With so many foreigners and expats altering their vacation plans to avoid Lebanon this summer, it is no wonder the hospitality sector, which relies heavily on tourism, is struggling.
According to statistics by the Ministry of Tourism, the number of tourists entering the country this year, until July, had decreased 12 percent in comparison to the same period last year, which was already weak tourism-wise. Hotels, which usually rely on the summer to make their profits, suffered the most this year and median room occupancy was around 45 percent — even with deals on lower room rates — when usually it is between 55 to 60 percent, according to Pierre Achkar, head of the Lebanese Hotel Owners’ Association.
He says the first half of 2012 saw hotel occupancy percentages rise as compared to the same period in 2011. Last year started terribly, says Achkar — noting the collapse of the Lebanese government in early 2011 and the beginning of the Syrian uprising — but the situation improved with the formation of the government in June, and this spilled over to create a comparably good first half of 2012. “The numbers deteriorated by summer 2012, with the spread of Syria’s troubles to Aleppo and Damascus and the associated difficulties in reaching Lebanon by land,” says Achkar, adding that hotels have experienced an almost empty summer.
In line with Achkar’s assessment, though declining to provide numbers, major hotels in Beirut have admitted to an unusually quiet summer, especially during the Eid period after Ramadan, which is usually abuzz with tourists. According to Christophe Hazebrouck, general manager of Le Gray Hotel, contingency plans hotels have adopted to weather the crisis include cost savings, such as sending employees on vacation, and business plans like targeting other countries and promoting attractive room packages.
The main blow for hotels this season, according to Achkar, was the travel warning on Arab tourists, as they account for 60 percent of a hotel’s business. He says he sees thoughts of replacing Gulf Arab tourists with others as irrational: “We can diversify our base, but we cannot replace them as no one will spend as much as them or even visit as much as them, especially since they are so close to us distance-wise.” says Achkar, giving the example of a Saudi tourist who prepaid for 56 weekends in Lebanon at a certain hotel beginning in the summer of 2010.
To aid them through these difficult times, the Hotel Owners’ Association is appealing to the private sector and the government: “We are approaching the central bank, Al Kafaat Foundation, the association of banks and the prime minister and asking for the following: financial support for fuel, a one-year grace period for our loans which we usually pay at the end of the summer and a subsidization for the National Social Security Fund and taxes.”
As an immediate solution to the tourism crisis, the association suggests working on monetary incentives to attract the Egyptian, Iraqi, Jordanian and Syrian tourists, who are still coming to Lebanon despite everything. “Instead of wasting the ministry’s budget of $3 million to $5 million a year promoting Lebanon to European cities which usually don’t visit the country, it would be better to use this money to target the Levant tourists and provide them with charter planes or discounted plane tickets,” says Achkar.
Empty seats at the table
Restaurants, cafés and bars in Lebanon are also feeling the effects of the unstable regional and internal situation. The Syndicate of Owners of Restaurants, Cafés, Night Clubs and Pastries in Lebanon pegs the number for such venues in operation at 6,000, accounting for 9 percent of the total employment in Lebanon. A decline in this industry would therefore have a noticeable impact on the country’s economy.
In line with Achkar, Ziad Kamel, treasurer of the Syndicate, sees 2012 as the worst year for the hospitality sector since 2006 (when the July war with Israel occurred). “The year 2007 showed some growth, which continued steadily until 2011 when the situation stagnated and then plummeted to the 40 percent decrease in turnover we are experiencing now,” explains Kamel.
Offering explanations for this decrease, Kamel says: “All types of establishments in our business are affected due to the travel bans on the Arab tourists, the expats not returning as much this summer and the war next door which is spilling over to Lebanon. With all that is going on, who would choose to come to Lebanon for a vacation?”
Speaking about his own restaurants and those of his colleagues, Kamel sees that people are not going out as much and consumer confidence is low. “In such uncertain times, it seems local residents are in crisis mode and tend to save their money in case they need it for something more important than going out,” he says.
Kamel says the industry has seen closures as a result, especially in areas like Aley and Bhamdoun, as well as restaurants in downtown that mainly depend on Arab tourists.
“The people with investments in the country cannot hold on for much longer,” he says. “We, the restaurant owners, already have a lot to deal with from outdated laws and license procedures to competition without the added concern of the security situation. Investor confidence is down and national expansions are being put on hold.”
Using himself as an example, Kamel’s own expansion plan for Couqley, a restaurant he founded in Gemmayze, has been delayed.
Achkar believes Lebanon has seen worse, and believes Lebanese expats will return, in small numbers, for the Adha holidays, should the situation remain relatively stable. On the issue of tourism, however, Achkar believes it is too far in the year to see any real change in numbers.
“Only regional security and internal stability will get the tourist back. Once we have those, they will come to Lebanon without us having to do any promotions,” says Achkar. Until then, the hospitality industry has no choice but to hang on and try to be creative.