By Steven Scheer

JERUSALEM Half of Israeli hotel rooms are being used to house families evacuated from communities near the Gaza Strip, where an Oct. 7 rampage by Hamas gunmen triggered a cross-border war, the head of the Israel Hotel Association said on Monday.

Israel has 56,000 hotel rooms and 28,000 are being provided to evacuees with the state footing the bill, said association chief executive Yael Danieli.

She told a parliamentary panel debating compensation for residents impacted by the war that an additional 27,000 from border towns near Lebanon were expected. The Israeli-Lebanon border has seen an increase in hostilities as the Gaza war rages.

These citizens need meals and other welfare support from the state, Danieli added.

Foreign tourism has dried up since Oct. 7 with many countries operating flights to repatriate their citizens after most commercial airlines suspended flights to Tel Aviv.

The Dan Hotel chain said its hotels in Jerusalem, Tel Aviv and Herzliya were being used for evacuees while rival Isrotel said its hotels in the Red Sea resort of Eilat were housing displaced families.

Yogev Gardos, Israel's budget director, said the country's initial response was to finance the military's needs and now it would turn to the economy as a whole.

"Within a few days we will give very sweeping grants to the entire economy, with an outline that will not provide full compensation for 100% of the economic damage because the state cannot withstand this," he told the committee.

(Reporting by Steven Scheer; Editing by Kirsten Donovan)