There are plenty of non-Jews in Israel who celebrate Christmas. There are also many Israelis who enjoy holiday parties, and/or greeting people with holiday wishes (perhaps based in humor and irony), and even light symbols of the holidays.

Using Christmas trees is taking it too far. This has been determined by the Rabbanut. Rav Eliyahu Shlesinger, the rav of the Gilo neighborhood of Jerusalem and the rav in charge of the national kashrus division of the Rabbanut.

Rav Shlesinger has said that any kosher hotel or hall that displays a Christmas tree will lose its kashrut certification.

Rav Shlesinger said, "A hotel that receives certification must be a Jewish hotel. It is impossible that in a place that has a hechsher there should be a Christian Christmas tree. We are proud to be living here in the State of Israel that is a Jewish state. It is completely illogical that in a place that has kashrut certification, and even mehadrin kashrus, they will act according to the Christian customs."

Rav Shlesinger stressed that the Rabbanut is only laying down this law regarding the outer symbols of Christmas - no tree. If people wish to have private parties, that is their business and the Rabbanut has no say in that. The Rabbanut cannot tell people all year round when they can or cannot have parties, even if it is on a Christian holiday. The Rabbanut statement is regarding the Christmas decorations alone (specifically the tree).