Israel has announced a pilot project to facilitate reciprocal procurement in the field of incoming business tourism (MICE) for international companies that have won government tenders.
The decision followed discussions between the Industrial Cooperation Authority (ICA) at the Israel Ministry of Economy and Industry, the Israel Hotels Association and the Israel Ministry of Tourism.
Under the project, international companies committed to reciprocal procurement in Israel will be able to purchase hotel accommodation services within the framework of business tourism: conferences, seminars, corporate vacations, exhibitions, etc.
Business tourism in Israel is considered a central engine for growth in the tourism industry.
Just before the start of the COVID-19 pandemic, tourist entries into Israel reached a record level of nearly 4.6 million tourists. But during the two years of the pandemic, Israel’s skies were closed and few tourists visited Israel. The incoming tourism industry, including incoming tourism hotels, tour operators, tour guides and tourist transportation companies nearly collapsed.
Since then, the skies have reopened and incoming tourism has begun to recover, but, according to forecasts, it will return to its pre-pandemic levels only in another two years.
Against this background and following an appeal on behalf of the Israel Hotels Association and the Israel Ministry of Tourism, the ICA has decided to temporarily allow recognition of services and/or products that include accommodation services for MICE tourism, corporate vacations, conferences, seminars for a minimum $75,000 per event.
While the average tourist spends about $1,400 in Israel, it is estimated that an average MICE tourist will spend more.
The agreement is valid for two years. In the first stage, the Tourism Ministry and the Economy Ministry will approach international companies currently committed to reciprocal procurement and market this new outline.
“The ICA is working to promote quality industry collaborations between international companies and Israeli industry and emphasizes direct industry collaborations in the form of subcontractors within the various projects they have won,” explained Economy Ministry Vice Director-General and Head ICA Inon Elroy.
“The Ministry of Tourism promotes this process which is expected to increase business tourism to Israel and especially conference tourism, which the ministry has recently highlighted for development. This move has the potential to significantly help the tourism industry, which was so severely damaged during the pandemic and has yet to fully recover,” added Tourism Ministry Director-General Dani Shahar.
“The Israel Government Tourist offices around the world will work with the Ministry of Economy and those companies which will receive the incentive details, in order to bring as much business tourism as possible to Israel.”
A foreign company, from which government entities purchase, is obliged by law to make procurements and industrial collaborations in Israel from Israeli companies for a certain amount of the transaction: 50 percent on security transactions, 20 percent on civilian transactions with countries who are signatories of the GPA agreement and 35 percent on all other transactions.
The ICA monitors this compulsory obligation from the tender phase through the preparation of a business plan together with the foreign companies where investment options are offered in Israeli companies, to the monitoring of debt.
Procurement is a significant growth engine that produces business opportunities worth billions of dollars annually for Israeli industry, which contributes to the development of the industry and breaking into new markets for these industries.
It is much more than a legal commitment – it represents leverage for investment in Israeli industry and economic growth, creates business relationships between Israeli and foreign companies, and a quality, long-term investment for foreign companies which today understand more and more that reciprocal procurement in Israel is a most lucrative investment.
