Bethlehem/Jerusalem: Thousands from around the world reached Bethlehem to celebrate Christmas. Bethlehem is the birthplace of Jesus, which witnessed its most cheerful celebrations in many years breaking the gloom of last year in the wake of the US administration's declaration of Jerusalem as Israel's capital.

The Manger Square, where tourists and locals usually push for space before the midnight mass, was abuzz with activities on a cold day as traditional march led by Palestinian boy and girl scouts kicked off Christmas celebrations on Monday.

Playing drums and bagpipes, they paraded past a 16 metre giant Christmas tree in the Manger Square outside the ancient Church of the Nativity, the traditional birthplace of Jesus.

All the Bethlehem hotels were fully booked and the security situation relatively calm as the city is preparing to host an "astounding" number of tourists overnight, the "numbers we have not seen for many years", Palestinian tourism minister Rula Ma'ayah said. 

"We have never received this number of tourists coming to Palestine," Ma'ayah said, adding that "in a city like Bethlehem, tourism creates waves throughout the economy". 

"Hotels in the city have been booked to their full capacity for a few weeks leading into today's celebrations," said Fadi Kattan, a travel agent.

The city's hotel association had predicted occupancy of more than 95% in the build-up to the festivities this year, but workers at hotels near the Church of Nativity said that rooms were in short supply as the number of foreign visitors exceeded their expectations this year. 

"We are fully booked during the Christmas season," Wissam Salsa, manager of the Walled Off Hotel, said jubilantly. 

Security was tight in the city as paramilitary Palestinian police armed with assault rifles patrolled the cobblestone streets.

Israel also eased security restrictions and made all possible efforts to make tourists feel safe. 

With a relative lull in violence the region has seen an increase in the number of tourists coming to Israel and the West Bank city of Bethlehem, which is under the control of the Palestinian Authority (PA). 

Ma'ayah noted that Bethlehem, located in the Palestinian-controlled area of the West Bank, was preparing to host an "astounding" 10,000 tourists overnight, "numbers we haven't seen for many years", and that the total number of visitors would exceed 3 million this year.

Last year, US President Donald Trump's decision to declare Jerusalem as Israel's capital incensed the Palestinians and ignited clashes in the region and worldwide protests that kept the pilgrims away from visiting the holy land. 

The decision had taken the joy out of Christmas for the people in the holy land who witnessed a low key celebration with thousands of tourists choosing to stay away from festivities.

The boom in Bethlehem's tourism comes as Israel also enjoys a record number of tourists. Israel's Tourism Ministry is projecting that more than four million visitors will visit the holy land in 2018. 

Some 3.8 million tourists visited Israel in the first 11 months of the year, 14 per cent more than in the corresponding period last year. 

Coffee vendors and gift stores in Bethlehem also seemed to have come alive this year.

"We hope this revival is not short lived and tourism continues to grow. The city is heavily dependent on tourists", Khaled, a gift shop owner, said adding, "our lives are intertwined with every small political development in the region. Our smiles can fade instantly with just some violent spark erupting around". 

The Christmas festivities traditionally bring a boost of holiday cheer to Christians in the holy land, whose numbers have shrunk over the decades relative to the general population and now make up just a minority in Jesus' birthplace.

The city today has a strong Muslim majority of at least 70 per cent, with only 30 per cent Christians. It was once a Christian dominated city but emigration arising out of a wave of violence and economic hardships has seen its Christian residents moving to several countries across the world.

Archbishop Pierbattista Pizzaballa, the top Roman Catholic cleric in the holy land, entered Bethlehem on Monday crossing an Israeli military checkpoint that divides Jerusalem from Bethlehem.

The top cleric later addressed a packed house of worshippers and dignitaries at the Church of Nativity that included Palestinian President Mahmoud Abbas and Prime Minister Rami Hamdallah.

Visitors this year were able to view the Church of the Nativity's newly restored mosaics dating to the Crusader era after they were recently cleaned and repaired in a major project. 

Pizzaballa said the recent restoration of the church was a metaphor for recent events in the region.

"The mosaics were splendid, but covered by a layer of dirt", he said during his traditional address.

"This last year was terrible", the cleric said referring to upsurge in violence, "so we all tend to think that all is dirty. But if you remove this layer of dirt we see how wonderful the mosaics are".

"Since it's Christmas, we have to be positive," the archbishop stressed.