Global Refund, the company responsible for repaying VAT to non-resident shoppers, has registered a 16% drop in overall tourist retail spending since former premier Rafik Hariri’s assassination on February 14th, with a 22% decrease in VAT refund claims.
Among the Arab tourists, who represent the biggest spenders visiting Lebanon, purchases dropped by as much as 43% for the Syrians, 30% for the Egyptians and 23% for the Saudis between February-July of 2004 and the equivalent period in 2005.
The largest drop in tourists has been among the Saudis and the Emiratis, both showing a decrease of 48% between July 2004 and July 2005. Overall, Lebanon witnessed a 26% drop in tourism from the Arab world and a 17% drop in the total number of tourists.
Considering the fact that the Saudis consistently feature among the top spenders in the country, the impact on the retail market, and especially the luxury segment of it, has made itself felt.
“It directly affects the sales of luxury products,” says Khalil Achkar, Global Refund’s country manager for Lebanon. “For a lot of retailers, 40% on average of their total sales go to tourists, of which the Saudis form the majority. A drop like the one we’ve witnessed over the course of the last few months can mean a 20% decrease in revenue.”
Most affected by the drop in tourist spending are the fashion and clothing retailers, which sell the most to Lebanon’s visitors – close to 70% of the VAT refunds requested between February and July of this year were for clothing items, with watches and jewels trailing in the back with some 12%.
However on an up note, the average amount spent purchasing by tourists claiming VAT refunds increased between 2004 and 2005 by 4%, from $749 to $775. In 2004, 50,000 visitors – some 5% of Lebanon’s tourism – claimed re-imbursement, collecting on average $50 from one of the tax-free shopping desks at the country’s main border crossings.
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