BDI CODE 2014 - Israel's Leading Companies, Law Firms, Accounting Firms, Best Companies To Work For - page 260

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services
BdiCode 2014
Service Sector
The services sector, which constitutes a significant portion of the economic
activity of the Israeli economy, concluded 2013 with an increase of 4% in
turnover compared to 2012, NIS 453 billion. The services sector is composed
of a number of economic branches: transport, storage, mail and courier
services, hospitality and catering, information and communications
services, financial and insurance services (not including banks and
insurance companies), management and support, health, welfare and
relief, as well as other services. The number of employees in the sector
at the end of 2013 registered an increase of 2.5% relative to last year.
The information, communications and professional services, and the scientific
and technical branches each hold a 22% share of the sector’s turnover. Transport,
storage, mail and courier services account for 18%, management and support
services for 13% and hospitality and catering hold 10%. Each of the health,
welfare and relief, and financial and insurance services account for 6% of the
turnover of the sector. Finally, other services and education services held 2%
and 1%, respectively.
Similarly to the turnover in 2012, the information and communications branch
concluded 2013 with a turnover of NIS 100 billion. The year 2013 continued to
present challenges to the companies in the communications market. The decrease
in earnings from activity in the cellular realm continued to detrimentally affect the
aggregate income in the market, which was estimated at NIS 27 billion. Over the
past few years we have witnessed a number of consumer reforms and regulatory
activism in the Israeli communications market; easing migration of telephone
numbers, entry of new operators into the cellular market and cancellation of exit
fines. Continuing in this spirit, the Communications Ministry, under the leadership
of Minister Gilad Ardan has been promoting reforms in the wholesale market.
As part of the efforts of the ministry to increase competition in the duopolistic
landline market, it was decided to initiate a reform that would enable companies
to lease lines from Bezeq (and later from Hot) at a wholesale price determined by
the regulator. Implementation of the reform is expected to lower the cost to the
consumer and ease the unwieldiness of contracting with two separate companies
for Internet service, one for “infrastructure” and another as the “supplier” (ISP).
In 2013 the major cellular companies continued to lick the wounds inflicted by
the reforms, reducing expenses and cutting profitability. The aggregate earnings
of the leading cellular companies amounted to NIS 11.4 billion, a drop of 17%
relative to the previous year, which completed a decrease of 36% over the past
two years. The amounts of the operational profits also indicated a decrease,
which in 2013 stood at an average amount of 12% as opposed to 18% in 2012
for the leading companies.
Last year the restaurant and catering branch experienced significant developments
and changes that included, inter alia: opening of the “Coffix” chain of cafes that
offered its customers coffee and additional products at reduced prices and even
caused other chains to reduce prices, expansion of the vegan trend as a healthier
and more moral way of life, which influenced many businesses in their selection
of the composition of the menu offered to their customers and its pricing, as
well as the closing of cafes and restaurants that encountered difficulties as a
result of the fierce competition in the market. This branch continues to lead the
list of the most precarious branches in the economy, and is characterized by low
chances of survival over the length of time. The extent of earnings in the cafes
and restaurants branch amounted to NIS 17.8 billion in 2013, an increase of 4%
compared to 2012. Furthermore, it is estimated that in 2013, 10,300 cafes and
restaurants operated in Israel, distributed throughout the country, an increase
of 2% in comparison to last year. The average annual income per sales point
in the branch was estimated at NIS 1.7 million, similar to 2012. It is estimated
that in 2013 the extent of the earnings in the catering market stood at NIS 2.7
billion. The aggregate income of the three largest companies, Norcate, Schultz
and Sodexo, constitutes a third of the entire catering market.
2013 was characterized by a continued growth in the tourism branch, this in
accordance with the strategy of the Ministry of Tourism to promote activities that
contribute to realizing the potential embodied in tourism to Israel. It appears that
despite the explosive security situation existing in the Middle East, the tourism
branch presented positive data in a variety of tourism indicators. The number of
tourists visiting Israel in 2013 was record-breaking and was estimated at some
2,962 thousand visitors, as opposed to 2,886 thousand in the previous year, a
growth of 3%. The movement of outgoing tourism presented an even more
impressive growth compared to incoming tourism, with a growth of 9% in
the number of those travelling abroad, which amounted to 4,757 thousand in
comparison to 4,349 thousand travelers last year. An examination of the manner
of travel of Israelis abroad shows that 90% travelled by air, the rest of the Israelis
travelled by sea or via the land passages. The total earnings from tourism in 2013
amounted to $ 5.7 billion, a growth of 3% in comparison to 2012. It appears
that the tendency of strengthening of the shekel opposite the euro and dollar
contributed to the increase in earnings from incoming tourism. Similarly to last
year, the leading countries of origin of tourism to Israel are the United States,
Russia, France, Germany and Britain in that order. These countries account for
an aggregate quantitative share of 57% of the total visitors to Israel. In 2013 the
turnover of the hotels in Israel amounted to NIS 9.3 billion, a moderate increase
of 1%. The hotels in Eilat registered the highest earnings of all the cities in Israel,
NIS 2.3 billion, a growth of 4% compared to last year.
The turnover of financial institutions and insurance agents registered an increase
of 7% in comparison to 2012, and amounted to NIS 26.4 billion. The turnover of
the professional, scientific and technical services branch also registered a growth
of 3%, to NIS 99 billion, and finally the hospitality and catering services concluded
2013 with a turnover of NIS 45 billion, a growth of 7% in relation to 2012.
500
450
400
350
2013
2012
2011
408
437
453
Transport, Storage, Mail
and Courier Services
18%
Education
1%
Other
Services
2%
Health,
Welfare and
Relief Services
6%
Food &
Hospitality
10%
The Segmentation of Turnover in the Services Sector, According
to Branches
(in Monetary Terms)
Turnover in the Services Sector, According to Years
(In NIS Billion)
Information and
Communications
22%
Management
and Support
Services
13%
Professional,
Scientific and
Technical Services
22%
Financial and
Insurance
Services
6%
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