Palestinian hotels in East Jerusalem running half-capacity

By Yusef Daher
 JERUSALEM (eTurboNews) — With the new Israeli Hotel Grand Court, a total of 1400 rooms currently compete in East Jerusalem.  The Arab Hotel Association latest statistics show that 19 out of the 39 hotels are either closed or partially-closed. Some of these hotels have been transformed to renting space for non-tourist organizations. Others are either closed or incapable of operations, while some open only in Easter season. Out of the original 2000 rooms of Arab Hotels in East Jerusalem, there are only 1166 rooms left today. 

Arab hotels in East Jerusalem have a positive advantage of being in close proximity to the Old City and the major tourist and pilgrims sites around the city. Generally, they are small and medium sized hotels with an average of 25-100 rooms each, with services are concentrated on the pilgrims market.
However, Arab hotels in Jerusalem lack professional marketing, sales and financial management skills and are in need of professional training in line level, supervisory, and management levels. In the past two years, some technical assistance was introduced by EU support but no support is expected in the near future.

The 39 Palestinian hotels in East Jerusalem are mostly family-owned businesses with leased property under Islamic or Christian endowment, and some are classified under mixed-owned property. The hotels used to be managed by industry-pioneers, but some of them lost continuity in this respect as the new generation lost interest in the industry because of the current situation.
Most of the properties were built in the 1960s.  Some of the hotels were not planned to be hotels but the demand in the last two decades has resulted in them becoming successful small- and medium-sized hotels.
Currently, most of these hotels are run down and in serious need for renovation and restoration. The current infrastructure conditions are considered the worse among other Palestinian areas for many reasons and mainly financial difficulties based on the many financial obligations and market recession.
During the last four years, due to the dramatic drop in incoming tourism and complete loss of the local market as a result of the wall and the separation of the city from its surroundings, the hotels started closing down to stop the financial bleeding and prevent the Israeli tax authorities from raiding their properties and confiscating fixed assets as penalty for their inability to pay previous and existing obligations. The Arab Hotels of East Jerusalem owe the Municipality of Jerusalem 12 million shekels for overdue Arnona (municipal taxes) amounts for 2003 and 2004.
The Arab Hotel Association has initiated legal consultation to convince the Israeli government to reduce the amounts based either on reclassifying the location terms on which the tax is being levied or on the basis of extremely low income and turnover. The association statistics shows that in 2003 the Arnona tax constituted to 37 percent of the income before expenses and taxes. A legal case is still an option.
The Arab Hotel Association has also developed an on lending proposal for long term soft loans in an effort to revive this vital tourism private sector that can accommodate more than 1100 jobs. The paper is targeted at renovation and restoration activities in the sector and has been channeled through and to donor agencies for the last decade with no positive reaction yet.
The latest incident of property leasing by the Greek Orthodox Patriarchate, which included two hotels in the Old City and the complete loss of the National Palace and the sale of the Palace hotel, are just visible examples of what to expect.
(1 shekel=US$0.22)

July 19, 2005   Posted in: Israel