The number of foreign tourists visiting Israel has dropped to half its previous level since Israeli-Palestinian fighting erupted eight months ago, forcing hotels to close, thousands of workers to be laid off, and the national airline to cut routes, officials said Wednesday.
The finance ministry estimates the losses from tourism will cost Israel's economy $ 1 billion this year - about 1 percent of the gross national product. The tourism industry last year brought in revenues of $ 3.2 billion.
"This is a major hit on the tourism industry. The damage to tourism is a long-term problem," said finance ministry deputy director Vered Dar. "It may not be over for years, depending on the situation."
In the first three months of this year, 485,000 tourists came to Israel, 50 percent fewer than the number of visitors in the same period a year ago, the tourism ministry said.
Twenty-five hotels have closed and about 12,000 hotel workers - 35 percent of the hotel work force - have lost their jobs since the fighting began Sept. 28, according to the Hotel Association in Tel Aviv.
In an effort to save jobs, about 3,000 hotel workers now spend half of their work week in government-subsidized training courses or are on unpaid vacations until things improve. Pnina Ben-David, an economist with the Hotel Association, worries that they will have to be fired in the next few months.
El Al, the Israeli national airline, has seen 20 percent fewer passengers than normal since last year. The biggest drop was in passengers from Italy, Germany and Spain, airline officials said.
To cut expenses, El Al is using smaller planes and in June will stop flying to Manchester, England, and Simferopol, Ukraine, spokesman Nachman Klieman said.
At the end of December the company reported a loss of $ 109 million for 2000.
The fall in tourism accounts for much the economy's decline since the Palestinian uprising began. The Israeli Chamber of Commerce reported Tuesday that losses in tourism, exports and construction had cost the economy $ 2 billion.
Aside from the fighting, the drop in the Nasdaq stock exchange has had a significant impact on Israel's economy, hurting Israel's many Internet, biotech and other high-tech start-ups, said Dar from the finance ministry.
Israel's tourism ministry is shifting its marketing strategy to target religious visitors - mainly Jews and evangelical Christians - and others who may have a close connection to Israel.
"We are telling people that Israel is more than just a place to visit, it's a place of prayer that has meaning," said ministry spokeswoman Nitsan Ilan.