Tourism Minister Fadi Abboud said in October that he expected 2010 to have been another bumper year for Lebanese tourism, predicting that revenues from the industry will hit nearly $8 billion by the end of the year, compared to $7.2 billion in 2009. After 2009’s record-setting revenues, expectations and hype were running on overdrive this year, and not without good reason: the first nine months of 2010 mark another record for Lebanon’s tourism industry, despite the slowdown during the normally booming month of August due to Ramadan.
According to the Ministry of Tourism, the number of tourists totaled some 1.694 million from January to September, compared to 1.439 million during the first nine months of 2009, a 17.8 percent increase. The World Travel and Tourism Council (WTTC) expects the real growth rate of the industry to be 11.3 percent by the end of 2010; last year, Lebanon’s tourism sector was the fastest growing of 165 countries. In terms of contribution to gross domestic product, travel and tourism’s share is expected to be 13.3 percent, compared to the 9.3 predicted in 2009. In December, the ministry said they expected a total of some 2.2 million visitors to arrive by the end of this year.
The distribution of visitors by region remained unchanged; about 42 percent came from Arab countries and nearly 25 percent came from Europe, followed by visitors from Asia and the Americas.
Since the opening of Beirut Souks and numerous high-end international boutiques this year (see retail section on page 196), retail and tourism are now, more than ever, mutually beneficial business generators. Global Blue, the organization that counts value added tax refunds, released figures showing the Beirut area attracted 82 percent of total spending by tourists in Lebanon, mostly on clothing and watches, with 23 percent of total tourist spending coming from Saudi Arabian wallets. It seems there was also an increase in visitors from Syria, as spending by Syrian tourists increased 40 percent in the first 10 months of the year.
The number of airport passengers, which includes departures and transits, increased 11.6 percent year-on-year in the first 10 months, according to figures from Rafiq Hariri International Airport.
Occupancy
Though occupancy rates averaged 68 percent in the first nine months of 2010, down 3 percent yearly, the average room rate in Beirut was $262, up six percent from last year, according to financial auditor Ernst & Young. The average revenue per available room (REVPAR) in Lebanon rose 11 percent this year to $136 by end of August 2010, according to Deloitte Middle East, the regional wing of the international accounting and consulting firm.
Minister Fadi Abboud told Executive in August that “the average stay is about nine days and the average [amount] spent is about $3,500,” adding that the country is unsuitable for “fish and chips” tourists with $500 a week or less to spend.
In addition to contributing a significant chunk to Lebanon’s GDP, tourism is a major employer, with 553,000 jobs — 38 percent of the workforce — directly or indirectly affiliated with the industry, according to the WTTC. Meanwhile, bank loans to the sector reached $858 million by July 2010, an increase of 11.5 percent from a year ago, Marwan Barakat, head of research at Bank Audi, told The Financial Times.
Easy prey
Abboud claimed that efforts have been made to reform the industry and provide more rigid regulations to ensure that tourists are not subjected to price gouging.
Still, the same complaints about inconsistencies abound. For example, if an individual tourist comes from Europe they don’t have to pay for a visa, but if a tour group comes, each has to pay. Many tourists report being ripped off by fortune-seeking drivers, especially as they make their way from the airport to their hotels. Meter-less taxis leave the tourist with no option but to pay whatever the driver demands, in many cases.
Similar complaints are heard about restaurants, salons and other service-oriented businesses, prompting the ministry to try and clamp down on the practice, though its efforts have been stunted by limited manpower and money. Experts agree there should also be basic information desks or even maps distributed to help tourists who wander Beirut by foot.
IDAL
In August, Abboud said the country had some $4 billion invested in the tourism industry. Some of this cash was steered by the Investment Development Authority in Lebanon (IDAL), a public investment promotion agency that aims to attract and facilitate investment in tourism and other core industries. One of the incentive programs IDAL offers investors — the ‘package deal contract’ — provides exemptions and tax reductions on investments that meet certain criteria, such as being more than $15 million (if in Beirut) or employing a workforce exceeding 200 people. To encourage investment projects in more rural areas such as Baalbek, the necessary investment is only $1 million to qualify for the package deal.
In 2010, IDAL gave four Beirut hotel projects package deals. Together, they represent more than $350 million in investment, mostly from Lebanese and Saudi Arabian investors.
However, Hawlo Tleiss, executive vice president of IDAL, says some administrational issues still exist. “It [Law 360, formed in 2001] is supposed to be a one-stop shop for investors, but in Lebanon, politically, it’s difficult to get the authority of the tourism [and other ministries]” to give investors the ‘package deal’ incentive.
The biggest obstacle to tourism investment remains security. Compared to other fields like industry and technology, tourism is more sensitive to even the suggestion of security upheavals and thus is more risky for investors. But security issues can’t blanket Lebanon’s true potential, and the world is catching on.
“Only last week we were in The New York Times, The Times of London, and the American Express travel magazine,” Minister Abboud told Executive in August. “In the last six months, Lebanon was probably mentioned in every decent publication in the world.”
In addition to accolades from magazines like Britain’s Tatler, which targets upscale consumers, the Lonely Planet travel guide rated Beirut third on its 2010 list of “The 10 greatest comeback cities,” behind Berlin and Ayacucho, Peru. The guide describes the city as a “world-famous cultural center,” favored by “fashionistas and partygoers.”
However, the party spirit of 2010 may have been dampened by a dent in spending, as some believe that the waves of the financial crisis have finally washed upon Lebanon’s shores.
The usual summer round of concerts, music festivals and international DJs saw a drop in attendance, despite being heavily promoted. The Virgin ticketing office reported total sales of around 400,000 tickets for major musical events and concerts last year, but 30 to 40 percent less in 2010 even though there were more events, according to Abdo Housseiny, partner and general manager. Housseiny said shows were only promoted in Lebanese media, missing out on potential visitors that he believes would come based on the summer schedule.
Industry issues & concerns
In contrast to previous years, efforts were made in 2010 to promote a more mature tourism sector. To spread tourism over 365 days a year and not depend on summer and holiday periods, more attention was focused on niches such as health tourism, eco-tourism and religious tourism. Several exhibitions and conferences were held to attract and diversify investment, with view to spreading the seeds over the whole country and not just Beirut, where 77 percent of tourists currently stay.
But Lebanon may be losing out in a regional marketing race, as neighbors — mainly Turkey, Jordan, Syria and Egypt — are spending heavily to promote themselves as destinations and are building up their tourism sectors at a faster rate.
“Istanbul and Cairo have done tremendous promotional work… but they are targeting more the economy market versus the luxury market, so we haven’t lost anything in the luxury market,” said Georg Weinlaender, general manager of the Phoenicia hotel.
Meanwhile, tourists from Turkey tripled when visa requirements were lifted this year, according to the ministry. The Phoenicia recently witnessed this phenomenon first-hand when a visiting group representing one of the largest beverage producers in Turkey was so numerous they had to split between three other hotels.
Corporate clients are big business for the nation’s premier hotels but Weinlaender said he fears inadequate conference facilities are restricting this market from its full potential.
Although the Beirut International Exhibition and Leisure Center (BIEL) has been busy with the increase in international congresses and exhibitions Beirut saw in 2010, Weinlaender said the city needs a bigger venue if the city is to keep pace as it moves up the meetings, incentives conferences and exhibitions (MICE) ladder.
“A convention center usually has to take up to 12,000 to 15,000 people,” says Weinlaender, but BIEL’s main conference center has a capacity to seat 9,000.
Although larger “city-wide congresses” have taken place — such as the International Medical Congress organized out of the United States, which took place at the Phoenicia, Habtoor and other hotels — to attract more MICE business, Beirut needs a bigger meeting facility.
Operators and hotels
The lack of specific guidelines regulating the sector means that anyone can set up shop as a tour operator, leaving tourists facing wildly differing prices and levels of service. Unlike other countries, tour operators are also left in the cold in regards to foreign competition.
“Hotels do not protect the local tour operator, while in other countries they do,” said Sandro Saadé, chief executive officer of Wild Discovery. “For example, if we call a hotel in Egypt, they refuse to work directly with us. We have to come through a local tour agent, and thus they [local firms] are protected by law.”
As only 3 percent of tourism emanates from tour packages, there is room for tour operators to have a larger role in attracting the new tourists. The ministry says it is keen on bringing in increased numbers from Germany, the United Kingdom and Russia specifically.
Though the positive spin on glitz and glamour is helpful to counteract the war-torn image of the past, Beirut’s expensive reputation is a double-edged sword. While there are three-star hotels outside the capital, there are not many in the city center.
“We can’t force tourists to go out of Beirut because we have to fill the hotels,” says Saadé. “Hotels outside of Beirut have to have a value-added and change their positioning. If they want to wait for tourists to come it won’t happen.”
