Figures presented by the Israel Hotel Association (IHA) show that Israel's incoming tourism and hotel industry is expected to lose some US$500 million in income in the third quarter of 2014 (July to September) due to "Operation Protective Edge" in Gaza.

According to the IHA's estimate, the losses will affect hotels and all service providers in the tourism, catering and transportation industries.

In addition, hotels are expected to lose another NIS 85 million (about $25 million) in the third quarter as a result of the drop in domestic tourism.

The year 2014 was supposed to be a banner one for Israeli tourism. After attracting a record 3.6 million visitors in 2013, Israel was expecting to exceed that figure by about 15 percent this year, according to industry projections based on the number of visitors through June.

But all that ground to a halt when conflict between Israel and Hamas erupted in early July. Tourism pumped US$11.6 billion into Israel’s economy in 2013, accounting for about 6% of the country’s GDP.

It’s the country’s largest source of foreign currency income. Before the fighting in Gaza began, some 803,000 tourists were expected to visit Israel in the third quarter of the year – a 15% increase from the same period last year. The updated estimate points to a 34% drop in the number of tourists, meaning that Israel is expected to lose some 280,000 tourists, reflecting losses of about $500 million in income.