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H OSPITALITY AND T OURISM A DVISORY S ERVICES e A New Market Strategy for Israeli Tourism The Ministry of Tourism Government of Israel November 2006 Quality.

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Presentation on theme: "H OSPITALITY AND T OURISM A DVISORY S ERVICES e A New Market Strategy for Israeli Tourism The Ministry of Tourism Government of Israel November 2006 Quality."— Presentation transcript:

1 H OSPITALITY AND T OURISM A DVISORY S ERVICES e A New Market Strategy for Israeli Tourism The Ministry of Tourism Government of Israel November 2006 Quality in Everything We Do

2 e 1 1Introduction 2The Potential 3The Road to 4 Million Annual Visitors 4Summary Agenda

3 Quality in Everything We Do e 2 Introduction

4 Quality in Everything We Do e 3 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 The Research Team

5 Quality in Everything We Do e 4 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 Quality in Everything We Do e 5 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 The Research Team

7 Quality in Everything We Do e 6 Methodology

8 Quality in Everything We Do e 7 Holistic and Results-Driven Approach Analysis and Practical Strategies Development and Marketing Strategies Supply - Hospitality & Tourism Infrastructure - Aviation and Investment PolicySupply - Hospitality & Tourism Infrastructure - Aviation and Investment Policy Demand - Source Markets: Demographics, Attributes, Attitudes & PreferencesDemand - Source Markets: Demographics, Attributes, Attitudes & Preferences Economic Impact and Return on Investment A New Era of Tourism Growth for Israel

9 Quality in Everything We Do e 8 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 The Primary Research

10 Quality in Everything We Do e 9 The main goal is… To substantially grow inbound tourism and to establish tourism as a leading engine of growth for the Israeli economy

11 Quality in Everything We Do e 10 The main obstacle… Perception versus Reality

12 Quality in Everything We Do e 11 Israel – Current Perception

13 Quality in Everything We Do e 12 Israel – Current Reality

14 Quality in Everything We Do e 13 The Potential

15 Quality in Everything We Do e 14 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 The Potential 2 m 4-5 m

16 Quality in Everything We Do e 15 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 The Potential

17 Quality in Everything We Do e 16 The Road to 4 Million Annual Visitors

18 Quality in Everything We Do e 17 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 Marketing Strategy

19 Quality in Everything We Do e 18 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 Marketing Strategy  France  Italy  Sweden  USA  UK  Germany

20 Quality in Everything We Do e 19 Return on Investment in Marketing  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. ROI of 9:1 High return on investment

21 Quality in Everything We Do e 20 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 Physical Infrastructure

22 Quality in Everything We Do e 21 Present vs. Future Hotels

23 Quality in Everything We Do e 22 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. Physical Infrastructure

24 Quality in Everything We Do e 23 Present vs. Future Sites, Attractions and Amenities

25 Quality in Everything We Do e 24 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 Investment Environment

26 Quality in Everything We Do e 25 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 Investment Environment

27 Quality in Everything We Do e 26 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 Aviation Policy

28 Quality in Everything We Do e 27 Summary

29 Quality in Everything We Do e 28 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 Summary


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