Government Approves Planning Reform to Expand Israel's Hotel Room Supply

JERUSALEM - May 28, 2026 - PRLog -- JERUSALEM — The government has approved a new planning reform designed to expand Israel's hotel room supply by allowing limited residential development within hotel-designated areas. The policy replaces National Outline Plan (TAMA) 12 and establishes a revised national framework for hotel accommodation development led by the Planning Administration and the Israel Ministry of Tourism.

Under the new framework, hotel projects may include up to a 49% residential component in designated areas, subject to strict conditions. The reform is intended to improve project viability for developers while preserving land use for tourism and protecting environmental and landscape priorities.

Minister of Tourism Haim Katz said the reform represents a major step forward for the sector.

"This is a significant step for Israeli tourism that will increase the supply of hotel rooms, develop advanced hospitality infrastructure, and encourage competition," Katz said. "The approved framework is a strategic move that sends a clear signal to both the Israeli and international markets: Israel is open to investment and committed to creating regulatory and economic certainty for developers. This step will attract investors from Israel and abroad, while strengthening the economic viability of hotel projects."

He added that while the tourism industry has faced significant challenges in recent years, it retains strong potential for recovery and long-term economic contribution.

"The tourism industry has been severely impacted over the past two years, yet it also holds the potential for a rapid recovery and to contribute billions of shekels to the economy," Katz said.

"This is a huge win for visitors who want to travel to Israel and experience top-notch accommodations," said Lorin Maugery, Consul Director for the Southern United States, Israel Ministry of Tourism. "This is a signal to the market that Israel is open for tourism development and serious about long-term growth."

Officials said the inclusion of residential units is intended to help address financing constraints in the hotel sector, which have been intensified by market volatility in recent years, while supporting long-term growth in Israel's tourism infrastructure.