Cancelled tours, empty hotels: Israeli, Palestinian tourism reels as conflict escalates

BETHLEHEM/JERUSALEM, Oct 16 (Reuters) - Early this month, the main square and streets around Bethlehem's Church of the Nativity were bustling with tourists.

Now they are empty after a devastating attack by Palestinian militant group Hamas in Israel on Oct. 7.

"Business is at a standstill since the war started," said Essa Abu Dawoud, a tour guide in the Palestinian city. "The roads were cut off, no one is coming."

Across Israel and the Israeli-occupied Palestinian territories of Gaza and the West Bank, hotels have emptied and at least six companies have stopped trips to top destinations like Jerusalem and Tel Aviv as the conflict escalated. Two tour operators have called off trips until next year.

Cruise ships are avoiding Israel's once-bustling shores and major airlines have stopped flying to and from Israel, while governments have scrambled to get their citizens home.

easyJet says it has cancelled all packages to Tel Aviv due to depart before Oct. 22, while Virgin Atlantic Holidays has let holidaymakers rebook for later dates or get a refund if they're travelling before Oct. 18.

The assault by Hamas - designated a terrorist organisation by the United States, European Union and other governments - on Israeli communities on Oct. 7 killed at least 1,300 people. Most were civilians, including children.

Israel has intensified its strikes on Hamas' stronghold Gaza in retaliation.

InterContinental Hotels said two of its hotels, Six Senses Shaharut and Hotel Indigo Tel Aviv – Diamond District, were temporarily shut. It has seen some cancellations and some customers moving bookings to later in the year.

With most of its hotels empty, one of Israel's top chains, Isrotel, was "on the verge" of temporarily closing some, a spokesperson said.

The exodus of foreign visitors is a big blow to Israel's lucrative tourism industry, one of the country's biggest, as it was recovering from the COVID-19 pandemic. The sector accounts for 2.8% of GDP and about 3.5% of total employment.

The coming months are the busiest of the year for Christian pilgrimages arriving from the United States, Britain and elsewhere in Europe.

"We rely on tourism for living. We had the COVID crisis and we were still recovering and slowly waiting for the tourists to come back," said Khader Hussein, 30, a souvenir seller in Bethlehem, the traditional birthplace of Jesus.

"Now the tourism sector is dead."

Drawn by historical sites in Jerusalem and Bethlehem, and Tel Aviv's white sandy beaches, some three million tourists flocked to Israel in the first nine months of this year, according to the Israel Central Bureau of Statistics.

That's close to pre-pandemic levels, and included about 800,000 Americans.

PROLONGED CONFLICT

A day after the attack, Israel's ministry of tourism said tours should be avoided and tourists should stay in their hotels or on cruise ships.

It said on Wednesday tourists could move around the country if needed. Over 90,000 tourists were in Israel, and thousands had visited national sites during the past week, it said.

On the same day, though, the U.S. government raised its travel warning for Israel and the West Bank to Level 3 or "reconsider travel", its second-highest level.

Britain advises against all but essential travel to Israel and Palestinian territories.

Elias al-Arja, the head of the Arab Hotel Association, said most hotels in the West Bank had spent last week helping tourists flee after the violence began.

Around 90% of hotels in the West Bank are empty, he said.

Dan Hotels and Isrotel said they were providing rooms for people fleeing the Gaza border. Dan is also offering 50% discounts off rooms for locals.

With no resolution to the conflict in sight, it's unclear when foreign visitors might return.

Tour group Authentic Israel has asked tourists who were booked on their cancelled trips to donate $150 each to support its staff during the crisis.

Australian tour operator Intrepid Travel has called off tours to Israel and Palestinian territories until the end of the year.

Odysseys Unlimited has suspended its Israel trips until March 31. The U.S. company said it would continue tours in Egypt and Jordan but it has given guests the option of moving to a later date or another destination.

Some are rescheduling to next year, it said.

(Reporting by Joanna Plucinska in LONDON, Steven Scheer in JERUSALEM and Doyinsola Oladipo in NEW YORK; Additional reporting by Yadarisa Shabong in Bengaluru Editing by Josephine Mason and Mark Potter)