"They are trying to steal our tourists, but they can't steal this place," said Ziad Bandak, the Palestinian Authority's presidential advisor on Christian affairs, motioning toward the 1,500-year-old Church of the Nativity. "You can't be a pilgrim and not come here."
Not far away, Bethlehem's 250-room Intercontinental Hotel, a former Arab mansion decked out with poinsettias and garlands, is fully booked the last two weeks of December. The rest of the year, occupancy hovers around 60%, even though the amenities are comparable to those at Israeli hotels a few miles away in Jerusalem — and room rates are lower.
The reason, hotel officials say, is that Israeli tourism companies rarely direct visitors to Bethlehem unless Jerusalem hotels are sold out.
"The biggest operators are Israeli and all the traffic starts at Ben Gurion airport, so it's an Israeli-controlled gate," said Muhsen Shweiki, the Intercontinental's office manager.
It doesn't help that the hotel is a few yards from a 36-foot-high cement wall and watchtower, part of Israel's separation barrier with the West Bank. For nearly a decade, visitors to Bethlehem have had to pass through military checkpoints to visit the birthplace of Jesus.
Shop owners have tried to cut the tension — and send a political message — by tweaking the traditional Christmas manger scenes they sell as souvenirs. In the new versions, a wall separates baby Jesus from the three wise men.
Israeli officials say their campaign to attract Christian pilgrims benefits both Israel and the West Bank.
"When it rains, it rains on everyone," Drori said. "There's a sense of competition, but it's healthy and good."
Many Arab Christians view the competition with an embittered eye, pointing out that the indigenous Christian population in the Holy Land has shrunk from about 20% in 1948 to less than 2% in Israel and the West Bank today.
"Most of this is just propaganda targeted at the West," said Andre Moubarak, an evangelical Christian and Palestinian tour guide. "Meanwhile, the Christians who live here are ignored and almost extinct."
Last year, he said, he attended Bethlehem's midnight Mass on Christmas Eve, but saw only diplomats, dignitaries, journalists and tourists.
"I didn't see anybody I knew," he said. "I left after 30 minutes."