With the electricity more off than on, it has been a hot, yet so far quiet summer. No waves of swaying black abayas in ABC and while Beirut’s hotels would normally be fully booked, a room these days is easy to find, often against bargain prices. A quick Internet search shows that a five-star Saturday night in mid-August costs $495 per room at the Movenpick Hotel and Resort, $240 at the Phoenicia Intercontinental, $135 at the Hilton Beirut Metropolitan Palace (down from $328!) and only $99 at the Commodore Hotel.
Now, Ramadan traditionally is a quiet time in terms of travel, yet a similar search for a Saturday in September again shows ample availability and only slightly higher prices. Surprisingly, the tourism sector’s main indicators at first sight do not seem all that bad. During the first five months of this year, 557,188 foreigners flocked to Lebanon, which represents only 6.5 percent decline compared to the same period last year. According to Ernst & Young’s survey of the Middle East hotel sector, the average occupancy rate at Beirut’s four and five-star hotels was 66 percent in the first five months of 2012, a 14 percent increase from the same period last year.
But these figures do not tell the full story. First, one should not forget that 2011 was already a precarious year. Only 1.65 million tourists visited Lebanon, a 23.7 percent decrease compared to 2010.
Secondly, the make-up of foreign visitors has changed. Most Arabs visiting Lebanon until June were Iraqis (48,125), Saudis (44,907) and Jordanians (39,744). Asian tourists recorded the sharpest decline, mainly due to the only 16,525 Iranians, an 80 percent drop compared to last year.
It illustrates the main issue at stake for Lebanon: Syria. Most Iranians normally visit Lebanon as part of a pilgrimage along the main Shiite sites in Syria. Yet, as Lebanon’s eastern neighbor has grown more and more dangerous, less and less Iranians go on holiday. The same is true for those Gulf Arabs and Jordanians — in 2010 the biggest group of foreign visitors — who tend to visit Lebanon by car.
In addition, following violent clashes in the streets of Tripoli and Beirut, the governments of Qatar, Kuwait, Bahrain and the United Arab Emirates in May urged their citizens not to travel to Lebanon. In early June, Saudi Arabia issued a similar warning. Many Lebanese believe the warning is partly politically motivated, as the Gulf Cooperation Council supports the Syrian opposition, while Lebanon’s government remains on somewhat good terms with the Assad regime.
“Until May 21, we had a relatively good year, but after the warnings we immediately felt the impact,” said Roger Saad, Director of Sales at the Four Seasons Beirut. “In July, we had an occupancy rate of only 55 to 58 percent, which is still not too bad seeing the circumstances. August will be much quieter, although we expect a strong pick-up to up to 85 percent for Eid at the end of August. Of course, we will have to wait and see. One major incident and all reservations are cancelled again.”
Following the travel warnings, Lebanon’s Tourism Minister Fadi Abboud headed to the Gulf claiming the reports about unrest in Lebanon were “exaggerated.” In July, Lebanon’s President Michel Sleiman followed in his footsteps. The efforts should not come as a surprise, knowing that tourists from these countries represented only 13 percent of foreign arrivals in 2011, yet were by far the biggest spenders.
Even this year, despite the decline in numbers, Global Blue, which maps shopping trends by analyzing VAT Returns, concluded that the biggest spenders were still Saudis, Emiratis and Kuwaitis, with a combined 41 percent of the total. Some 85 percent of their purchases concerned clothing and jewelry. According to Lebanon’s Ministry of Tourism the sector in 2010 contributed some $8 billion to the economy, or 20 percent of Lebanon’s gross domestic product. This decreased to some $7 billion in 2011, and this year it is feared it may drop below $6 billion.
The tourism toll
One of the main sectors affected is the hospitality market. “On July 2, Beirut high-end hotels reported an average occupancy rate of 74.5 percent, while over the first 6 months of 2012 the average occupancy income went up by 35 percent,” said Pierre Achkar, president of the Lebanese Hotel Association (LHA), as well as chief executive of the Monroe Hotel in Beirut and the Printania Palace Hotel in Broumana.
“However, that is only in Beirut, not in the rest of the country,” he continued. “Beirut’s high-end hotels will always attract corporate clients. Outside Beirut, that is hardly the case. The situation is extremely bad. At the Printania, we often have occupancy rates of 10 percent, which may go up to 40 percent on a very good day.” Achkar cited the negative travel advice or “embargo” as one reason for the malaise. Another, especially for places such as Broumana, is the situation in Syria, as most tourists who travel to Lebanon by car tend to stay in homes and hotels outside the capital. “Since the uprising began, we may have lost some 350,000 to 400,000 visitors coming through Syria,” he said.
The LHA figures for last year confirm the trend. By the end of 2011, over a third of Lebanon’s 18,593 hotel rooms belonged to 58 high-end hotels. While Beirut’s 5-star hotels in 2011 posted an average room occupancy rate of 53.56 percent, occupancy rates in 5-star hotels outside Beirut varied from 21 percent to 34 percent. The same was true for the country’s 4-star hotels.
The knock-on effect
The absence of tourists is not the hotels’ only problem. “In Broumana we do not have electricity for 16 to 18 hours a day,” said Achkar. “Still, people want AC and as we have a central cooling system that costs us about $1,000 a day. Also, we normally employ some 52 seasonal workers in summer, mostly students. This year only 11, as we have to bring our costs down.” While business has not been as bad for Beirut’s high-end hotels, they too have taken measures. “Nothing dramatic, but we must limit our overhead,” said Saad of The Four Seasons Hotel. “We are keeping our expenses down and spend less on ads and business trips. No one has been laid off yet, but we are pushing employees to take their (paid) holiday now.”
Paul Ariss, president of the Syndicate of Owners of Restaurants, Cafes, Nightclubs and Pastries in Lebanon, emphasized the problem did not start this summer. According to him, the sector’s combined turnover since early 2011 has taken an estimated 40 percent hit. However, he also stressed that not all venues have been affected in similar fashion, as some in particular target tourists, while others mainly depend on a local clientele.
He estimated the number of tourists normally traveling by car through Syria at some 40,000 a month. “There have so far not been more closures than normal, but we have seen some take-overs,” he said. He did not know how many Lebanesee lost their jobs, but signaled that, for more than a year, bars and restaurants have employed more and more foreign laborers.
Both Ariss and Achkar remained positive, however. “We don’t care and just keep up,” said Ariss, while according to Achkar recovery in Lebanon is always rapid. “Arab nationals own some 35,000 to 40,000 homes in Lebanon, so they will come back sooner or later,” he said. “And look at 2006. As soon as the war was over, tourists were back. The same was true in 2008. Following the Doha Accord, we had a 100 percent occupancy rate within a week.”