A ban on nearly all incoming air traffic by Israel - the main entry point for foreign visitors heading to the occupied West Bank - kept international tourists away for a second consecutive year.

The ban is meant to slow the spread of the highly contagious Omicron variant, which has shaken Christmas celebrations around the world.

Instead, local authorities were counting on the Holy Land's small Christian community to lift spirits.

Bethlehem's mayor, Anton Salman, said the town was optimistic that 2021 would be better than last year's Christmas, when even local residents stayed home due to lockdown restrictions.

Bethlehem planned a return of its traditional marching band parades and street celebrations.

"Last year, our festival was virtual, but this year it will be face to face with popular participation," Salman said.

Police erected barricades early on Friday as scout bands marched through Manger Square banging drums and holding flags ahead of the expected arrival from Jerusalem of Latin Patriarch Pierbattista Pizzaballa, the top Roman Catholic clergyman in the Holy Land.

"I hope that this COVID will finish," Pizzaballa said as he left Jerusalem, saying there needs to be a balance between public health and community life.

"We need pilgrims to bring us the life in our communities," he said. "We need to find this balance and we are all working for this because it's very sad to see the Old City (of Jerusalem) almost empty."

Pizzaballa was scheduled to celebrate Midnight Mass at the nearby Church of the Nativity - which houses the grotto where Christians believe Jesus was born.

By midday several hundred people, nearly all of them Palestinians, milled about behind the barricades to celebrate the occasion.

Before the pandemic, Bethlehem would host thousands of Christian pilgrims from around the world, bringing a strong dose of holiday spirit to the town and a huge jolt to the local economy.

In early November, Israel lifted a year and a half ban that had kept most foreign tourists out of the area. But weeks later, it was forced to reimpose the restrictions as the omicron variant began to spread worldwide, dashing the hopes of the local tourism sector.

Tourism is the lifeblood of Bethlehem's economy, and the lack of visitors has hit hotels, restaurants and gift shops especially hard.

"Under normal conditions for this time of year, I usually have a 20-metre queue outside," said Adil Abu Nayaf, owner of an empty food stall in Manger Square.

Those who attended tried to make the best of a difficult situation. The Holy Land is home to over 200,000 Christians, a small but tight-knit community that makes up an estimated 1 to 2 per cent of the population in Israel and the occupied West Bank.

There are also thousands of foreign labourers and African migrants, as well as diplomats and journalists.

Billy Stuart, an employee at the British Consulate in Jerusalem, said his experience in Bethlehem was uplifting, despite the smaller-than-hoped-for crowds.

"The parade is amazing and I did not realise there were so many Palestinian bag pipers," he said.

Australian Associated Press