All 3,000 rooms in Bethlehem were fully booked for the Yuletide holiday, said Samir Hazboun, chairman of the Bethlehem Chamber of Commerce and Industry. About 250,000 tourists were expected to arrive in Bethlehem on Christmas week, up from only 65,000 for the same week in 2007.

When 2008 ends, 1.25 million visitors will have been in Jesus of Nazareth's birthplace, Bethlehem Mayor Victor Bataresh said. It is a 96 percent improvement from last year and a turnaround from seven past gloomy Christmases.

The past seven years were difficult times for the city's tourism sector because of the rise of violence throughout the region. The relatively peaceful environment now is the result of Palestinian Authority President Mahmoud Abbas engagement in peace talks with Israel since last year.

Because of the sharp rise in tourists, unemployment in Bethlehem has gone down to 23 percent from 45 percent in 2007.About 12,000 tourism jobs have been created, while more are expected in the coming weeks as new tourist-oriented establishments are slated to open in strategic tourist locations like near the Church of the Nativity.

Abbas led the Christmas tree lighting ceremony in Manger Square. Although majority of the visitors are Christians because of the city's prominent role in their religion's beginnings, the Christian population of Bethlehem has gone down to 40 percent from 90 percent in the 1950s because of the violence. The remaining 60 percent of residents now are Muslims.

Valere Tjolle