Apr. 5--The increasing violence in Israel has nearly shut down the country's tourism industry. 

Easter and Passover, which usually draw hordes of tourists to the Holy Land, generated little business. 

"With the situation today, most people are afraid to travel to Jerusalem and other parts of the country," said David Levy, owner of Gold Carpet Touring, a travel agency in Tel Aviv. 

Mr. Levy, like many other Israeli businessmen, has been struggling to make ends meet. He has had to eliminate some of his company's vehicles, cut back on expenses and lay off about six employees. 

"We're just trying to keep our heads above water," Mr. Levy said of his firm, which is down to two employees. 

If things don't turn around soon, he says, he will have to close his 23-year-old business. 

Tourism "has a great influence on the Israeli economy," Mr. Levy said. 

"When it goes down, it has an impact on other businesses -- like cab drivers, hotels, restaurants and souvenir [stores]." 

Since the start of fighting, 20 restaurants and four hotels in Jerusalem have closed, according to Yediot Ahronot, Israel's leading daily newspaper. 

About 1.2 million tourists visited Israel last year, a drop of 54 percent from 2000. That drop meant a loss of $1.7 billion in tourism revenue. 

Business at Gold Carpet Touring is down 80 percent to 85 percent, compared with 2000, when business was booming, especially when Pope John Paul II visited in March. 

In 2000, nearly 2.7 million visitors entered Israel, an increase of 4 percent from 1999. That included about 2.4 million tourists and more than 250,000 travelers on cruise ships, according to information on the Israeli Ministry of Tourism Web site. The agency's U.S. offices were closed this week in observance of Passover. 

But by the last quarter of 2000, tourism began to look bleak, especially after the terrorist attack on the destroyer USS Cole in Yemen in October 2000. The increase of about 25 percent in tourism in the first nine months of 2000 was offset by the large drop in tourism about 50 percent at the end of the year, according to the Israel Ministry of Tourism. 

Last year, things didn't get much better. The September 11 terrorist attacks in New York and suburban Washington and the Oct. 17 assassination of Tourism Minister Rehavam Zeevi in Jerusalem by Palestinian militants were more blows to the industry. 

"In 2001, we felt a serious drop in tourists coming to Israel," Mr. Levy said. 

As a result, Gold Carpet, like many other travel agencies in Israel, began targeting the local market, offering tours to residents. But business hasn't picked up much. 

The latest rash of suicide bombings has "had a great impact on the people here," Mr. Levy said. "Everyone is staying home." 

Earlier this week, the U.S. State Department warned Americans to stay away from Israel because of the ongoing fighting. 

Despite the turmoil in the Middle East, Israeli airline El Al has not reduced its flight schedule and even added seven U.S. flights during Passover, according to Sheryl Stein, an El Al spokeswoman. Last year, the airline added the same amount of flights for Passover. 

The flights on the airline, which flies out of New York, Chicago, Miami, Los Angeles and Newark, N.J., have been about 80 percent full since September 11. 

"A lot of people travel for business or to go see their family and friends, Miss Stein said. "Business can, of course, be better, because we're missing the large number of tourists that would be traveling." 

Many U.S. tour operators no longer offer trips to Israel. 

"Nobody's going, and nobody's inquiring," said Scott Scherer, president and owner of Catholic Travel Centre and Trinity World Tours in Burbank, Calif. 

The companies offer organized tours for Catholics and other religious groups. 

Travel to Israel started to drop off in October 2000 after the U.S. ship was attacked in a Yemeni port. The two tour companies combined had about $1 million worth of business that was cancelled over a six-month period. 

After that, the inquiries stopped altogether. The companies do not rely solely on Israel to drum up business. Tours to Israel accounted for about 10 percent of the overall business. 

In November 2000, travel operator 206 Tours stopped marketing its Israel tour, which included visits to Tel Aviv, Jerusalem and the Dead Sea. 

The Israel trip accounted for about one-third of the Long Island, N.Y.-based tour operator's business. To cover for that loss, the company has been pushing trips to markets such as Spain and Portugal. 

"Given the volatility of Israel, you can't stay in business if you rely only on Israel," Mr. Scherer said. 

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(c) 2002, The Washington Times. Distributed by Knight Ridder/Tribune Business News.