Pilgrims are bringing Christmas joy to Bethlehem, flocking in large numbers to the traditional birthplace of Jesus where tourism had collapsed during the years of the Palestinian uprising.
"This year is the best since 2000," says Samir Hazbun, who heads the local chamber of commerce, pointing out that the West Bank city welcomed more than one million tourists this year, twice as many as in 2007.
And Christmas will bring even more cheer, he said. "All hotels in every category are full."
That represents as many as 3,000 rooms and a sharp contrast to the violent days of the uprising that started in 2000.
The city of 185,000 has put on its Christmas best to welcome the pilgrims
Garlands of flickering lights, synthetic pine trees, fake snow and other Christmas favourites give a festive, if somewhat commercial, feel to the city.
Souvenir sellers, who expect to do a booming business in icons, carved Nativity scenes, crosses, rosaries and other religious items, set up inflatable Santas and blow-up snowmen outside their stores in a city that about 20,000 Christians call home.
"The atmosphere is good; the tourists have returned massively" said George Babul, sitting outside his Bethlehem Star Store. As church bells rang out, he briefly bowed his head and made the sign of the cross.
A tour guide, giving only his first name, Mohammed, said "being a guide has become a good job again. This year, I have worked almost every day."
Crowds of pilgrims thronged the Church of Nativity, built on the site where Jesus is said to have been born in a stable because there was no room at the inn.
The boom is having a major impact on the city's tourism-driven economy and has brought unemployment down to 23 percent this year from 45 percent in 2002-2003.
Last year was the first since 2000 that saw a significant influx of tourism, and the city shows signs of optimism about the future.
The number of restaurants more than doubled in the course of this year - jumping from 20 to 50 - and three new hotels are under construction.
Israeli authorities say they are going all out to ease obstacles to the flow of visitors to Bethlehem during the festive season.
"We believe, when it comes to tourism, there are no borders," says Deputy Director General Raphael Ben-Hur.
But an eight-metre (25 foot) high concrete wall separates Bethlehem from Jerusalem, just five kilometres (three miles) to the north.
The wall, which runs for several hundred meters (yards) along the edge of the city, is part of Israel's controversial barrier erected in the West Bank after the Palestinian uprising.