H OSPITALITY AND T OURISM A DVISORY S ERVICES

1. HOSPITALITYAND TOURISM ADVISORYSERVICES Introduction and Methodology The Ministry of Tourism Government of Israel November 2006 e Quality in Everything We Do

2. Agenda • Introduction • The Approach • The Methodology

3. Introduction

4. Introduction • A Fully Integrated Team • Fully integrated advisory team; three groups representing the best in class in their respective fields • Unparalleled team in terms of: • Global presence and resources • International and local knowledge • International experience in tourism development and marketing • Technical and process expertise • Proprietary models and unique tourism databases • Comprehensiveness of services offered • Capacity to serve the world’s largest and most demanding clients

5. The Research Team • A Fully Integrated Team • The advisory team represents the best in class in their respective fields • Project management and infrastructure assessment • Policy, economic analysis and tracking & forecasting systems • Source markets and future marketing strategy

6. The Research Team • Ernst & Young, LLP – Project Leader • World’s largest professional services firm: • 106,000 employees in 140 countries • Global Real Estate, Hospitality and Construction practice with 3,500 employees in more than 25 countries serving more than 4,000 clients • The Hospitality and Tourism Advisory Services group: • Advisor to the leading organizations in the hospitality industry • Knowledge leader in hospitality, tourism and leisure • Extensive international experience • Expertise in hospitality & tourism infrastructure development

7. The Research Team • Ernst & Young, LLP – Hospitality & Tourism Advisory Services • Extensive international experience in: • Hotels • Resorts • Mixed-Use Developments • Convention Centers • Amusement Parks • Sport Facilities • Museums • Other Leisure Real Estate

8. The Research Team • Global Insight – Travel & Tourism Advisory • Track global travel demand by origin and destination • Monitor and forecast tourism for 163 country markets • Conduct market strategy, investment policy, and tourism economic development analysis for destinations around the world.

9. The Research Team • Short List of Global Insight Clients • World Travel & Tourism Council • NYC and Company • Intercontinental Hotels Group • Kerzner International • Hilton Hotels • Abu Dhabi Tourism Authority • Travel Industry Association of America (TIA) • US Office of Travel & Tourism Industries • Hong Kong Tourist Board • Ontario Tourism Commission • Canadian Tourism Commission • Singapore Tourism Board • Visit Britain • Dubai Tourism and Commerce Marketing • Various Resort Developers • American Express • Orlando CVB • Irish Tourism Board • Bahamas Ministry of Tourism • Turkish Association of Travel Agents

10. The Research Team • IPK International Leading international tourism consulting group Specialist in tourism research and tourism marketing for 35 years • Network of institutes and tourism consultants in all European countries, North America, South America, Africa and Asia/Pacific • Highly skilled researchers and statisticians having vast experience in conducting quantitative and qualitative surveys around the globe • More than 1,000 tourism studies around the globe successfully completed • Owner of the World Travel Monitor®, the world’s most comprehensive tourism data bank on the European, Asian and American outbound travel behavior

11. The Research Team • IPK International Public Sector Clients: • Ministries, • Tourist Boards, • Other public organizations from more than 40 countries worldwide Private Sector Clients: • Hotel Companies • Airlines • Tour Operators • Theme Parks and Other Attractions • Numerous other international clients

12. The Approach

13. Holistic and Results-Driven Approach • Analysis and Practical Strategies • Supply • - Hospitality & Tourism • Infrastructure • Aviation and Investment • Policy Demand - Source Markets: Demographics, Attributes, Attitudes & Preferences Development and Marketing Strategies Economic Impact and Return on Investment A New Era of Tourism Growth for Israel

14. The Primary Research • Research in Fifteen Countries • Interviews with 104 tourism industry stakeholders in Israel • 135 site inspections of tourism infrastructure • 500,000 annual interviews for World Travel Monitor survey • Survey interviews with a total of 8,400 respondents in 8 countries • 18 focus groups in 8 countries • 51 interviews with international tour operators in 8 countries

15. The main goal is…To substantially grow inbound tourism and to establish tourism as a leading engine of growth for the Israeli economy

16. The main obstacle…Perception versus Reality

17. Israel – Current Perception

18. Israel – Current Reality

19. The Methodologyfor the Research of the International Outbound Markets

20. Methodology • Phase 1: Research of 17 International Key Markets based on IPK’s World Travel Monitor® Phase 2: Further In-Depth Research of the 8 most promising Markets • Based on: • Qualitative Research  Focus Groups • Quantitative Research  Population Surveys • Trade Research  Tour Operator Interviews

21. Methodology of Phase 1 Research of 17 International Key Markets The selection of the 17 outbound key markets was made according to the following criteria: Consideration of • the most important international outbound markets worldwide • the most important markets for Israel at present • markets having a high share of Jewish population • and • worldwide coverage: Europe (West and East) America, Asia

22. Fulfilling these criteria, the following 17 int’l markets were selected (in accordance with the Tourism Ministry) Western-Europe • UK • Germany • France • Italy • The Nordic Countries • The Netherlands • Switzerland Eastern-Europe • Russia • Poland • Hungary America • USA • Canada Asia • China • India • These 17 markets represent • 60% of all outbound trips worldwide • 75% of the outbound trips to Israel • 90% of the Jews living in Diaspora

23. The 17 Int’l Key Markets were surveyed / analyzed regarding: • the general outbound travel behavior • the travel behavior to Israel and as a benchmark • the travel to the most important competitors (Turkey, Greece, Italy, Egypt) Method and Database: IPK’s World Travel Monitor®

24. World Travel Monitor® Facts • The World Travel Monitor® is • an annual study surveying the outbound travel volume and travel behavior in all European and all important American and Asian countries, since 1988 • representative of the population in each country • interviewing more than 500,000 consumers per year(15 years and older) • carried out via telephone interviews (CATI system) • applying the same questionnaire / method in all countries

25. World Travel Monitor® Facts • The World Travel Monitor® is • the sole and largest tourism information databank worldwide • providing comparable tourism data on European, American and Asian outbound travel behavior • Clients from the public and private sector are, among others:- The European Travel Commission (ETC) - The UNWTO- Numerous tourism destinations worldwide (Spain, Greece, Italy, Mexico, Brazil, etc.)- Tour operators (TUI, Thomas Cook, Kuoni, etc.)- Consultancies (McKinsey, Boston Consulting, etc.)

26. Methodology of Phase 2 In-Depth Research of the 8 Most Promising Key Markets • 8 markets offering the best opportunities for Israel were identified out of the 17 international Key Markets • Criteria for the selection (among others): • Size of the market / market prospects • Affinity towards Southeast Mediterranean destinations / Israel • Affinity towards specific products / holiday types • Religious affiliation • Spending behavior / share of high spenders • etc.

27. Based on these Criteria the selected 8 Markets were: America • US Asia • China Western-Europe • UK • Germany • France • Italy • Sweden Eastern-Europe • Russia

28. In-Depth Research Program for each of these 8 Markets • Qualitative Research • 2 Focus Groups per country • In the US and UK 3 Focus Groups each based on 18 Focus Groups

29. Method of Focus Groups • Per group 8-10 participants (consumers) • Men and women (approx. 50% each) • Different age groups (25-65 years old) • Middle and higher education and income classes • Religious affiliation (except for China):2-3 participants practicing Christians / Evangelicalsat least one representative of the Jewish population

30. Method of Focus Groups • All participants with travel experience to the Southeast Mediterranean (especially Egypt, Greece, Turkey) • All participants interested in a trip to Israel / at least 2–3 persons with travel experience to Israel Selection / identification of participants: • in the scope of pre-screening / pre-interviews

31. Conduction of Focus Groups • The Focus Groups were conducted by institutes specialized in qualitative research (ICC/ESOMAR members) in the individual countries (under the guidance of IPK) • Each Group was guided and analyzed by an expert / psychologist specialized in qualitative research • All Focus Groups were conducted according to a guideline of topics

32. Focus Group Tasks Determination of topics such as • awareness / perception of Israel • factors of attraction • factors of rejection • assessment of the different products / offers / holiday types • strengths / weaknesses of the offer • expectations towards the product • comparison with other destinations / competitors • etc. as well as a • test of TV commercials

33. In-Depth Research Program for the 8 Top Markets 2. Quantitative Research in each of the 8 markets based on surveys “representative of the population”

34. Sample of the Population Survey • Only persons with outbound tourism experience last 5 years and / or intention next 5 years. • Sub-sample of Jewish / religious people, respectively Evangelicals (depending on the countries’ predominant religious group) • The sample (in each of the 8 countries) was determined by a pre-screening. • The appropriate pre-screening questions were asked in a sample being representative of the population (according sex, age, regional distribution, etc.).

35. Population Surveys • At least 1,000 interviews per market • Telephone interviews (CATI method: Computer Assisted Telephone Interviews) in all markets • Random selection of the interviewees • Partner institutes of IPK, specialized in quantitative population surveys in the respective countries • All institutes following ICC / ESOMAR standards / codex

36. Task of the Population Survey Specific questions with regard to Israel were asked, such as • image of Israel • future interest potential for Israel • interest in different holiday products • factors of attraction / motives of Israel • relevance of religious motives • price image • travel season • accommodation preference • booking preference • future target groups

37. In-Depth Research Program for the Top 8 Markets • Trade Research • In total for all 8 markets • Per market 5 – 8 interviews based on 51 Tour Operator Interviews

38. Method of the Trade Research In accordance with the client, important Tour Operators offering / not offering Israel were chosen for each market: 51 Tour Operators in total Europe: 37 / USA: 9 / China: 5 21 Tour Operators “not offering” Israel 30 Tour Operators “offering” Israel

39. The Tour Operator Interviews were conducted • via telephone • with senior managers responsible for Israel / the Southeast Mediterranean • with the help of a guideline / questionnaire

40. Task of the Tour Operator Survey Determination of topics such as • image of Israel in the tour operator’s view • strengths / weaknesses of Israel • positioning of Israel vs. competitor destinations • interest in including / extending the Israel offer • expectation regarding sales support • aviation and lodging • etc.

41. Method & Data Pool for the International Markets All in all • a very comprehensive data pool • with a high validity and reliability • allowing the development of secured marketing strategies for Israel in the international markets