Israel’s hospitality sector continues to demonstrate remarkable economic resilience, proving that demand for the Holy Land remains inelastic among premium travelers. Recent data reveals that while occupancy rates across the country fluctuate, the average daily rates (ADR) remain impressively high, signaling a market driven by value rather than volume.
The State of the Stay
- Tel Aviv leads in activity: The commercial capital maintains the highest occupancy levels, balancing volume with solid nightly rates.
- Jerusalem commands the highest premium: The capital’s spiritual and historical significance allows hosts to charge the highest nightly rates in the country, despite lower booking frequency.
- Eilat holds steady: The southern resort city mirrors classic coastal trends, utilizing high rate ceilings to offset seasonal gaps.
- Quality over quantity: The national strategy has shifted toward maintaining high price standards (~$200 average) rather than slashing rates to fill calendars.
Tel Aviv’s Value Proposition Remains Unshaken
The “White City” continues to serve as the beating heart of Israel’s short-term rental market, boasting over 7,000 active vacation rentals. The data indicates that Tel Aviv is the most balanced market in the country, effectively blending tourist demand with business consistency.
Current metrics show occupancy hovering around 51 percent, significantly higher than other regions. With an Average Daily Rate (ADR) of approximately $200 per night, the revenue per available room (RevPAR) sits at roughly $96. This suggests that Tel Aviv hosts do not need to fill every night to remain profitable; instead, the market sustains itself on premium pricing that captures high yield from half the available inventory.
Is Jerusalem the Premium Capital of the Market?
While the coastal plain focuses on a blend of occupancy and rate, Israel’s capital operates on a model of exclusivity. The data suggests that visitors to Jerusalem are less price-sensitive, placing a premium on the unique spiritual and historical proximity the city offers.
Performance data for Jerusalem reveals a “high value, specific demand” model. Occupancy is moderate, clustering near 32 percent, yet the ADR is the strongest in the nation, ranging between $278 and $300. This reflects a market with immense rate power; hosts here can afford lighter booking schedules because the revenue generated per stay is substantially higher than the national average.
Eilat’s Coastal Resilience and Revenue Strategy
The southern resort city maintains a distinct economic rhythm compared to the center, following a classic vacation pattern where higher nightly rates compensate for seasonal fluctuations.
Eilat records occupancy in the mid-40s percent range, placing it between Jerusalem and Tel Aviv in terms of activity. However, its ADR is a standout at roughly $216, surpassing Tel Aviv’s average. This illustrates a specific coastal dynamic: lower booking frequency compared to a business hub, but higher rate ceilings driven by vacationers willing to pay for the Red Sea experience.
How Should Hosts Optimize Returns Across the Nation?
The national average reflects a mature market that understands the intrinsic value of the Israeli tourism product. Rather than engaging in a race to the bottom, hosts are holding firm on pricing standards.
Across Israel, the average ADR stabilizes around $200 with occupancy in the high-30s. This data dictates a bifurcated strategy for revenue optimization:
- In High-Demand Zones (Tel Aviv/Jerusalem): The logic is to push for premium pricing during weekends and events to capture maximum ADR value.
- In Softer Markets (Eilat/National Average): The data suggests tilting toward “length-of-stay” discounts or mid-term pricing to convert marginal nights into confirmed bookings, thereby lifting the overall RevPAR without eroding the base value of the property.
| City | Occupancy Rate | Average Daily Rate (ADR) | Strategic Focus |
|---|---|---|---|
| Tel Aviv | ~51% | ~$200 | Balance: Moderate occupancy with solid rates creates stable RevPAR (~$96). |
| Jerusalem | ~32% | $278 – $300 | Premium: High rate power compensates for lower booking frequency. |
| Eilat | Mid-40s% | ~$216 | Coastal: High rate ceilings offset seasonal gaps; favors length-of-stay incentives. |
| National Avg | High-30s% | ~$200 | Yield: Hosts prioritize rate integrity over 100% occupancy. |
Strategic Moves for Israeli Hosts
- Leverage Scarcity in the Capital: In Jerusalem, do not drop prices to chase occupancy; the data shows the market supports high ADRs ($278+), so focus on luxury service to justify the premium.
- Incentivize Duration in Eilat: With occupancy in the mid-40s, use length-of-stay discounts to secure longer bookings, stabilizing revenue in a fluctuating resort market.
- Maximize Weekends in Tel Aviv: With the highest occupancy (51%), hosts should utilize dynamic pricing to spike rates during peak weekends and events.
Glossary of Terms
- ADR (Average Daily Rate): The average rental income per paid occupied room in a given time period.
- RevPAR (Revenue Per Available Room): A performance metric calculated by multiplying a hotel or rental’s average daily room rate by its occupancy rate.
- Occupancy Rate: The percentage of available rental nights that are actually booked by guests.
- Rate Power: The ability of a market or property to command high prices regardless of competition or occupancy levels.
Methodology
The analysis in this article is based on specific market snapshots provided for the Israeli short-term rental sector. Data points regarding occupancy, ADR, and RevPAR were sourced from industry analytics platforms including AirDNA (for Tel Aviv metrics), AirROI (for Jerusalem stats), Airbtics (for Eilat performance), and PriceLabs (for national averages). All figures represent the most recent reported data trends.
Frequently Asked Questions
Why is Jerusalem’s occupancy lower than Tel Aviv’s despite being a major tourist destination?
Jerusalem’s market operates on a high-premium model. While occupancy is around 32%, the ADR is significantly higher ($278–$300) than Tel Aviv. This indicates a market driven by specific, high-value tourism (often seasonal or religious) rather than the consistent flow of business and leisure traffic seen in Tel Aviv.
Is it better to lower prices to get more bookings in Israel right now?
Not necessarily. The data suggests that the national average ADR is holding strong at ~$200. Dropping prices might increase occupancy slightly, but it could lower your overall RevPAR (revenue per available room). The current successful strategy involves maintaining premium rates in strong markets and using length-of-stay discounts for softer periods.
Which city offers the highest average nightly rate?
Jerusalem currently commands the highest average daily rates, reaching up to $300. This outpaces both Tel Aviv (~$200) and Eilat (~$216), highlighting the capital’s unique position as a premium destination.
What is the average revenue per available room (RevPAR) in Tel Aviv?
In Tel Aviv, the RevPAR is approximately $96. This figure is derived from an occupancy rate of 51% combined with an ADR of roughly $200, showing that the city generates healthy revenue even with half the nights unbooked.
Assessing the Market Horizon
The data paints a picture of a defiant and robust Israeli rental market. Despite global fluctuations, the “brand value” of Israeli cities remains intact, allowing hosts to prioritize revenue quality over mere occupancy. By aligning pricing strategies with specific regional strengths—premium rates in the center and duration incentives in resort areas—investors can maximize their returns.
Final Takeaways
- Jerusalem is the King of Rates: The capital commands the highest nightly prices, proving its unique global allure.
- Tel Aviv is the Engine: With 51% occupancy, it remains the most active and consistent market for hosts.
- Strategy Matters: Success in 2024–2025 relies on dynamic pricing—pushing premiums in tight markets and discounting for length in softer ones.
Why We Care
For investors and supporters of Israel, these numbers tell a story far beyond hospitality; they reflect economic fortitude. A healthy short-term rental market with high ADRs indicates that despite geopolitical challenges, the world remains deeply connected to Israel. Visitors are voting with their wallets, paying premium prices to experience Tel Aviv, Jerusalem, and Eilat. This data validates the strength of the Israeli economy and the enduring appeal of the Jewish state as a premier global destination.
