Israel’s Ministry of Tourism will proudly tell anybody willing to listen that 2010 was a record year. 3 million overseas visitors were recorded for the first time ever.

As for January 2011, the figures were 17% up on last year, as around a quarter of a million guests entered the holy land.

In a country of 7.5 million people, these stats are significant. Estimates place around 100,000 people are employed directly from tourism, with another double that employed indirectly. Altogether, this is worth around 33 billion shekels or $9 billion.

This week’s annual International Mediterranean Tourism Market exhibition has been larger than ever. Over 300 participants from 35 countries have turned up. All very encouraging, but so what’s in this for a potential investor?

The answer is quite a lot.

First, infrastructure: New hotels are required in most of the major centres, including Jerusalem and the airport. The Tourism Ministry has publicly expressed its commitment to a new port complex in Ashkelon, the setting up of several golf courses, the expansion of the filming industry, and much more. 

The Israeli government has not been slow in coming to the party, providing tax incentives. Eilat, an all-year-round beach resort, has benefited from a VAT-free zone for nearly two decades. As Leon Harris, a noted local tax expert points out,

Tourism enterprises may enjoy company tax rates ranging from 10% to 24% for seven to 10 years. The higher the level of foreign investment, the lower the tax rate…..

Bottom line:  Israel has a reputation for a booming stock market and a great high tech basis. Now, the tourism industry offers an additional exciting opportunity for foreign direct investment.