Since the assassination of Prime Minister Rafiq Hariri in 2005, the Lebanese tourism industry has fallen victim to one crisis after the other. This year, as feuding political factions struck a fragile peace in Doha, Qatar, the industry recovered some of its former luster, with Arab tourists and expats flocking equally from East and West.
As the summer approached, market players in the tourism industry kept their fingers crossed, hoping for a good summer season to beef up their fragile balance sheets in a country where Arabs visitors usually represent about half of hotel reservations. Tourist figures have drastically changed since 1974, the last year before the Lebanese Civil War. That year, 500,000 Europeans and 900,000 Arabs visited Lebanon and the tourism industry accounted for 19.4 % of the national GDP.
“Ever since the end of the war in 1990, Lebanon has not been able to reclaim its former status as one of the region’s prime tourist destinations. The structure of Lebanese tourists has changed as well with many of the incoming flows of foreigners actually being Lebanese nationals holding dual citizenship. Other factors that have also affected Lebanon’s performance in terms of tourism figures can be attributed to the emergence of new destinations such as Jordan, Syria and Turkey, while Arabs have also started venturing into new countries, such as in Asia,” explained Mohammad Chamsedine of Information International.
By the numbers
In 2004, just four years ago, 1,278,500 people visited Lebanon, 457,000 of whom stayed in hotels for a total of 1,018,000 tourist per night. Over the next three years, the number of visitors steadily dropped, from 1,140,00 tourists in 2005, to 1,063,00 in 2006, and then just 1,017,000 in 2007. Information International estimates average expenditure of tourists visiting Lebanon at about $1,000. According to figures provided by the Ministry of Tourism, about 984,000 tourists came to Lebanon this year excluding the months of October, November and December, which will most likely witness growing numbers with the Adha and Christmas holidays, thus possibly reversing the trend of the past years and restarting a growth in visitor numbers.
Chamsedine estimates that one of the main obstacles to the development of the tourism sector resides in the weakness of its budget, estimated at $7.8 million in 2008. “The contribution of the tourism sector to GDP varies between 8% and 11% but it is difficult to assess if one takes all other sectors involved, such as the retail industry, that without a doubt contribute indirectly to it," said Pierre Achkar, head of the Lebanese Hotel Association.
Independent economist Ghazi Wazni adopted a more conservative estimate, bringing the figure down to about 6%, comparing it to the Gulf countries’ 15% level. “In 2007, the sector’s growth was at 9% in various Arab countries, while it was nearly negative in Lebanon. Lebanon also lags behind in terms of investment in the sector,” he explained.
In the last few years, hotel industry growth plummeted due to the 2006 War, as well as to the multiple political crises that shook Lebanon. “The situation was a real disaster until the month of May, when the Doha Accord was struck. Occupancy in hotels located outside of Beirut did not exceed 5-7% and only reached 20% or 30% for hotels in the capital. After Doha, the situation improved dramatically, with hotel occupancy reaching 44% in June, 65% in July and 90% in August. This also reached hotels outside Beirut where reservations were rerouted when the capital’s hotels were overbooked,” said Achkar.
The head of the hotel syndicate explained that Lebanon remains a very attractive destination for tourists because of the country’s natural beauty, the hospitality of its people and the lifestyle they lead, the affordability of prices relative to the region as well as the quality of the service provided by industry players.
As hotels, travel agencies and restaurants slowly emerged from their 2006-08 slumber and came back to life, they were accompanied by a flurry of cultural activities such as festivals, estimated this year at about 60 by Nada Sardouk, general director at the Ministry of Tourism. “The number of incoming tourists also grew due to the facilitation of visa procedures for over 36 countries, a process which was jump-started by the late Prime Minister Hariri. During his recent trip to Egypt, Prime Minister Fouad Saniora discussed easing up visa formalities for Egyptian tourists. A distinction was established, however, between working and tourist visas,” Sardouk added. Despite these optimistic developments, some nationalities were scared away by their countries’ negative travel advisories, like in the case of Saudi Arabia, after threats were voiced against their governments.
The director said that the number of restaurants grew by about 325 venues, while some 20 new hotels and residences opened their doors. “Investments in the sector are increasing significantly, which in the case of hotels are usually a mix of Arab and Lebanese capital, while the restaurant business is essentially funded by locals,” Sardouk said.
The restaurant business has been booming as well. During the last two years more than 300 new restaurants have been launched, mainly in the Greater Beirut and Kaslik areas, according to Paul Ariss, president of the Syndicate of Restaurant and Café Owners. Ariss estimated that about 70 venues opened in Gemmayzeh and Saifi, 10 in Ashrafieh, 50 in Hamra and Verdun, 40 in Antélias and Dbayeh, 30 in Kaslik and Jounieh and 10 in Batroun.
Sardouk explained that most restaurants setting up shop in Lebanon are not snack venues but rather high quality gourmet restaurants. “Some investments that poured in are massive, as an example we have witnessed that the cost of the land alone for one project was $4.5 million. Smaller projects usually vary, however, between $200,000 to $500,000,” she added.
However, not all is rosy. Ariss pointed out that in Beirut’s downtown, not all restaurants have reopened their doors, with only 40-50 restaurants, out of 104, resuming operation. “Despite the dramatic events in 2006 and 2007, restaurants located in the North, the South, the Bekaa and Mount Lebanon did succeed in keeping up, since they mostly are owned and run by families with very low operational costs,” he added.
One of the main setbacks for the tourism sector is the brain drain that occurred in Lebanon in the wake of the 2006 and 2007 events, forcing thousands of skilled laborers to look for jobs abroad. “This happened at a time when the economies of Dubai, Abu Dhabi, Qatar, Kuwait and Saudi Arabia were booming and investments in hotels and restaurants were skyrocketing. Although most universities have high-level hospitality schools and there are a few recommended technical schools, the graduating staff does not comply with the local and regional demand, leaving a gap on the level of the local market in term of recruitment,” explained Ariss. Moreover, the increase in local restaurants and the high number of franchises of Lebanese concepts — not only Lebanese food — have created a very sharp demand for skilled labor.
Lebanon has also been unable to recover regional levels in terms of business conferencing. “Hundreds of conferences take place every year in the region, of which Lebanon is unable to attract more than 20,” said Chamsedine.
The Lebanese forté
However, Ariss was keen to emphasize that “the strengths of the industry in Lebanon remain in the dedication, innovation and professionalism of market players. As an example, during the last four years more than 30 restaurant companies, such as Casper & Gambini, Waterlemon, Burj Al-Hamam, Kabab-ji, Crepeaway, Zaatar w Zeit, Roadster Diner, Lina’s Sandwiches, etc. have been signing more than 400 franchise contracts in the Arab countries. This is living proof to the strength of the industry, whether nationally, regionally and someday internationally. Most of these companies are ISO-certified since they have been trained with Qualeb and ELCIM.”
As long as political stability remains, Lebanese emigrants, Lebanese expatriates and foreign visitors will arrive steadily. “The tourism industry will keep on expanding and pulling up its share of the GDP from 10% to more than 15% in 2012,” Ariss claimed. According to Sardouk, VAT figures from tourist activities improved by 40% last year and some 1.2 million tourists will have visited Lebanon by the end of 2008, in addition to the one million Lebanese expats who flock annually to their home country.
Achkar concurred, saying that most hotels around the country are fully booked, while he added that he doubts the global financial crisis will directly affect Lebanon. Achkar explained that although the crisis may impact investment levels, it will not hurt actual tourism figures. “Lebanon has an excellent year, ahead provided stability reigns over the country in the coming months,” Achkar concluded.