The difficulties of existing in Bethlehem, which lies just beyond the wall that separates Israel from the Palestinian territories have defeated big companies. The InterContinental Hotels Group, for instance, withdrew its contract with the Jacir Palace Hotel in Bethlehem after a series of stabbings in Israel and retaliations in the West Bank. Tourists generally travel through Israel and come via buses from Israeli touring companies, which drive in and out of the town, headed to more developed destinations on the Israeli side, as rapidly as they can. The GDP per capita in Israel is $34,800 a year.
Khoury is unfazed. "This is Israel and Palestine," he said. "You have to expect that."
He believes that if Bethlehem had more to offer tourists, their numbers would grow, and they would stay and spend more money. Both Israel and the Palestinian territories are seen as tourism markets with enormous untapped potential. For instance, in 2010, a comparison between Israel and Jordan found the former got about 2.8 million in tourists, compared with Jordan's 4.5 million. About 648,000 Americans visited Israel in 2016, up 5 percent from the previous record year.
Khoury remains hopeful. To cope with the complicated politics of the region, and the complicated religious politics, Khoury assembled an board of heavyweight patrons of many faiths.
Khoury said he invited two Jewish board members and hopes to have one join this year.
To raise more money for Bethlehem, Khoury is turning to wealthy individuals, especially those with roots in Palestine. "It is like with any start-up, you need a track record," he said. "We have that now."
On his list of targets: Carlos Slim, the Mexican billionaire whose father was from Lebanon. Khoury said he'll find many people willing to help. Donations have already begun coming, such as a $1.2 million gift from the Kuwait-based Arab Fund for Economic and Social Development, he said.
"I made a big list. These people, like our family, have connections to Palestine and have succeeded."
He's convinced the story of Bethlehem will attract givers. He paused, unexpectedly poetic for a businessman. "My song that I sing, I bring many people along," he said.
— By Elizabeth MacBride, special to CNBC.com