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HOSPITALITY AND TOURISM

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Existing Hotels: generally dated, relatively unsophisticated, poorly designed, ... Explore extending airport hours. Aviation Policy. 27. Quality in Everything ... – PowerPoint PPT presentation

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Title: HOSPITALITY AND TOURISM


1
HOSPITALITY AND TOURISM ADVISORY SERVICES
A New Market Strategy for Israeli Tourism The
Ministry of Tourism Government of
Israel November 2006
e
Quality in Everything We Do
2
Agenda
  • Introduction
  • The Potential
  • The Road to 4 Million Annual Visitors
  • Summary

3
Introduction
4
The Research Team
Ernst Young, LLP Project Leader
  • Worlds largest professional services firm
  • 106,000 employees in 140 countries
  • Global Real Estate, Hospitality and Construction
    practice with 3,500 employees in more than 25
    countries serving more than 4,000 clients
  • The Hospitality and Tourism Advisory Services
    group
  • Advisor to the leading organizations in the
    hospitality industry
  • Knowledge leader in hospitality, tourism and
    leisure
  • Extensive international experience
  • Expertise in hospitality tourism infrastructure
    development

5
The Research Team
Ernst Young, LLP Hospitality Tourism
Advisory Services
  • Extensive international experience in
  • Hotels
  • Resorts
  • Mixed-Use Developments
  • Convention Centers
  • Amusement Parks
  • Sport Facilities
  • Museums
  • Other Leisure Real Estate

6
The Research Team
A Fully Integrated Team
  • The advisory team represents the best in class in
    their respective fields
  • Project management and infrastructure assessment
  • Policy, economic analysis and tracking
    forecasting systems
  • Source markets and future marketing strategy

7
Methodology
8
Holistic and Results-Driven Approach
Analysis and Practical Strategies
  • Supply
  • - Hospitality Tourism
  • Infrastructure
  • Aviation and Investment
  • Policy

Demand - Source Markets Demographics,
Attributes, Attitudes Preferences
Development and Marketing Strategies
Economic Impact and Return on Investment
A New Era of Tourism Growth for Israel
9
The Primary Research
Research in Fifteen Countries
  • Interviews with 104 tourism industry stakeholders
    in Israel
  • 135 site inspections of tourism infrastructure
  • 500,000 annual interviews for World Travel
    Monitor survey
  • Survey interviews with a total of 8,400
    respondents in 8 countries
  • 18 focus groups in 8 countries
  • 51 interviews with international tour operators
    in 8 countries

10
The main goal isTo substantially grow inbound
tourism and to establish tourism as a leading
engine of growth for the Israeli economy
11
The main obstaclePerception versus Reality
12
Israel Current Perception
13
Israel Current Reality
14
The Potential
15
The Potential
Substantial growth prospects for Israeli tourism
  • In 2005 Israel received a total of 1.9 million
    international visitors
  • A realistic target (also considering political
    setbacks and, on the other hand, aviation reform)
    is
  • to double the number of international tourists in
    the next 5 years to 4-5 million visitors

16
The Potential
Substantial growth prospects for Israeli economy
  • Doubling the number of annual international
    visitors by 2011 to 4 million visitors could
    result in
  • An annual addition of approximately NIS 18
    billion in international travel and tourism
    receipts in Israel
  • An annual addition of approximately NIS 15
    billion to Israels GDP
  • The creation of nearly 45,000 new jobs in Israel

17
The Road to 4 Million Annual Visitors
18
Marketing Strategy
A research-driven long-term marketing strategy
for Israeli tourism
  • Israel has a large unexploited interest potential
    in international markets and thus considerable
    growth prospects
  • Current interest potential in Eight Priority
    Markets 17.9 million visitors
  • Current annual visitation from Eight Priority
    Markets 1.2 million
  • The political situation acts as a barrier but it
    can be overcome via the establishment of an
    attractive touristic image and a moderate
    price policy
  • Israels most important strength is its worldwide
    unique religious culture / history (but
    primarily in a touristic culture / sightseeing
    rather than a pure religious sense)
  • Another important strength is the great
    diversity / variety within a small area
  • Israel should implement a long-term marketing
    strategy

19
Marketing Strategy
Core strategies for the international markets
  • Implementation of a 5-year image campaign budget
    of 250 million USD / 50 million USD per year
    (this would be in line with the competitors)
  • Concentration on the first priority / high
    potential markets
  • Russia and China are examples of second priority
    markets
  • Concentration on the core product Tour
  • Following a mid-priced strategy
  • Close partnership with tour operators / travel
    agencies as the central distribution channel
  • Improvement of the offer quality / orientation on
    the core product Tour
  • Improvement of the flight offer / cheaper flight
    prices
  • France
  • Italy
  • Sweden
  • USA
  • UK
  • Germany

20
Return on Investment in Marketing
High return on investment
ROI of 91
  • Our analysis suggests that for every additional
    dollar invested in marketing, the return on
    investment will be 9 in additional spending
  • An annual increase in marketing spending to 50
    million could initially yield an annual average
    of 447 million in spending and over 510,000
    additional visitors.

21
Physical Infrastructure
Aging Lodging Supply
  • Upgrade the lodging product
  • Existing Hotels generally dated, relatively
    unsophisticated, poorly designed, offer few
    international brands and present limited variety
    in product
  • First Priority renovate existing hotels
  • Second Priority develop new hotels
  • Attract well known international hotel brands
  • An upgraded lodging product could improve
    Israels market position

22
Hotels
Present vs. Future
23
Physical Infrastructure
Aging and Underdeveloped Sites and Attractions
  • Further develop existing sites and attractions
  • Israel has an unmatched concentration of unique
    attractions in a small area
  • However, many attractions are poorly maintained,
    underdeveloped, in need of renovation and do not
    include high-quality facilities and amenities
  • Public infrastructure in some tourist areas is in
    poor condition
  • Focus should be on further developing, expanding
    and upgrading existing sites and attractions in
    order to make them truly exceptional
  • Upgrade and better maintain public infrastructure
    in tourist areas Old City of Jerusalem Tel Aviv
    beachfront Eilat promenade Tiberias city
    center etc.
  • Capital investments by the public sector,
    public-private partnerships, private donations,
    corporate sponsorships, etc.

24
Sites, Attractions and Amenities
Present vs. Future
25
Investment Environment
How can the government facilitate private
investment in tourism?
  • Establish a single Tourism Investment Board
    (TIB)
  • Prospective investors in tourism in Israel face a
    confusing array of organizations and procedures
    to gain government approvals and grants
  • This creates confusion and inefficiencies, and
    does not allow for an overarching development
    strategy to be implemented
  • The TIB will assume all tourism-related
    responsibilities from the Investment Center and
    be responsible for tourism investment, grants,
    incentives and partnerships with the private
    sector, based on a clear long term strategy
  • The TIB will be a separate entity, under the
    umbrella of the Ministry of Tourism
  • Final decisions on projects will be taken by the
    TIB board, which will include IMOT, HAMAT,
    Finance Ministry, and the Land Administration
  • The TIB will develop and promote product concepts
    to investors and will act as a concierge to court
    prospective investors and fast-track approvals

26
Investment Environment
What government incentives should be in place?
  • Revise the incentives available for investments
    in tourism
  • Current grant and incentive system is too limited
    to make an impact
  • Israels investment incentives must address the
    real issue of a deteriorating product in the
    midst of new regional development of a much
    higher quality
  • Further, incentives need to address the
    particular risks to tourism investment in Israel
    and must be at least as compelling as those of
    destinations competing for the same capital and
    developers
  • Offer a safety net policy to investors to
    counterbalance security risks
  • Offer low interest financing for projects of
    special significance and/or when private
    financing is difficult to obtain
  • Award grants and incentives for renovations, not
    just for new developments
  • Seek private sector equity and operational
    expertise in public projects

27
Aviation Policy
A more liberal aviation policy could result in
substantial growth in tourism
  • Liberalize Israels aviation policy
  • Aviation policy in Israel has stunted market
    development
  • Liberalization of aviation policy alone could
    result in 580,000 more international visitors and
    10,300 new jobs in travel and tourism sectors by
    2011
  • A liberalized policy will allow for increases in
    international airline activity to Israel, easing
    restrictions on airlines, capacity and
    frequencies
  • Provide extended rights for a second Israeli
    airline to fly international routes
  • Relax restrictions on connection flights
  • Pursue charter and low-cost airlines to operate
    international flights to BGA
  • Explore extending airport hours

28
Summary
29
Summary
Considerable growth prospects for inbound tourism
to Israel
  • Israel has substantial growth prospects in the
    international markets
  • Doubling the number of international visitors
    within five years could add NIS 15 Billion to
    Israels GDP and create 45,000 new jobs
  • Improvements should be made to Israels
    organizational and physical tourism
    infrastructure in order for Israel to be
    competitive
  • Israel needs a better set of incentives and a
    more efficient organizational structure in order
    to more successfully attract investments in
    tourism
  • A more liberal aviation policy would have far
    reaching outcomes in terms of tourist arrivals,
    job creation and economic activity
  • A long-term marketing strategy with a secured
    long-term budget is necessary for Israel to
    establish a touristic image in the
    international markets
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