In our July issue, Executive devoted a special section to the tourism sector in Lebanon. Like the rest of the country, we eagerly anticipated a record season in 2006: the tourism ministry predicted 1.6 million tourists would enter Lebanon this year, and estimated the value of the sector at around $4.5 billion.
On July 12, these dreams abruptly ground to a halt. The following days saw desperate tourists flee the country en masse; festivals and concerts were cancelled; restaurants, hotels, nightclubs and beach resorts shut their doors. The crucial sector is now on hold: according to industry experts, the future of tourism in Lebanon hinges on the type of settlement reached at the end of the conflict. Anything less than a comprehensive solution will spell its permanent demise; if a lasting settlement is achieved, there is a chance the sector may bounce back stronger than ever.
“It’s really a catastrophe,” lamented Nada Sardouk, Director-General of Tourism. The industry is suffering from a host of direct and indirect losses, in every corner of the country. Tourist infrastructure was not spared in the Israeli bombardment: the damage done to beaches alone by the disastrous oil slick from Israeli attacks on the power plant at Jiyeh may cost billions to repair. The losses in services are similarly staggering, with occupancy rates down at hotels and restaurants, and businesses like travel agencies and car hire firms largely irrelevant in wartime Lebanon.
According to Pierre Achkar, president of the Lebanese hotel syndicate, 75% of hotels are currently at under 10% occupancy. Although the remaining quarter enjoys better rates, hosting displaced Lebanese and foreign media, these numbers will continue to slide as the displaced seek more permanent, cost-effective accommodation.
Debts called in
Numbers for the restaurant sector are even bleaker. Syndicate President Paul Arif estimates losses at approximately $800 million already. Restaurants in the BCD, which has been reduced to a virtual ghost town, have been especially hard-hit. In addition to the loss of revenues, the restaurant sector faces the costs of paying some 75,000 employees partial or full salaries for July and August.
Moreover, of the thousands of new restaurants that have opened in the past six years, Arif estimates as many as 90% raised debt from the banks: “If the banks don’t set up a contingency plan to drop interest payments, many restaurants will go bankrupt.”
According to Sardouk, the Tourism ministry is already working as a liaison between investors in the sector and parties they’re indebted to, helping to postpone financial dues.
“No one can imagine how many people work in the tourism sector, especially this season,” she explains. “They all have loans out; now they’re making nothing but they still have to pay back.”
The greatest losses, however, are the least tangible: those incurred by the damage to the country’s image as a tourist destination. Sardouk notes that 2006 was supposed to be Lebanon’s “confidence year,” after years of development and campaigning. Instead of challenging Lebanon’s image as a war-torn nation, however, the events of July obviously reaffirmed this perception.
“Look at the evacuations,” ventures Sardouk. “What can we sell to these hundreds of thousands of people who were driven onto boats and treacherous roads, trying to escape the country? People have suffered here.”
Achkar agrees that if the sector is to recover, changing Lebanon’s image from a place where war can break out unexpectedly will be crucial.
“Confidence is related to the political solution,” he argues. “If Hezbollah loses its arms, that would be a final solution. And if we have a final solution, I will be optimistic.”
Arif is more optimistic still. He suggests that with a comprehensive resolution, tourism in Lebanon could start to recover within months – although it may take longer to lure back Europeans, he believes Gulf Arabs would return as soon as Ramadan this fall.
Au revoir or goodbye?
In the meantime, the tourism sector, which we described just last month as Lebanon’s “crown jewel”— a sector that offered so much promise and optimism—has become one of the most striking examples of Lebanon’s collapse. It is too early to assess direct losses to the sector, and a calculation of total costs may be impossible: tourism, after all, depends not only on restaurants, hotels, and attractions, but also on the infrastructure that permits people to travel to them, the integrity of the environment and structures that comprise venues, the people who provide services, and innumerable other factors.
The costs, however, will be nothing short of staggering – early estimates put the number in the billions of dollars. And damage to the morale of the Lebanese and the will of foreigners to visit may be even greater still.
In the absence of a lasting resolution to the war, the future of tourism in Lebanon is very bleak indeed. The past few weeks have shown that war can rise up suddenly at the best of times in Lebanon: as long as this continues to be true, few people will risk investing their time or money in the country. Sardouk spells it out in very stark terms:
“If there isn’t a total and eternal solution, don’t speak anymore of tourism in Lebanon. We should say goodbye to it forever.”