Bashir Bassatne, the 30-year-old co-owner of Mandaloun, Asia and the soon-to-be-relaunched Rai, three of the biggest nightclubs on the Beirut’s nightlife circuit, is in a reflective mood. “I don’t think any clubs really hit their targets this summer. A lot of newcomers have entered the market with no experience in the club scene,” he said. “Some made money and some are going to lose a lot of money. It’s not going to last. It’s just a trend. The club business will go back to the people who know how to run it.”Over the last few years, Beirut’s flourishing but fickle nightclub sector has indeed become a magnet for young, wealthy, often foreign-educated, Lebanese wanting to cash in on an industry high on glamour and where the returns appear tantalizingly quick. Often using family money, these playboys-turned-club owners have pumped as much as $1 million each into a sector worth an estimated $36 million annually. “The money is easier to come by if you go to your family, or the family underwrites the loan,” said one clubber, who is friends with many of the sector’s new brat pack. And let’s face it, few banks will endorse loans in such an unpredictable sector. Unpredictable is a fair appraisal.
Recently, Beirut’s nightlife has been plagued by antiquated by-laws, bribery, reports of increased drug use and, yes, even a conspiracy theory that the government wants to shut them all down. But is Bassatne’s prediction that the bubble will burst reasoned analysis or merely sour grapes? As the nightclub/bar market mushrooms, the heady days of huge takings by a small clique of clubs are over. Bassatne, whose partners include his brothers and five university friends, has seen his profits fall by 50% in the last year alone. Six years ago, in a relatively virgin sector, things were different. “Within a year, I had recouped my investment in Rai and a 30% profit,” he said. Mandaloun, Taj and Asia may currently rule the night, but with over 100 other nightspots plying their trade, the competition is cutthroat. “Whenever one comes up, another must die,” said Bassatne.It is not an easy game, especially in a market that is violently seasonal. Christmas, Adha and summer provide enough revellers to go around, but the remaining eight months of the year offer slim picking for a saturated market. Clubs close at the blink of an eye. “It’s a very tough market,” said Ramzi Adada, a partner of Bassatne, who also has a stake in Zinc in Ashrafieh and Japs in Faraya. The nightclub explosion has, according to one owner, “broken the dynamic” of the established institutions, which have seen revenues diverted as clubbers try out the new places. “It’s fierce and uncontrolled competition,” he said, “and most of them [clubs] are losing.”Another owner, a Paris-educated banker, whose parents stumped up his share of investment, compared the current stampede to invest in Beirut nightclubs to the NASDAQ in early 2000, when anyone with a bit of money and no experience, invested and got burned. “Today in Lebanon, anyone with cash is trying to open either a nightclub or a restaurant,” he said. “It’s not a healthy situation at all.” Fadi Saba, who owns two thirds of Zinc in Ashrafieh, believes it is all down to the perceived revenues. “They have high expectations,” he said. “They think they can make it in four months. But it’s not a game.” Given the unreasonable expectations, petulance is never far from the surface. Saba explains that disputes often arise when the profits fail to materialize. “Investors will accuse their managers of theft and it’s downhill from there on.”The gold rush has however, forced a change in investment strategy. Aware of how quickly a club can fizzle and die, today’s investors are now spreading their risk across multiple venues. “When we only had three or four clubs in town, obviously the risk was less,” said one club owner. “Now no one is going to be crazy enough to put all their eggs in one basket.”“It used to be easy to convince one person to invest $300,000,” recalls 32-year-old Saba. “Now the maximum someone will come in for is around $70,000.”“A new nightclub can have as many as 15 partners, whereas before it was one or two,” said Bassatne, whose personal “spread” involves a stake in the $800,000 Mandaloun, and a joint $325,000 and $800,000 in Rai and Asia, respectively. Another $600,000 to $700,000 will be pumped into the new Rai (Bassatne refutes allegations that the original Rai lost it’s competitive edge, blaming the closure on Rue Monot’s agonizing roadworks), which he admitted will have to wait till the market eventually reverts to its regular rhythm and the fly-by-nights have been spat out. Nonetheless, he has also had to diversify. His new ventures include restaurants and a sandwich bar on Bliss Street.The multiple-investor strategy does however, help market the venues, with each investor “working” his circle of friends and acquaintances to ensure patronage. Bassatne spends much of his time securing the favor of the 500-strong local party animals as well as the sizable, and often wealthy, Lebanese expatriates and Gulf Arabs, who flock to Beirut during the holiday season. It also helps spread the costs of building and renovation, which can run over the $1 million dollar mark, as clubs become bigger and flashier.Greater competition has forced nightclub owners to exploit the Lebanese penchant for conspicuous consumption. “People want to show off,” said Ramzi Adada, with a twinkle in his eye “and we want to help them show off.” Adada and his fellow Rai partners, claim to have introduced the “champagne celebration,” a fanfare of sparklers and a bevy of beauties that accompanied every bottle of champagne purchased. In true Lebanese fashion, another top club got hold of the idea and wrote it large (literally). Today, anyone buying $35,000 worth of Salmanazars (equivalent to 12 regular sized bottles) of champagne is immortalized on the club’s “Wall of Fame” or, as local clubbers call it, liste des cons (list of idiots). So far the wall boasts around 15 names. Ramzi Adada recalled how one Lebanese customer spent $22,000 in two hours in Rai. However, such incidents are rare. The image of wealthy Arabs flocking to Beirut for a marathon session of beaches, babes and booze with checkbook cocked is a myth, said Bassatne’s brother Raed. “We’re not getting the big, big spenders and when they come here, they don’t want to really overdo it because we are such a small society.”Other clubs use more time-honored methods to draw in the crowds, relying on what are know within the industry as mafateeh or “keys,” who provide a small but potent stable of beautiful women, who mingle, cajole, look good and even get up and dance on the bar if there is a lull in the evening. Although their existence is never admitted, their clout is considerable. One thriving nightspot shut down (officially for redecoration) after a “misunderstanding” with the “keys.”“These girls work the clubs that have a reputation for hosting high-maintenance ladies,” said one club owner. “A smile here and a compliment there is sometimes all it takes to make even the ugliest guy feel special, and when that happens, he spends and he comes back. Their handlers aren’t so much pimps as they are our partners.” But it is not just supply, demand and a bit of rented cleavage that dictates the market. Some investors have lost money because of antiquated laws and run-ins with the local authorities. Late last year, 28-year-old Marwan Kazan (he of the once popular FUBAR at Sodeco Square) and seven friends, invested $400,000 in Nabab opposite St. Joseph’s Church in the Monot district. Invoking a law that stipulates a nightclub must be a certain distance from a place of worship, the authorities shut it down two months later, after the priests complained of drunkenness, drug taking and indecent behavior. Kazan, a veteran by local standards, has bounced back and now (along with five other investors) has 20% in the $450,000 Taj, which replaced FUBAR and a 10% percent stake in the $550,000 Moorea beach club (12 investors). Moorea, explains Kazan, is modeled on La Voile Rouge in St Tropez. “It’s practically a night-club during the day,” he said, adding that he plans to open FUBAR II, which he expects to cost around $1 million. He too bemoans the rise of the fly-by-night club culture. “Suddenly anyone with $50,000 in his pocket started opening pubs,” he laments. “It hurt us.”Drugs have also taken their toll. Ecstasy may give a designer high, but it’s a downer for bar takings. “It affects our sales,” said Bassatne. “Instead of coming and having a bottle of vodka, this new generation just pop a pill and drink water all night.” And although not rampant, the proud Lebanese habit of kickbacks has also eaten into the bottom line, but the bosses are philosophical. “You have to bribe here and there,” admits Adada. “I wouldn’t call it a bribe,” said Kazan. “You become friends with these people and you offer them a bottle or something.” Fadi Saba speaks of the need to offer, “a good dinner and a bottle of whisky from time to time.”There is however a flip side and it pays to be well connected in a country rife with red tape. “Everyone has connections,” said Kazan. Asked if he used his to deal with problems in his clubs, “Absolutely. Who doesn’t?”Despite the unregulated market, Kazan believes that with the right degree of public sector assistance the sector could be a gold mine (he said that in Nabab’s short life, he and his partners were able to recoup 25% of the initial investment). “The government should see that and try to help us out,” he said, criticizing the overly aggressive and threatening manner in which some clubs, including BO18 and Acid, were raided by security forces searching for drugs. The sector was flummoxed by such high profile clampdowns and their impact on the tourist trade. It is not surprising therefore that many saw the raids as part of a cynical plot to smear clubland with a reputation of drugs and debauchery and in doing so, boost the cachet of Maarad. “It’s their duty to come in,” said Kazan. “How they come in is the problem. It’s not exactly attractive for the tourist. He might think ten times before coming back.” And “coming back” is what it’s all about.