Peace envoy Tony Blair is trying to improve tourist access and facilities in Bethlehem. The British former prime minister stayed overnight in one of the city's poshest hotels last week to send a message it is safe.
Church leaders, worried about the Holy Land's dwindling Christian population, have also been trying to drum up business by convincing pilgrims to visit. Their efforts are paying off.
"I wanted to see where Jesus was born - I think it's something every Christian should do," said 21-year-old Ukrainian baptist Andrew Dubovoy. "I asked the tour agency many times about safety but now I'm in the city I feel fine."
Some, however, say the festive cheer is premature.
Pilgrims - many of them Russians on day trips from Egyptian beach resorts - arrive in tour buses and stay just long enough for a quick trip to the Church of the Nativity and a souvenir shop before heading back through the Israeli checkpoint.
"What we need is more tourists to stay in our hotels, eat in our restaurants and roam around the old city," Batarseh said.
The pre-Christmas buzz also masks the daily hardship of life in Bethlehem. Unlike the romantic image portrayed by Christmas cards and carols, the town is encircled by military checkpoints and the towering concrete wall of Israel's West Bank barrier.
Israel says the barrier keeps suicide bombers out but Palestinians argue it intimidates tourists and stifles the economy, while eating into land they want for a state.
Saliba Salameh sells falafel - a deep-fried chickpea snack much loved by Palestinians and Israelis - in a prime location in the heart of Bethlehem.
But business is slow despite the uptick in tourism, because Israeli restrictions keep out the locals who once came from Jerusalem and the West Bank for weekend lunches.
Tourists rarely stop to try his falafel.
"They don't have time to stop and eat any," he said. "They hurry past to the church, then back to the tour bus."
