It’s hardly been a great tourist summer. According to the numbers published by the ministry of tourism, the number of tourist arrivals in July reached 126,986 compared to 188,465 in 2005. In June, arrivals were down nearly 60% from 2006 which was proving to be a bumper year until the war broke out.
Looking back, growth from 2001 to the beginning of 2005 averaged 20% to 30%. The first six months of 2006 were excellent with 32% growth and 71% occupancy in Beirut before the high summer traveling season. There was not enough time to recover from the war before the string of events that kept Lebanon in the news and resulted in the worst season for 15 years. Occupancy rates were under 20% for the first six months of this year and rising to between 28-35% in August, according to Pierre Achkar, President of the Lebanese Federation of Tourism and Hotel Associations and owner of the Monroe Hotel, the Markazia Monroe Suites and Printania Palace in Broumana. “When you are running below 45%, you are losing a lot of money.” From the war to the present, estimated damages to the tourism sector hover around $286 million.
In the BCD, an area once touted as the new hotel epicenter but which has now become Camp Solidere, home to an eight month demo, the squatters have succeeded in crippling at least two hotels and forcing nearly 200 businesses to close their doors. The Markazia Monroe Suites has had no clients since the protest began in December 2006. The hotel used to employ around 140 people but in the present situation, it is paying the salaries of 16 department heads just to keep them from going abroad. “How long can we hold out? Nobody knows. Do we have a financial problem? Yes. Are we going to be helped by the government? We don’t know,” says Achkar, who is considering legal action against the government for the sit-in. “When it lasts six to eight months, it’s illegal,” he argues. “They are impinging on my freedom.”
Owners need some assistance
Marwan Kairuz, chairman of Etoile Suites, also in the BCD, thought that he had escaped the losses of last summer when his hotel was fully booked by journalists. After the war his regular business returned, but once the sit-in began, it was game over. The streets were blocked and guests couldn’t access the hotel. As the protests dwindled and a few streets re-opened, he was able to achieve about 10-20% occupancy. In mid-August of this year the occupancy rate rose to around 40 to 50%, but at a price: today the average room rate is $80 compared to $220 in 2006 and $300 in 2005, while he has had to let go 70% of his staff. “We are losing money,” he said and admitted that he might have to sell some of his equity in the business.
Achkar believes that there should be greater responsibility on the part of the government to assist hotel owners because of the indirect destruction. He is asking that at the very least special loans should be provided with 0% interest for seven to ten years with owners keeping their managing interest. He believes that without this some will go out of business or the banks will move in. The syndicate has also asked the government for special electricity rates but the best the government can do is to offer the sector subsidized loans at 4%.
The brain drain is also having a negative impact, with many of Lebanon’s 120,000 tourism workers being lured to the Gulf. “I think that a lot of people working in the Gulf will be back,” says Achkar. “I have 40 former employees working in Qatar and Saudi Arabia and they tell me that the salary is only 10-20% more than that here.”
Think outside the box
The catch phrase this year for most four and five-star hotels is to “think outside the box” and focus on non-core activities such as weddings, with bookings staying steady at 2005 levels. The Mövenpick Hotel and Resort told Executive that 65 weddings were booked from July to September and that they are catering up to three a day on weekends.
Four and five-star hotels are in great locations with a full array of outlets such as high end restaurants, spas, gyms, and shopping areas — all the things one needs to take their mind off the stresses of the day. Mövenpick is one of them. Says Mira Hawa, director of sales and marketing, “[We] have been deriving business in different ways.”
Earlier this year, Mövenpick also ran a campaign in which local Lebanese were encouraged to stay and use the spa and generally pamper themselves. That campaign generated almost $65,000. Other promotions include a summer kid’s camp and “Me Time” at the Essential Spa for busy career women and mothers. Occupancy reached 65% in mid-August and they are expecting a healthy average of 50-55% for the year.
The management at the Metropolitan in Sin el-Fil has been relying on the boulevard shopping mall, the Elixia Spa and Habtoorland amusement park to keep them afloat. Last year, the Habtoor Grand Tower closed leaving only the Metropolitan Palace’s 200 rooms open for business. In August the hotel was running at a respectable 60% occupancy. It has also partnered with Middle East Airlines on a promotion for MEA ticket holders to stay four nights for the price of three.
Hotels outside Beirut such as Le Royal in Jounieh maintain they are at 50% occupancy in August, while Grand Hills in Broumana and Mzaar Intercontinental near Faraya are offering weekend getaway packages for two including a room, meals and spa treatment. Although these are normally off-season promotions, this year they have had no choice. Business has to tick over and the good news is that many Lebanese are taking advantage of the prices.
MICE (meetings, incentives, conventions and exhibitions) events have taken place but in smaller numbers with fewer participants. This is a staple for the industry particularly in the spring and fall. Mark Timbrell, general manager of Gefinor Rotana, told Executive that business never ceases and that he is quietly optimistic. While travel warnings may discourage US or European business travelers, local syndicates and associations will continue to hold their conferences, meetings and seminars. Le Royal is focusing on MICE for their target market this fall. Joyce Mouwad, director of sales and marketing for Le Royal said that for 2008 the same number of conferences are still being booked.
For the future, all agreed that recovery depends on stability to gain consumer confidence and this in large part depends on a successful presidential election. Until then the sector will continue to be creative and hang on in there.