Banksy's 'Scar of Bethlehem' appears at Palestine hotel

British street artist Banksy has brought a sombre Christmas spirit to a hotel he founded in Bethlehem, with a manger scene invoking the Palestinian-Israeli conflict.

Dubbed 'Scar of Bethlehem' the display features a miniature Jesus, Mary and Joseph under a shell-pocked rendition of Israel's concrete West Bank barrier.

It is located in The Walled Off Hotel, which abuts the real barrier and which the secretive Banksy opened in 2017.

"Christmas [is] known with the Star of Bethlehem, that led people to the birthplace of Jesus," said Wisam Salsa, manager of the hotel.

"Banksy called this nativity 'The Scar of Bethlehem' and as you see there is a scar, there is a hole on the wall that marks the wall and the life in Bethlehem how it is today."

The theme of Nativity scene taking place with the barrier as a backdrop has been featured in art works and commodities since the barrier was erected.

Israel says the barrier that cuts through the West Bank is a bulwark against Palestinian suicide bombers. Palestinians see it as a symbol of oppression that takes up land they want for a state.

Meanwhile, hundreds of tourists from the region and elsewhere flocked to Manger Square, where they took selfies with traditional nativity scene on display just outside of the Church of the Nativity, revered as the birthplace of Jesus.

"I think it's totally true that the connection is really really important and Banksy found exactly how to tell without words the reality, it's really really incredible," said French tourist Charlotte Borie. "We are really lucky to be here today."