For two years during the Gaza war, all public celebrations for Christmas were cancelled in Bethlehem in the occupied West Bank – where Christians believe Jesus was born. But after the recent ceasefire, the holy city decided that this year the festivities would return as symbolised by the lighting of its traditional, giant Christmas tree in front of the historic Nativity Church.

It's been a bad two years of silence; no Christmas, no jobs, no work, says Bethlehem Mayor Maher Canawati. We're all living here from tourism and tourism was down to zero.

The mayor accepts that the idea of resuming celebrations was not without controversy, as suffering continues in Gaza – including for those in its tiny Christian community, many of whom have relatives in Bethlehem. Some may say it's not appropriate and others say it's appropriate, Mr Canawati tells me. But deep inside my heart, I felt that this was the right thing to do because Christmas should never be stopped or cancelled. This is the light of hope for us.

Locals – both Christians and Muslims - posed for selfies in front of the tree hung with red and gold baubles in Manger Square. They were joined by a handful of foreign tourists. Brightly coloured lights now decorate the streets, and there are signs advertising Christmas bazaars and children's parties.

We're very happy to have the tree, first thing, and to see foreigners in Bethlehem and to be able to celebrate Christmas in its true spirit, says local jewellery designer Nadya Hazboun. This is where it all started, so this is where we can send the message to the world of what really Christmas should be about. And this year, if Christmas is peaceful, then I hope it will bring a nice message for the whole world.

The neighbouring towns of Beit Jala and Beit Sahour are also planning to light Christmas trees in the coming days. Hotels – which have stood largely empty for the past two years – have seen an influx of bookings from Palestinian citizens of Israel as well as some foreign visitors.

One tourist from Russia, Angelica, is on her second pilgrimage to the Holy Land. I think everyone needs to come at least once in their life, she tells me. I hope a lot of people will soon come back because it's sad without many tourists.

For many Palestinian Christians, however, even with the festive events, it will be an austere Christmas. We're preparing for Christmas after one of our hardest periods as Palestinians and as Christians, says Alaa Salameh, owner of Afteem, a family restaurant which has seen its income plummet. But for the people of Bethlehem, maintaining the spirit of Christmas is seen as essential during these challenging times. With tensions still high across the region, there is a collective prayer for peace and a hope for the return of tourists to this birthplace of Christmas.