Download Quality in Everything We Do

HOSPITALITY AND TOURISM
ADVISORY SERVICES
A New Market Strategy for Israeli Tourism
The Ministry of Tourism
Government of Israel
November 2006
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Quality in Everything We Do
Agenda
1 Introduction
2 The Potential
3 The Road to 4 Million Annual Visitors
4 Summary
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Introduction
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The Research Team
Ernst & Young, LLP – Project Leader
 World’s 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
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The Research Team
Ernst & Young, LLP – Hospitality & Tourism Advisory Services
 Extensive international experience in:
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Hotels
Resorts
Mixed-Use Developments
Convention Centers
Amusement Parks
Sport Facilities
Museums
Other Leisure Real Estate
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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
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Methodology
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Holistic and Results-Driven Approach
Analysis and Practical Strategies
Supply
Demand
- Hospitality & Tourism
Infrastructure
-Aviation and Investment
Policy
- Source Markets:
Demographics, Attributes,
Attitudes & Preferences
Development and Marketing Strategies
Economic Impact and Return on Investment
A New Era of Tourism Growth for Israel
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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
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The main goal is…
To substantially grow inbound tourism
and to establish tourism as a leading
engine of growth for the Israeli
economy
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The main obstacle…
Perception versus Reality
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Israel – Current Perception
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Israel – Current Reality
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The Potential
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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
4-5 m
2m
2006
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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 Israel’s GDP
 The creation of nearly 45,000 new jobs in Israel
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The Road to 4 Million Annual Visitors
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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
 Israel’s 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
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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:
 USA
 France
 UK
 Italy
 Germany
 Sweden
 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
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Return on Investment in Marketing
High return on investment
ROI of 9:1
 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.
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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 Israel’s market position
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Hotels
Present vs. Future
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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.
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Sites, Attractions and Amenities
Present vs. Future
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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
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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
 Israel’s 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
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Aviation Policy
A more liberal aviation policy could result in substantial growth in tourism
 Liberalize Israel’s 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
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Summary
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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 Israel’s GDP and create 45,000 new jobs
 Improvements should be made to Israel’s 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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