Tourism as a Growth Engine

Tourism infrastructure insurance

Israel benefits from a resource that makes it unique in the worldwide tourism industry: an almost total monopoly of the Christian holy sites and a concentration of sites holy to all other religions. Despite this advantage, this economic potential has not realized. The problem lies in the lack of appropriate infrastructure to accommodate the desirable amount of tourists (meaning - hotel rooms, transport services, infrastructure in holy sites, etc.).

Currently, it seems that the tourism industry depends too much on government grants rather than on loans and credit from financial institutes. Our findings suggests that the main reason for that is a "market failure" caused by the volatility that characterizes Israel's tourism industry, due to “security incidents” such as wars or terror attacks, causing a cancelations and loss of income.

The lack of certainty regarding the scope of the compensation received and date of receipt hurts the industry’s ability to raise credit thus, forcing it to continue relying on random compensation from the government.

An IEP research prepared by the accounting firm PWC Israel, offers an insurance policy program to assure compensation according to criteria known in advance. Such insurance could be used as collateral to raise credit and investments.