Some are attributing the change in Palestinian attitude toward Christmas celebrations to the UN's naming Bethlehem a world historical site.
But the tiny city also has a new female mayor who, by most reports, is doing everything possible to encourage the tourist trade.
Bethlehem's first female mayor, Vera Baboun, can't walk through the main square of the biblical town without being stopped by admirers.
"This is our new mayor, who is turning Bethlehem into one of the greatest cities in the world," a tour guide hollered to a group of Christian tourists passing by the Church of the Nativity, built over the grotto where tradition says Jesus was born.
Starting with Christmas celebrations - the high point of the year in the town - Baboun is hoping to turn things around in the troubled city. For the past seven years, the Islamic Hamas militant group had a strong presence in Bethlehem's leadership, prompting a cutoff of international aid funds. But they lost their seats in October elections that brought in Baboun, who is Christian, as Bethlehem's mayors traditionally are.
The local economy is battered, with the highest unemployment in the West Bank, and local Christians continue to leave Bethlehem, which years ago moved from a Christian majority to a Muslim one. But Baboun is trying to raise hope, pointing to the Palestinans' recent boost of status at the United Nations.
Fox News also points to the UN vote as one reason for optimism among ordinary Palestinians:
In Bethlehem, the Palestinian hosts were hopeful after a recent vote in favor of statehood in the United Nations, though the vote did little to bring them closer to independence.
In his annual pre-Christmas homily, the top Roman Catholic cleric in the Holy Land, Latin Patriarch Fouad Twal, said this year's festivities were doubly joyful.
"The path (to statehood) remains long, and will require a united effort," said Twal, a Palestinian citizen of Jordan, at the patriarchate's headquarters in Jerusalem's Old City.
Then he set off in a procession for the West Bank city of Bethlehem, Jesus' traditional birthplace. Twal had to enter the biblical town through a massive metal gate in the barrier of towering concrete slabs Israel built between Jerusalem and Bethlehem during a wave of Palestinian suicide bombings in the last decade. The Israeli military, which controls the crossing, said it significantly eased restrictions for the Christmas season.
Israel, backed by the United States, opposed the statehood bid, saying it was a Palestinian ploy to bypass negotiations. Talks stalled four years ago.
Hundreds of people greeted Twal in Manger Square, outside the Church of Nativity. The mood was festive under sunny skies, with children dressed in holiday finery or in Santa costumes, and marching bands playing in the streets.
After nightfall on Monday, a packed Manger Square, resplendent with strings of lights, decorations and a 17-meter Christmas tree, took on a festival atmosphere.
A choral group from the Baptist Church in Jerusalem performed carols on one side of the square, handing out sheets of lyrics and encouraging others to sing along with songs such as "We Wish You A Merry Christmas."
Festivities led up to the Midnight Mass at St. Catherine's Church, next to the fourth-century Church of the Nativity, built over the grotto where tradition says Jesus was born.
Audra Kasparian, 45, from Salt Lake City, Utah, called her visit to Bethlehem "a life event to cherish forever. It is one of those events that is great to be a part of."
It's a mirage, of course. The West Bank is no closer to "statehood" than it was last year, the year before, or ten years ago. As long as terrorists control the area, Israel will refuse to engage in negotiations that would lead to two states.
That's the reality. Palestinians - Christian or Muslim - are deluding themselves if they believe any differently.