Lebanon’s five star hotels diversifying markets and offerings

The world is their oyster

Photo by: Greg Demarque/Executive

Lebanon has not given its five star hoteliers many reasons to smile over the past seven years. Political tension and instability has kept away the country’s traditional market feeders, GCC nationals, since 2011.

Meanwhile, regional political and socioeconomic crises have taken their toll on Lebanese expats in the Gulf and in parts of Africa, generally reducing the length of their stay and their spending power while they are in the country. Locally the situation is not much better, with Lebanon’s residents less willing to spend on lavish meals in hotel restaurants or on city staycations.

It is a testimony to humankind’s adaptive nature and the Lebanese people’s well-honed resilience that these hoteliers have not only kept their good natured smiles despite the challenges, but have also persevered in cultivating and growing the markets that continued to visit Lebanon, as well as exploring and developing new ones.

The past year

Most hoteliers saw 2018 as a continuation of 2017 in terms of occupancy: not great, but not bad either.

For Gefinor Rotana, 2017 and 2018 were almost the same in terms of business growth. According to the hotel’s general manager, Gilbert Zeait, this was because the last two months of 2017—when then-Prime Minister Hariri announced and subsequently withdrew his resignation—put a damper on that year’s otherwise positive performance. Meanwhile, the first four months of 2018 saw cancellations and a drop in business in the aftermath of the rescinded resignation before things picked up again. “Summer 2018 was very good for us. Room rates were lower than in the golden years, such as 2010, but in terms of occupancy during the summer, I would say it was above 80 percent,” Zeait says.

The Smallville Hotel in Badaro also reports almost the same occupancy in 2017 and 2018, according to Michel Boulad, its director of sales and marketing. “Summer of 2017 was almost a record year for the hotel. However, summer 2018 was not as good for Smallville, mainly because the GCC nationals did not come as much as last year during the Adha holidays. The end of year 2017 was rather weak following the Hariri incident, but this year, and judging by our December bookings, we are anticipating much better performance,” Boulad explains.

For some hotels, 2018 was a better year than 2017. Nadia Madi, director of sales and marketing at Kempinski Summerland Hotel & Resort, says 2018 saw a 20 to 30 percent increase in occupancy from 2017, and the hotel expects to close the year at 65 percent overall occupancy—a good rate in her opinion, given that they are a summer resort and business is usually slower in winter. “Since we opened in summer 2016, 2017 was a relatively new year for us. So in 2018, we became more established, and people started knowing us more, whether in the local market or through the Kempinski chain,” she says.

Georges Ojeil, the general manager of Le Gray, says 2018 was the second best year in the hotel’s history, since its opening in 2009. He attributes this to a “synergetic team and a quality focused strategy,” whereby the hotel invested a lot of time and money in training and communicating with its employees, while at the same time not compromising on quality customer experience. The hotel’s expansion—which added two floors of rooms, a new lobby, and, most importantly, conference rooms and a ballroom—was also a major driver in the year’s exceptional performance. “The extension supported our financial growth because we managed to penetrate different markets. We closed October on 85.5 percent occupancy and November on 80 percent. Although January was shaky, the year picked up considerably afterwards,” Ojeil says.

The cluster director of sales and marketing at the Phoenicia Hotel, Tracey Bolton, says the hotel has had a 5 percent increase in occupancy from 2017 and will close the year at 60 percent occupancy (according to its performance as of mid-November), which she says is exceptional for a hotel of their size (446 rooms). Meanwhile, Rami Sayess, the regional vice president and general manager of the Four Seasons, says 2017 was a record year for their hotel, and that, despite this year’s drop in occupancy, 2018 is exceeding the expectations they had at the start of the year when the country was more unstable politically. 

As such, Lebanon’s five star hotels have managed to maintain almost consistent occupancy—at a positive percentage—despite the tough times.

Here no more

GCC nationals were Lebanon’s main tourism market for such a long time that the hotel industry became complacent, relying too heavily on this steady stream of guests rather than having to invest energy or resources to fill up the country’s hotels.

Today, this is no longer the case, as most hoteliers admit that the numbers of holidaying GCC nationals are in steady decline (see figures page 116). Rotana’s Zeait explains that this demographic used to account for 95 percent of the hotel’s targeted guests—now they make up only 10 percent. The drop in GCC nationals has also negatively impacted the average length of stay at the hotel, he says. “Even during peak holiday seasons, and although hotels in Lebanon become fully booked then, it is for a shorter period of time than before. That long duration of stays was when we had high numbers of tourists from the Gulf who would stay for at least a week, and up to five weeks sometimes.”

Worryingly, Gulf tourists remain the main market feeders of the Four Seasons, Kempinski, and Phoenicia—although the three establishments confirm that they are staying in lower numbers compared to 2010 and previous years.

Phoenicia’s Bolton explains that although the GCC is still a main market for the hotel, it is not the big spenders that are coming. “Thirty-five percent of our business is GCC, but they are not staying in the presidential suites as they used to before,” she says.

Speaking for Kempinski, Madi says they have seen a slight increase in GCC nationals this year, while Ojeil says Le Gray has witnessed an increase in Kuwaiti and Qatari nationals.

  

Beyond the Gulf

By now, the hotel industry has largely accepted that GCC nationals will no longer be the chief drivers of their business and so have invested all their efforts on strengthening the other markets visiting Lebanon, even if these markets are shy in numbers so far.

European tourists, which have always represented a small market for Lebanese hotels, have been increasing over the last few years, according to the hoteliers Executive interviewed for this article. They attribute this rise to their own efforts and to Visit Lebanon (a B2B meeting space that targets specific destinations for familiarization trips, which provides all the practical information that those working abroad in the leisure industry would need to arrange trips to Lebanon, organised by the Ministry of Tourism and participating hospitality stakeholders). Other stakeholders can also play their part. Bolton says that the number of Spanish tourists to Lebanon is starting to grow, a consequence of Lebanon’s flagship carrier, Middle East Airlines, establishing a direct flight to Madrid in June 2018. “The key going forward is we have to tackle these markets and maximize exposure to drive business,” she says.

Lebanese expats—typically first generation immigrants who left Lebanon for career purposes—have also been mentioned as a growth market by hoteliers with whom Executive spoke. “This year we saw many Lebanese living in the region coming to Lebanon for a vacation, but also on business trips. They enjoy staying in the resort as a destination for a vacation, and so we had a promotion for Lebanese expats, providing them with special prices to encourage them to stay with us,” Madi says.

Among neighboring Arab countries, Iraqis, Egyptians, and Jordanians are mentioned as frequent hotel guests, while Zeait says that Syrian guests have been on the rise at the Gefinor Rotana. “We have a lot of Syrians using hotels, especially when they are living outside the region and come back to visit their relatives in Syria—they land in Beirut and stay here for some time,” he says.

Various recent efforts have been targeting the Lebanese diaspora—ranging from the Lebanese Diaspora Energy conference, organized by the foreign ministry, to the Visit Lebanon meetings—and these efforts have paid off in the hotel industry. “We at the Phoenicia Hotel have seen a nice growth of the diaspora market especially over the summer season—these are mainly [Lebanese] from Brazil, Australia, and Canada. It is the young diaspora that is coming back, and they are looking to reconnect with their history. And because it’s the younger generation, they are staying in hotels and not in the villages where their extended family is—to them, part of connecting with their family and heritage is exploring Lebanon, so they make the hotel their base and go out from here,” Bolton says.

Ojeil says Le Gray has its eyes on the diaspora market as well. “Latin America is a new market we are targeting, and to a certain extent it is fueled by the Lebanese diaspora. We start with them, but they bring others from their countries with them, or go back and tell them of their trip, which motivates them to come here,” he says. 

Looking for something new

Not content with just developing existing markets, Lebanon’s hoteliers are also aggressively targeting new markets, having learned the dangers of putting all their eggs in one basket. “When we knew last year that the GCC market was not coming back as before, and that their confidence had not been restored in Lebanon as expected, we went after new markets,” says the Four Seasons’ Sayess, giving the examples of South America, in particular Colombia, as well as Mexico and Australia. In July, he says, the hotel’s highest number of visitors was from Australia.

Hotels are keen to diversify their guest base. “We at Smallville are looking to expand in new markets such as Russia or Latin America. There is a lot to explore, and so we need to steer away from the traditional feeder markets and to focus on new markets. This is already something we are doing, and we are seeing results, but we have to maintain our efforts,” Boulad says.

He goes on to explain that the hotel has been participating in international exhibitions to  explore new markets. At home, the hotel is partnering up with local travel agents who are targeting new markets such as China or Russia.

In fact, several hoteliers spoke of the Russian and Chinese markets, and it seems serious efforts are being made to attract these tourists to Lebanon. “I would love to explore the Chinese and Russian markets—both of which are very important—but we have to sort out the visa issue as it is not easy for them to get visas,” Sayess says. “We need to catch their interest in Lebanon, since they already go to Dubai, Paris, and Egypt, which means we need to go to the countries and talk to tour operators there. For example, we at Four Seasons welcomed a group of 12 Chinese tour operators here to explore Lebanon, as well as a Russian group, which was arranged through the Syndicate of Hotel Owners in Lebanon.” 

Meanwhile, Rotana’s Zeait says both Armenia and Turkey are interesting markets due to their proximity to Lebanon. The potential is certainly there but what is needed, hoteliers tell Executive, is sustained work from all stakeholders to promote Lebanon as a destination to tourists who may need a small push before they book that ticket.

While hoteliers are doing their part in promoting Lebanon and attracting new tourism markets to it, there is a lot more that needs to be done—by all stakeholders—before the country will be ready for a higher level of tourism, necessitating a strategy.

 

Work work work

While GCC nationals mainly frequented Lebanon for leisure, today’s hotel guests—for the most part—hail from the corporate world, according to the hoteliers with whom Executive spoke. “The perception around the area is that the leisure groups are still nervous to come because they are hesitant because of the political situation, so that still needs a lot of work. Whereas a corporate group will come because they need to do business here,” Phoenicia’s Bolton says.

Both Kempinski’s and Le Gray’s expansions of their corporate facilities have allowed them to target new markets and achieve growth. “The majority of the business in the pipeline is corporate business with a little leisure, especially in the summer,” Ojeil says. “The conference and events facilities allowed us to penetrate the MICE market so we have more residential seminars and more events, training, and conferences happening in house, and this is driving more revenue.”

Still, this has not prevented hotels from going after business from both leisure and corporate travelers, playing up their facilities to attract both. For Boulad, Smallville’s location on Badaro Street—minutes away from the French Embassy (one of their main clients, he says), as well as major universities, the new business hub of Sin El Fil, Badaro’s pubs, and the national museum—makes them ideally placed to capture both corporate and leisure business.

Zeait also speaks of Gefinor Rotana’s location as being attractive for both businesspeople—surrounded as it is by major hospitals and universities—and those seeking a good time in nearby Zaitunay Bay or Hamra. “We are positioning ourselves as a business-leisure hotel,” he says. “This is healthy because leisure alone gives you seasonal traffic—and is mainly the business of beach resorts—while the volume of business bookings decreases during holiday times such as the summer or mid to end of December.”

Madi says Kempinski reached 100 percent occupancy at times during the summer, which is normal for a beach resort. During winter, she says, they market the fact that they can offer corporate guests leisure facilities typically found in resorts, such as multiple restaurants, a huge spa, and a marina.

Eyes on Syria

As 2019 approaches, Lebanon’s hotel industry is looking toward the future, and hoteliers say they will continue to develop the new markets they have been working on in 2018. At the same time, they have their eyes open to new possibilities and, at the moment, the potential narrowing of the war in Syria is a very interesting prospect—the impact of which is already tangible, to some extent. “We see potential for Phoenicia Hotel in that a lot of companies—from construction to consultancy companies—will be making their base here,” Bolton says. “When they opened the shipping lines, for example, we immediately saw an impact on our business from shipping companies and freight companies. We are waiting in anticipation because we think it will bring a tremendous boost for our economy.”

Ojeil says Le Gray has also felt the impact of Syria’s impending reconstruction. “We are already sensing increased demand from business people coming to Lebanon for a few days for events related to the reconstruction of Syria. They take 14 rooms for a meeting or conference and stay for a few days. It is happening regularly. If we manage to grab our share of this business, it will be very positive for Lebanon,” he says.

Whether it is business from Syria’s imminent reconstruction or from one of the far flung markets that Lebanon’s hoteliers have been tirelessly developing, or even from markets closer to home finally making a comeback, this country’s hotel industry is prepared to welcome it all, having passed through the fiercest tests.

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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