Abstract
The growth rate of the number of foreign tourists coming to Israel has slowed considerably in the period from 1980 to 2016 as compared to the period from 1950 to 1980. Israel has many tourist attractions, but its foreign tourist industry faces two main constraints. These constraints are the fear of terrorist attacks and the high prices for tourists. A major reason for the high prices for tourists is the high price of hotels in Israel. While the hoteliers claim that their high prices are due to their high costs, more likely the high prices are due to the pricing strategy of the hotels to focus on consumers whose demand is inelastic. This group of consumers includes modern day pilgrims who come to Israel, some domestic consumers and business travellers. The paper concludes with some recommendations as to how the Israeli government can help the Israeli foreign tourist industry grow.
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