destination in Israel for hotel room reservations via Expedia, is by far, Tel Aviv, with Jerusalem in second place, Treynker says. In the first half of 2014, the number of hotel room nights ordered through Expedia totaled 136,000 – 46% more than in the first half of 2013. This represents 50,000 single orders since the average order is for three or four nights. (Some 40% of those booking a hotel room in Israel over Expedia order a four- to eight-night stay, 24% book a one- to three-night stay, and 23% order a 10- to 18-night stay.) Over a third of Expedia orders for a hotel room in Israel come from the US. Since American visitors make up only 20% of the total visitors to Israel, according to the CBS, this indicates American travelers’ preference for internet reservations on Expedia.
Another interesting trend that can be observed when going over the internet statistics and general statistics is that Israel is not seen as a leisure destination – people do not come here to lie on a beach – but as a cultural destination. Tourists come to enjoy the night life in Tel Aviv, culinary diversity, desert landscapes, and old cities.
As Belhassen notes, another trend, which all travel businesses should be aware of and take advantage of, is the last-minute reservation. This is a growing segment in the travel market. People are looking for last-minute deals. The combination of an amazing hotel offering a night at 50% off the regular price and a last-minute, low-cost flight is attracting an increasing number of travelers. If the destination happens to be on a traveler’s bucket list, the last-minute deal is an unexpected opportunity to fulfill a long-held desire to go see that place. Competition is, of course, getting tighter as more and more exotic destinations become more easily accessible.
In Israel, it is Tel Aviv that has adapted the fastest to the change in tourism. Many small boutique hotels, which offer a variety of bespoke services that tend to earn a hotel better ratings, are opening up. Private rooms to rent out via Airbnb are sprouting up all over the city (to the dismay of hoteliers who rightly complain of unfair competition as these rooms do not have to meet the same health, safety, and other regulations as a hotel). The accommodation options and the city’s vibrant culinary and cultural offerings are inspiring many to visit Tel Aviv. Naturally, details about numerous options in Tel Aviv can be found easily online. Hotels and tourism sites in other parts of Israel tend to have less of a presence on the internet or awareness of the need for it.
It also is Tel Aviv that rebounded first, within only a few months, from the fighting in the summer of 2014. Jerusalem is still struggling and the figures on travelers to the city are still problematic. The tourism industry in the south, which was hit the hardest by the Gaza conflict, still is struggling to recover, says Gal Greenberg, a licensed tour guide and advisor on tourism to local authorities in southern Israel.
When looking at the general picture, the internet clearly is the main catalyst for the move from group tourism to FITs. The groups are still responsible for the majority of travelers and the tourism industry still revolves around them. After all, to fill a 500-room hotel every night, night after night, one cannot rely on individual travelers. However, the growing number of individual tourists is giving Israel a new and much-needed boost. If the tourism industry in Israel manages to adapt to these trends, tourism will be able to generate much more than the $4.6 billion of income that travelers added to the Israeli economy in 2013. In the long run, as the world enters the age of tourism 2.0, the last-minute, low-cost, internet-savvy traveler has the potential to spur the Israel tourism industry to new heights that neither Kollek nor Ben-Gurion ever imagined.