After an outstanding first half of 2006 and a catastrophic second, any recovery for the tourist industry is once again at the mercy of political stability.
The last two years have hardly been a smooth ride for those working in Lebanon’s beleaguered tourist industry. Beset by high-profile assassinations, troop withdrawals, car bombs, an under-funded government ministry and now a devastating war, they can largely be forgiven for being gloomy about the prospects for the coming year.
As is always the case in Lebanon, the health of the tourist industry depends on the country’s stability: something which is consistently impossible to guarantee. But the continued importance of the sector to the national economy is vital: it accounts for a double-digit percentage of GDP, provides hundreds of thousands of direct and indirect jobs, and has significant knock-on effects across some of Lebanon’s other core industries like construction, real estate and retail.
If anything, though, the war of 2006 reinforced an already apparent conviction that no one in the tourism industry should make any long-term plans. Lebanon’s image to most of the outside world has suffered incalculably thanks to the events of this summer, and repairing it will take a sustained period of stability, government promotion and a plentiful supply of loyal visitors. Unfortunately for a private sector whose total losses reach into billions of dollars, none of those things can be counted on in 2007.
By all accounts, the first half of 2006 was rather good—at least compared to the first half of 2005, which was largely ruined by the Hariri assassination and the Syrian withdrawal. This time around, year-on-year arrivals were up by 47% and 39% in April and May, with hotels recording significantly improved occupancy rates and looking forward to a bumper summer of visits from GCC nationals, who were thronging restaurants and malls by the time the first bomb hit Beirut’s airport.
They were also spending lots of money. Global Refund’s index on tax-free tourist receipts, often a good benchmark of how much cash visitors have been pumping into the local economy, showed that spending rose by 45% in the first half of 2006 compared to the equivalent period in 2005. As in previous years, the biggest spenders were Saudis, who accounted for 27% of tax-free receipts, followed by Kuwaitis in second place with 14%.
Predictions were duly made for a record year. The Ministry of Tourism announced that an all-time high of 1.6 million tourists were expected over the course of 2006, whilst in June, the World Travel and Tourism Council (WTTC) released its annual research report. In it, experts optimistically predicted that the Lebanese tourism sector would cough up some $4.4 billion in economic activity over the year, generating 175,000 jobs and accounting for almost 11% of Lebanon’s GDP.
The damage done
All that turned out to be wishful thinking, rudely interrupted by a war which ground the tourist industry to a halt for several months and has doubtless put some serious brakes on next year’s prospects too. The mass exodus by land in the week after Beirut’s airport was bombed, coupled with the incessant television footage of Lebanese infrastructure being destroyed and western nationals waiting to be evacuated by warship, was more than enough to render the tourist industry defunct for the next few months.
Tourist arrivals in August dropped by 85.4% compared to 2005—not surprising considering the airport was closed for the entire month—and most hotels could do little but watch on as occupancy plummeted. Many even decided to shut down operations completely until the hostilities came to an end. One exception was the Rest House in Tyre, whose rooms were in great demand this summer and autumn from the hoard of journalists, camera crews and aid agencies based in the South.
But overall, Pierre Achkar, the president of Lebanon’s Hotel Owners’ Association, has estimated losses to hoteliers at around $2 billion, with overall occupancy down by half. No one knows exactly how long those losses will take to recoup, but layoffs have been made, and the worry is that unless things get better soon, qualified staff will simply pack their bags and head to the Gulf, where both demand and salaries are higher.
A silver lining or two
Hard though it may be to believe, there are some positives to be drawn from 2006 for those looking ahead to 2007. The first is the continued presence of the additional UNIFIL troops, assorted NGOs and the numerous other organizations involved in the post-war clean-up. According to a number of hotels, these sources are bringing in good business in Beirut, especially through block bookings.
Another is that the Ministry’s new website, Destination Lebanon (www.destinationlebanon.gov.lb), was finally launched in mid-June 2006, just before hostilities began. The five year-long project was funded partly by a $150,000 grant from USAID, and offers online booking, maps, virtual tours and all manner of listings and brochures.
More importantly, many operators report that Gulf tourists, if not their European counterparts, are becoming increasingly less sensitive to Lebanon’s perennial instability. It took only a few weeks after the ceasefire was signed for the gradual trickling-back of GCC visitors to begin, particularly for the Eid al-Fitr festival at the end of Ramadan.
This bodes well for the future: such greater resilience and speedier returns will be necessary, given that more sporadic crises are fairly predictable. Indeed, a trend that many in the industry foresee for 2007 is more last-minute bookings, with few tourists—perhaps understandably—having the confidence to lay down deposits on advance holidays.
Mending the image
Although very little physical damage was done either to Lebanon’s hotel infrastructure or the main tourist sites in the country, the biggest challenge in 2007 will perhaps be one of confidence-building among clientele.
For many tourists, especially Europeans and Americans, Beirut’s image has reverted back to that of the civil war days. Despite the fact that the vast majority of the capital remained untouched by conflict, the television images and photo montages from the southern suburbs suggested total apocalypse—and that impression will take some time to erase.
Thomas Cook, for instance, says that Lebanon is still not appearing in its European brochures after being on hold for more than a year and a half. The travel agency told Executive that it would prolong its “watch and wait” approach for 2007, even though Lebanon does appear in the company’s Egypt-based brochures.
Similarly, some of the country’s most prized cultural assets such as Baalbek and Tyre lie in zones which were amongst the worst-hit by Israeli air strikes. For these attractions, which even before the war were still trying to shrug off respective images as a 1980s kidnapping hotspot and an Israeli-bombarded town, it will be another step backwards in their efforts to tempt visitors out of the capital.
Also affecting Lebanon’s image for the 2007 season are environmental concerns. According to Tourism Minister Joseph Sarkis, some 50-60% of Lebanon’s tourist industry is based around the Mediterranean, which received an unwelcome gift of thousands of tons of oil after Israeli missiles struck a depot in Jiyyeh, south of Beirut.
It appears, however, that the damage is not as bad as previously thought. When the spill first happened, some environmental experts had claimed that the summer seasons for the beach resorts around Beirut would be “ruined for years”, with 150 kilometers of Lebanese coastline affected and the oil even spreading north to Syrian waters. According to more recent reports, though, most of the oil has dispersed from the areas further away from Jiyyeh, although some serious PR efforts will be required to repair outside conceptions.
Some of these might come from the government. In late August, the tourism ministry announced that it was launching an aid plan to help struggling the industry out of the quagmire: tourist-related businesses were being told to fill in forms detailing their war-related losses, tax breaks and other aid was being discussed, whilst a special account at the central bank was set up to receive donations.
But whatever government aid does come out of this over the coming year will almost certainly make only minor inroads into overall losses, given that the ministry has traditionally struggled even to maintain its modest annual budget of around $8 million. A delegation did, however, make a brave appearance at the World Travel Market (WTM) in London in November, along with the biggest private-sector players in the industry.
Peace and quiet, please
Despite all the woes, recovery may come quicker than expected if some stability can prevail. An important litmus test will be the Christmas/New Year period, which in 2006/7 will coincide with the Eid al-Adha, and which many tourist professionals hope will enjoy high arrivals from GCC visitors.
Some signs are good—one five-star hotel in Beirut told Executive that they were already almost fully booked for the holiday period—though others are less encouraging. The ski booking site www.skileb.com, for instance, says that its advance bookings are down by 40-50% for the coming winter season, whilst its sister hotel booking site has seen business fall by the same percentage.
Another vote of confidence will be the construction of the clutch of new luxury hotels in downtown Beirut. According to the companies’ original timetables, the next year should see the completion of Four Seasons, Grand Hyatt and Rotana Suites hotels in Solidere, with a Hilton and a newly-renovated Saint-Georges in the pipeline before 2010.
The extent to which building has been delayed by this year’s events should prove instructive, as should the progress of what is by far the biggest blueprinted project in Lebanon, the $1.2 billion Sannine Zenith. This giant ski resort, which when finished will reportedly cover almost 1% of the country’s territory, had already been delayed due to planning issues.
There’s no doubt that if peace and quiet do somehow ensue next year, then tourist business will be good. But trying to convince most of the outside world that Lebanon is a safe place to visit will be an uphill struggle. Instead, hotels, retailers and restaurants dependent on tourism revenues may have to rely even more on a high-spending Gulf Arab clientele, for whom Lebanon’s charms remain popular.