Cornering niche tourism markets

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Tour operators report a 50% improvement in bookings over 2003; the streets of Bhamdoun are rocking; guides are having the best summer in three years and their busy season increased to six months…. But Lebanon wants more tourism. EXECUTIVE details how the country can get more by taking a look at tourism niches and sub-niches that have development potential or even untapped capacities.

Healing the body

Health-related travel is an international tourism market niche to which local experts attribute enormous inbound potential. A broad coalition from the public and private sectors has begun efforts to unleash this potential by cultivating a sub-specialization of health tourism, called medical tourism, and the first results are coming in.

In June, Lebanon’s National Council for Health Tourism (NCHT) counted 40 to 50 patient arrivals here from regional countries, marking the beginning of what is hoped to become a huge activity for Lebanese hospitals, doctors and hospitality providers. “Every year, Arabs spend over $3 billion on health treatment. We have a stock of excellent doctors who studied in 58 countries. That is why we can claim to be an alternative source to developed countries in provision of health services. We have accreditation of a standard that no other Arab country comes even close to,” boasted Khalil Malaeb, general manager of K&M International Health Tourism.

His company received a commission by the NCHT – an entity formed under participation of five government ministries and five private sector syndicates – to organize and market Lebanon’s health tourism project worldwide. Work on the project started one-and-a-half years ago with measures to set up the infrastructure of local networks and international agreements, Malaeb said, and once the system is rolling, local providers should expect clients to come “by the thousands.”

The elements that make Lebanon an attractive destination for medical tourism in the region and possibly beyond are a superb price-cost ratio offered by clinics and practitioners here and 140 years of excellence in the field, Malaeb claimed. In developing the potential NCHT does not rely on approaching individual patients but tries to establish a systemic supply through agreements with governments and insurance companies in partner countries and through alliances between hospitals.

According to Malaeb, first operational accords were established earlier this year with Kuwait and Dubai, and government-to-government agreements with three countries in the Gulf and North Africa are currently in the process of being completed.

By NCHT expectations, most patients coming to Lebanon, often accompanied by family members, would stay anywhere between several days and a few weeks to undergo operations for a range of internal ailments of heart, liver and other organs. However, first arrivals already also included patients seeking longer treatment for cancer and degenerative diseases.

A second very significant client group presenting strong revenue potential for local surgeons are persons signing up for plastic surgery. With costs starting around $1,500 and the duration of the procedure taking a maximum of one week, including all medical follow-up, plastic surgery has become a preoccupation for vastly growing numbers of women and men from around the region, and Lebanon has already gained a reputation as a center for such treatment.

If the formula for medical tourism becomes as successful as expected and hospitals fill up with patients whose treatment costs are paid (upfront) by their foreign healthcare providers, it would constitute a healthy inflow of revenue – for which no projections are available – and also lead to a follow-up creation of rehabilitation clinics, convalescence homes, and purpose-built accommodations for family members in the vicinity of major hospitals. For the moment, the network employs existing hotel facilities to serve clients, offering numerous options on cost and class of treatment and hotel stay.

The beach

In core qualities, the new prime-grade Lebanese beaches should have no trouble competing with many of the top destinations. Whether at an undeveloped beach in the south, or at any of the leading new resorts in Rmeileh, Jiyeh, Damour, and Byblos, one sees a different and distinct beauty confirming the country’s age-old spell as a land of splendor.

Cleanliness has been a problem on Lebanon’s coast, both due to absence of wastewater treatment facilities and because of prevalent picnickers and beach revelers who don’t remove their own trash. But with the emergence of carefully managed new seaside fun spots over the past four years, private sector operators have shaped stretches of noticeably clean resort environments. As the beach resort business is expanding, it hopefully will bring continued impetus in the creation of environmentally responsible recreation sites and push municipalities and national authorities towards more effective action in remedying the deplorable state of handling liquid and solid wastes.

Competition pressures among resorts seem to have thus far stood against the establishment of a dedicated association or syndicate and defining of joint standards by operators. But one only needs to compare the diverse features of, for instance, Oceana in Damour and the Edde Sands Resort in Byblos to be immediately convinced that the offerings of classy places complement one another, and the more originality and variety in style they provide, the better.

The establishment of sophisticated and affordable beach resorts that are able to comfortably accommodate capacity crowds is still a relatively young development. Thus, the new leisure attractions operate under challenges to achieve returns on their investments ranging from $1.5 to $10 million, satisfy their mainstay local customers and raise the image of a Lebanese beach vacation among European holidaymakers, who account for the vast majority of international tourists on Mediterranean beaches.

All is not eco

In the worldwide growth sector of eco tourism, Lebanon recently claimed to have many chances, reaching from participation in reforestation and environmental projects to adventure travel and agritourism. However, the sector is not really in gear. “I am afraid to have to say that the sector is very weak. We don’t have a profile of eco tourists coming to Lebanon from abroad,” said Pascal Abdallah, general manager of Cyclamen, one of seven local companies specialized in the sector.

What these companies currently can produce, accounts for far below 5% of the entire tourism turnover in Lebanon, he told EXECUTIVE, and companies cannot offer eco-tourism in the real sense, which relies on experiencing nature non-intrusively. “We do not yet have a national policy on eco-tourism. We are restrained to providing responsible nature tourism,” he said.

What are promoted mostly in the still very small sub-sector are sports and adventure tourism trips. Many of the recent providers of these programs are enterprises evolved from informal beginnings in hiking clubs and youth organizations. The issue of eco tourism is viewed as very important at the ministry of tourism. This notwithstanding, no formal department for eco tourism has been instituted and the issue of nurturing eco tourism is handled by members of the ministry “as a hobby.”

Agritourism projects have been proven viable by academic research but are still small or even merely conceptual, with wine tourism as the specialization seen as having the best potential to become a niche attraction for tourists. Lebanon did hope to claim a modest spot in this lucrative sector (Australia wine tourism brings in $500 million to rural Australia annually, with a near 100% increase in the number of tourists since 1991). However, this initiative has stuttered in recent years. In 2001 UVL put together a formal itinerary for wine tasting tours called Le Route du Vin, but the post 9/11 drought of Western tourists virtually stymied the plan at birth.

Globally, the typical wine tourist falls into three categories: aged 40 to 60, childless couples or those with a higher than average education and income. This is a growing demographic group and one that would appreciate Lebanon’s other cultural attractions. Apart from the vacationing expatriates, the wine growers had counted on these enlightened 40-somethings, mainly from the UK and Germany, to make the journey to the Bekaa wineries.

Currently, only Kefraya, Ksara (which receives 40,000 visitors a year) Massaya, Clos St. Thomas and Clos De Qana offer genuine hospitality services. Cave Koroum is putting the finishing touches to a not insignificant wine resort in the village of Kefraya. The winery is arguably the biggest in the Middle East and has a restaurant, tasting room and hotel to match.

Massaya, a younger but forward thinking winery, has introduced weekend buffet lunches and last year held blues and jazz concerts in the vineyards. This summer, the winery expects to receive nearly 10,000 visitors and has added more concert dates. Others have taken the lead: Clos St Thomas in Qab Elias holds regular lunches and star watching evenings.

Gaming, shopping, and festivals

Lebanon is always a good place to leave money, and there’s nowhere easier to do that than the Casino du Liban. From 1959 until deep into the civil war, it achieved a legendary career as place where the rich, famous and reckless gambled their fortunes. Show designers from Las Vegas are said to have come to Maamaltain in the casino’s heydays to pick up entertainment ideas.

Today, the casino again is a fixture of the region’s entertainment scene as the Middle East’s largest gaming establishment. Night after night, its silhouette outlined with brightly flashing stroboscopic lights dominates Jounieh Bay and the pulling power of its gaming rooms and the new risqué “Lipstick” show often turns the shoulder of the Byblos-Beirut freeway into a parking lot.

According to a Casino du Liban spokesperson, the establishment has been increasing its advertising and promotion activities in Arab countries in recent years, and regional visitor flows are growing steadily. How big is this niche exactly? Until comprehensive surveys of visitor behavior are conducted in Lebanon, it will remain unclear just how many of our 438,203 Arab visitors from 2003 found their way into the gaming areas and how many of the roughly 130,000 hotel guests from the Gulf region flew to Beirut specifically and solely for a casino vacation.

What is certain is that the casino patrons are esteemed spenders. The casino’s auditors have held back on releasing the establishment’s books over the last three years, due to unresolved tax disputes. But with pre-tax dividends of $50 on each $145 share (OTC) for 2003 and fiscal participation of 30% in the casino’s annual turnover of an estimated $88 million, investors and fiscal coffers, and to a smaller degree the national economy, clearly enjoy a profitable inbound tourism niche here. Retail shopping was historically embedded in Lebanon’s function as the Middle East’s trading post, back when people from the entire region came to Beirut to shop for goods ranging from abayas to household furnishings.

However, attempts in the mid 90s to run month-long Lebanon Shopping Festivals failed to re-establish Beirut as a retail tourism destination in direct competition to Saudi Arabia’s shopping mall culture and Dubai’s mega sales spectacles. Today, summer sales periods in Lebanon have become successful in attracting regional guests, and for visitors from Levant countries, the wide choices in retail commerce continue to make Beirut a real shopping destination.

Tourist preferences in retail purchases and the share of these expenditures in their overall spending can only be estimated, demonstrating the need for more detailed research into consumer groups and behavior. “They spend a lot on food, a lot on clothing and ladies leave much money at the beauty salons,” said the PR manager of a major Beirut resort hotel with many Gulf customers. However, her colleague at another top house with a large GCC clientele responded that the city is not seen as a major shopping destination by guests in the hotel.

Statistics on Value-Added-Tax refunds still provide the best indicators that are available on the role of retail in inbound tourism. After the program was instituted in 2002, VAT-refunds were reimbursed to visitors to the tune of over $1 million over 12 months. Respective purchases by tourists in the range of $10 million to $20 million in one year would hardly make for a national retail salvation. However, concentration of refunds in certain item categories – 62% of refunds were on clothes and 12% on jewelry/watches – and large shares of foreign-bound sales at some retail outlets suggest that Lebanon’s retail sector has destination potential in a few micro-niches.

While they may not qualify as a destination that people travel 2,000 kilometers to visit, specialized up market clothing retailers Aïshti are an example of an enterprise that attributes a massive share of its sales to non-residents. With the incentive of VAT tax refunds, the retail streets of Beirut’s Hamra and Verdun districts could in the past two years again count on tourism as income boosters during the summer and religious holiday seasons. Large retail projects under development around the capital also count on Arab visitors in their feasibility predictions, and the ABC shopping mall in Ashrafieh in its first summer season is visibly successful in drawing in Arab visitors who otherwise seldom found their way to the quarter’s retail scene.

Like gaming and shopping, music festivals have long been well-known fixtures of Lebanon’s tourism infrastructure. The Baalbeck Festival contributed to establishing the country’s international profile since its renewal in the late 90s, thanks to coverage of festival events by foreign media, festival committee member Leila Bissat told EXECUTIVE, but she agreed that “the Lebanese and expatriates” traditionally comprised the main clientele.

This could change. Numbers of cultural festivals are mushrooming, with locations from Aanjar to Zouk Mikhael adding their profiles to the list of summer entertainment. The majority of these festivals are seen as value-added to the community and perhaps domestic attractions, but some virginal events, such as the Beirut Jazz Festival held last month for the first time, are aiming to make it onto international event calendars.

With the impressive portfolio of cultural backgrounds and settings of Lebanon, festivals have the potential to reach more international fans. At Baalbeck, special performances by world famous artists such as Placido Domingo this summer proved suitable to attract tourists from Jordan, Syria and other Arab countries, Bissat said. And like other festivals, the Baalbeck planners are looking at cruise ships stopping over at Beirut Port for opportunities to organize excursions to festival events.

Some events even aspire to stardom. “This is our first year, in which we want to build the legend of the festival,” said Roland Barbar, the conceptual director of the Byblos Festival. After the festival changed its format into a composition of ticketed performances and a series of free concerts in the consecutive off-Byblos event, he is confident that the annual spectacle will make it to the world agenda within the next three years. The festival, with 24,000 sold tickets in 2003, is certainly on course to achieve financial feasibility.

It would be stretching things to assume that the Byblos Festival and its peers in the assembly of Lebanese summer events could aggregate into a cultural and fun profile that let the country acquire stature akin to the model of global leaders, like the Edinburgh Festival. But by the quality of settings and the enthusiasm of the growing fan base, good music and great moods, festival packages here seem disposed well enough to become the region’s hub and the bridge of cultures between Europe and the Arab world.

Thomas Schellen

Thomas Schellen is Executive's editor-at-large. He has been reporting on Middle Eastern business and economy for over 20 years.