Blowing in the wind

Beirut’s hotels hang on despite the many challenges

Greg Demarque | Executive

The prosperity of Beirut’s hotel industry continues to ebb and flow. Room occupancies increase at the earliest signs of stabilization in Beirut’s security situation, only to drop as soon as a bombing or other attacks disturb the peace.

Yet hoteliers in Lebanon refuse to give up, and are targeting different segments of the tourist market while developing creative incentives to make up for the revenue lost in their traditional market segments.

Where are the tourists?

Pierre Ashkar, head of the Hotel Owners Association, pinpoints 2011 as the year in which Lebanon began to lose a large number of its traditional tourists from the Gulf region, as well as those tourists travelling overland.

tourist arrivals to lebanon by month“We used to have 350,000 travelers [per year] who would come by land, of which 70,000 to 80,000 were Jordanians who found this form of travel affordable. We also lost the big families from the Gulf who would come by mini-vans and spend the whole summer in Lebanon. Add to that the political sensitivities which caused tourists from the Gulf to avoid Lebanon due to the travel bans, and certain speeches made by political leaders.” These are the reasons outlined by Ashkar as to why hoteliers continue to call for political stability in Lebanon.

Nazira El Atrache, general manager of Le Bristol hotel, which opened its doors this year following a year and a half of refurbishment, also speaks of the negative effect the travel ban issued by some Arab countries on Lebanon has had on their business. “The market is very hard. You cannot really attract people to a country that is so unstable security-wise … and with so many factors at stake in the international political arena. This is also in addition to the bombing [in Dahieh in November 2015] and the bad publicity the country is receiving.”

Alternatives to tourists from the Gulf

Hoteliers in the country seem to have come to terms with the idea that tourists from the Gulf are no longer their strongest market and are identifying alternatives to this revenue stream. “We cannot sit back and wait for the Saudis to come back; we need to discover new markets, like Iran, for example. There is a massive shift in terms of demographics in Lebanese hotels and the question is – what will the market be like in another five years?” asks Peter Edholm, cluster director of sales and marketing at Le Vendome and Phoenicia Intercontinental Hotels & Resorts. He says that the majority of their hotel guests today are a mix of Europeans, Middle Easterners, residents of the Gulf Cooperation Council (GCC) and some Asians and South Americans.

Atrache says Le Bristol is now targeting tourists from Jordan, Egypt and Iraq through visits from the hotel’s sales teams, adding that it is the Iraqis coming to Lebanon for medical tourism who are the main driving force behind this segment.

Manal Dana, group marketing & communications manager at Achour Holding, has also noticed a decrease in the GCC market but cites “a phenomenal increase of Europeans, Americans and Far East guests coming [to Lebanon] for business, hence booking at Lancaster Tamar.”

Lancaster Tamar in Hadath is described as catering to the business community on its website.

Guesthouses

Lebanon’s small guesthouses, boutique hotels and bed and breakfasts have been a fast growing industry for the past decade. However, according to Orphee Haddad, founder of L’Hote Libanais, a network through which tourists can make reservations for alternative, often rural hotels, their visibility has only really started flourishing over the last few years. In fact, they have become so popular that they have been fully booked throughout the past three summers. This is even more impressive in light of the fact that larger, more traditional hotels have instead been struggling to fill their rooms.

While they still constitute only a small segment of the overall hotel industry – Pierre Ashkar, head of Lebanon’s Hotel Owners Association, places them at around 10 percent of Lebanon’s hospitality offerings, Haddad believes the significance of guesthouses lies in more than just numbers. “Although figures don’t show it, since the market is new and the number of rooms very limited, what’s happening is not just a trend or a marginal phenomenon: it’s the way Lebanon is responding to the contemporary traveler behavior and creating a socially and environmentally responsible market. The issue needs to be examined in terms of influence, vision, and promise, not only in terms of figures.”

Indeed, the Ministry of Tourism has adopted these guesthouses and boutique hotels into their rural tourism campaign, while Tourism Minister Michel Pharaon says they are looking to secure funding for those in rural areas who want to develop such projects.

Haddad goes on to explain how the guesthouse market has grown since L’Hote Libanais began operating, particularly among the local population. “At the beginning, all of them were foreigners, mainly Westerners. Nowadays, half of them are Lebanese people residing in Lebanon. They have booked more than 30 percent of the total number of nights for reservations made through L’Hote Libanais.”

Today, Kanj Hamade, senior consultant at Lebanese Industry Value Chain Development Program, estimates the number of guesthouses in Lebanon to be around 40 (13 of which are in the L’Hote Libanais network) but expects it to increase as investments in the sector continue to rise.

Because of this growth, L’Hote Libanais believes that customers need to be given more clarity as to what defines a guesthouse or a bed and breakfast; as such, they have developed L’Hote Libanais which Haddad says would ensure that the standards of quality are met in each of its guesthouses.

With increasing interest, both locally and abroad, the future can only be bright for this burgeoning, alternative style of lodging in Lebanon.

Indeed, the key driving force behind the performance of Beirut’s hotels this year was the corporate travel segment, known as Meetings, Incentives, Conferences and Exhibitions, or MICE.

Edholm says that “recently, corporate travel grew a lot with several exhibitions and meetings which we were hosting. These are events that go ahead no matter what is happening in the country because they are organized by local banks or regional companies and not international or multinational groups.”

A good year…but…

Despite the seemingly poor state of affairs, the hotels that Executive spoke to report that 2015 was off to a good start – with room occupancy rates generally exceeding those of 2014 – until the end of July, when the combination of the waste management crisis and the demonstrations and closures in Downtown drove tourists away.

“2015 was much stronger than 2014. We were several million ahead in revenue until August, when the garbage crisis really changed things. It wasn’t just the garbage but also the demonstrations, because people in the Gulf especially thought it was another Arab Spring,” says Edholm. He adds that growth for the first three quarters of the year was because of the improvement in the security situation and also because of the lack of negative media.

Director of Sales and Marketing at the Four Seasons Hotel Beirut, Maha Bourachi, also attributes their hotel’s positive performance this year to the increased stability in the country for the first three quarters of the year. “Naturally, [the first quarter], Q1, of 2015 was much better than the Q1 of 2014, where we had explosions randomly in the country. The Q3 of 2015 was also much better, as in 2014 in June there was the explosion of Duroy Hotel which imposed an immediate slowdown in business pick-up levels in the country,” explains Bourachi.

With the suicide bombings in Dahieh in November 2015, Edholm does not expect the year 2015 to end on a positive note for hotels in Lebanon. “With the bombing, we don’t see the year ending better, as Western countries are very sensitive to security issues. I think Jordanians, Egyptians and Iraqis would still come but we need a solid mix of travelers: we need the business travelers, the person coming for weekends or holidays, the suite guests if it’s a big family…”

Hustling for Business

While in previous years, hotels in Beirut may have been flooded with guests, today those in the hospitality industry are having to double their efforts and provide a variety of incentive packages in order to attract clients to their property.

“We are continuing to identify the strong performing key source markets for the hotel, and identify proactive business development initiatives to attract and grow our business levels from these markets. In a market environment as volatile as the Lebanese one, you need to constantly identify opportunities and tackle them proactively to grow your business,” says Bourachi.

Achour Holding’s Dana says they have have had to offer creative promotions to their guests in order to remain competitive. “We have managed [to sustain our business] through our year-round tailor-made promotions for corporate and travel agencies, and the MICE segment, in order to gain our share of business. Not to forget the online packages created for Ramadan and the summer period to attract locals and foreign clients,” she explains.

Edholm says the Phoenicia group chose to be much more present in the market this year from a commercial perspective, with their sales people travelling to Dubai, London and Paris among other cities in order to connect with travel agents and clients in those cities. “Just because you have a [precarious] situation you cannot stop being close to your clients, because when the business is back who will they call? And if the business is limited we should always be the first choice in terms of presence by visiting our key suppliers.”

Le Bristol’s Atrache also speaks of remaining active in foreign markets by participating in several travel fairs this year including ones in Berlin, London and the Gulf. She explains that this is particularly helpful for reversing the negative PR about Lebanon: “We tell [attendees] that we still have the nightlife, and the archeological and cultural sites, and that it’s a good idea to come now and take advantage of the special rates we have since the country is no longer really on the tourist map.”

The modern world and hotels in Lebanon

As part of their strategy to attract customers, more and more hotels are embracing the digital world, with Edholm pushing for more online and social media coverage among other online activities in Phoenicia, and Bourachi says that online digital campaigns to promote Four Season’s food and beverage (F&B) outlets would be part of their plans to grow their business in 2016.

“The market has changed. In the past, you used to get phone calls to book a room; now you have a room management system. You are online and you need to have a solid website and social media presence to be competitive,” says Atrache, recalling the changes in Le Bristol’s hotel market since it opened in 1951.

Dining and wining in a hotel

Hotels in Beirut generally have solid F&B and banquet hall offerings which they can rely on to generate some revenue, to a certain extent, when room bookings are low. The Four Seasons says their F&B offerings are constantly being developed with new menus and creative ideas while Edholm says F&B outlets will also be a key focus of Phoenicia in 2016.

However, Atrache warns against an overreliance on F&B and catering. “At Le Bristol, we are known as the caterers, but it is not enough to keep the payroll of all the services the hotel provides with only the catering department.” She explains that although catering constitutes 60 percent of their revenues at the moment, its cost is much higher than maintaining rooms.

Despite the ever-changing winds, the business of hotels in Lebanon is hanging in there and finding new ways to adapt and grow. As Atrache concludes, rather darkly, “Hospitality needs to keep on going because this is the heartbeat of Lebanon: we have no oil, we have no gas, we have tourism and this is what we are all about.”

Clearly, this is a sector worth fighting for, and if Lebanon loses its grip on it, the future will not be so bright for this small but ambitious country.

Nabila Rahhal

Nabila is Executive's hospitality, tourism and retail editor. She also covers other topics she's interested in such as education and mental health. Prior to joining Executive, she worked as a teacher for eight years in Beirut. Nabila holds a Masters in Educational Psychology from the American University of Beirut.

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