Business tourism in Israel: Companies doing mutual procurement could purchase hospitality services

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by Ifi Reporter Category:Real Estate Dec 3, 2022

The Authority for Industrial Cooperation in the Ministry of Economy and Industry, after a discussion with the Hotel Association and the Ministry of Tourism, decided on a pilot that would enable mutual procurement of international companies that won government tenders, also in the field of inbound business tourism.
This means that international companies committed to mutual procurement in Israel will be able to purchase hospitality services in hotels as part of business tourism: conferences, seminars, corporate vacations, exhibitions, etc. The new outline may give a significant boost to business tourism (MICE) in Israel, which is globally considered a central growth engine in the tourism industry.

On the eve of the Corona epidemic, the rate of tourists entering Israel reached about 4.6 million tourists - an all-time record. During the epidemic, the skies were closed and for two years almost no tourists entered Israel. The inbound tourism industry, including inbound tourism hotels, tour operators, tour guides and tour operators, has almost collapsed. Since the skies opened and the arrival of tourists was renewed, the industry began to recover, but according to forecasts, it will return to its pre-epidemic level only in about two years.
Against this background and following a request from the Israel Hotel Association and the Ministry of Tourism, the Israel Defense Forces decided to temporarily allow, within the framework of fulfilling obligations for industrial cooperation and mutual procurement of foreign companies that have won (in government tenders), recognition of the procurement of services and/or products that includes orders for hospitality services within the framework of tourism Business MICE or corporate vacation, conferences, seminars in an amount not less than $75,000 per event. Business tourism activity as mentioned above, will be recognized as a joint venture in respect of the company's commitment to an indirect joint venture and not instead of the direct joint venture (direct joint venture in the project itself in which the company was awarded). Also, current tourism expenses other than business tourism events will not be recognized within the outline.
The average expenditure for a tourist in Israel is about $1400, there is an estimate that the average expenditure of a MICE tourist is significantly higher. In addition, this tourism is a gateway to making further investments in the future. Therefore, tourism authorities around the world focus on this area of ‚Äč‚Äčtourism and strive to expand it.
The agreement is valid for two years, and in the first phase, the tourism and economic ministries will contact the international companies currently committed to the mutual procurement and market the new outline to them.
Yanon Al-Roei, Deputy Director General of the Ministry of Economy and head of the Israel Defense Forces: Israel Defense Forces works to promote high-quality industrial cooperation between international companies and Israeli industry and places emphasis on direct industrial cooperation in the form of subcontracting within the various projects they won. In light of the damage The difficulty in the tourism industry We examined the request of our partners, and deemed it appropriate to launch a temporary pilot, with the aim of helping to strengthen the scope of business tourism entering Israel. We encourage the companies committed to mutual procurement, to carry out large corporate events, professional seminars, etc. in Israel by also recognizing such expenses in fulfilling their commitment.
Director General of the Ministry of Tourism, Danny Shahar: "The Ministry of Tourism is promoting the move that is expected to increase the scope of business tourism to Israel and especially conference tourism, which the ministry has emphasized on developing in recent times. The move has the potential to greatly help the tourism industry, which was hit the hardest during the Corona period and has yet to fully recover. The bureaus of the Ministry of Tourism around the world will work with the Ministry of Economy and the companies to which the details of the incentive will be distributed, in order to bring as much business tourism and conferences to Israel as possible."
The Israel Defense Forces, which operates in the Ministry of Economy and Industry, is entrusted with managing the mutual procurement of the State of Israel, monitoring the fulfillment of the obligations of foreign suppliers and connecting Israeli factories and industry with the committed foreign companies, with an emphasis on industrial activity in the periphery and the promotion of small and medium-sized businesses.
A foreign company, from which government entities purchase, is obliged by law to carry out repeat procurement and industrial collaborations in Israel, from Israeli companies to a certain extent of the value of the transaction: a scope of 50% if it is a defense transaction, a scope of 20% in civilian transactions against policies that sign the GPA agreement and 35% in the other types of transactions. The Israel Defense Forces monitors the fulfillment of this obligation, starting from the tender stage, through the construction of a business plan together with the foreign companies in which investment options are offered in the Israeli companies, and up to the monitoring of the fulfillment of the obligations.
Mutual procurement is a significant growth engine that generates business opportunities for the Israeli industry worth billions of dollars every year, which contribute to the development of the industry and breaking into new markets for these industries. Reciprocal procurement is much more than a legal obligation - it is a lever for investments in Israeli industry and economic growth, the creation of business relationships between Israeli and foreign companies, and a long-term quality investment for foreign companies, who understand more and more today that reciprocating in Israel is a very profitable investment.

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