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Pierre Achkar

President of the association of hotel owner

by Thomas Schellen

Year after year, hotelier Pierre Achkar has been the voice highlighting the concerns, needs and demands of local hotel operators and their occasional ideas for new strategies to market destination Lebanon. Executive visited the president of the Association of Hotel Owners at his office in his Printania Palace hotel in Broumana to find out where brighter spells prevail in the tourism gloom of 2013.

We would like to understand the positive things, if any, that are happening in the Lebanese hotel industry this year.

A hotel is an operation and a real estate investment. The only positive thing [at this time] is that the real estate is retaining its value. The property gains about 5 to 6 percent value each year. This is the minimum added value and the only positive thing that you see financially. The other factor to note is that the airports in Syria are closed and everybody is going through Beirut airport. This is giving us a few overnighters. In terms of the business community, Beirut is the place to meet for the Syrians, especially with their contractors or partners from Europe. The business community is the only group that is giving us the occupancy that we have at this moment, especially in Beirut.

How do operators fare outside Beirut?

Outside of Beirut, we used to have a very big problem because people have not been coming to Lebanon for holidays [in the first part of 2013]. But just after Ramadan, we feel that Syrians are giving us added occupancy and the hotels outside Beirut are running now between 30 and 35 percent occupancy.

What is the main operational concern for the hotel owners?

The disadvantage at this moment is that intense competition has lowered the prices 50 to 60 percent below the prices that we used to have, especially in the summer. If we take our income, we are 36 percent less than in 2012 and 54 percent less than in 2010.

Do you have a view of how many hotels are under threat of closure?

All hotels are partially closed. You have hotels that didn’t open [this summer] because they know that if they open, they are going to lose money. They might take a board decision to keep the property closed because it is better not to lose. It does not mean that they have a very big financial problem or are going into bankruptcy.

How many hotels are members of the association?

Around 250.

How many hotels are there, which are not members of the association?

Around 200. But in Beirut and Mount Lebanon we represent 85 percent of all hotels.

When you refer to the hotel as a real estate value, it appears that we are talking more about an underlying asset value than a hotel business. How large is the operational value in comparison with the real estate value?

Especially in seasonal hotels, 95 percent of the value is the property and the added value on the property. That is why we are looking at a new concept of merged financial operation between hotel and real estate. It is called condo hotels. The concept is based on selling the rooms and the apartments and when you sell an apartment, people are looking to real estate value, not return on investment.  

This is a business model that you see as a possible way forward for some of the renowned mountain hotels in Lebanon?

Yes.

And the association is proposing legislation that makes this possible?

Yes.

What is required there?

We need a law but the problem is that we don’t have a government.

From your perspective on the industry, what needs to be done right now?

Nothing. I cannot do anything.

What can the hotel owners’ association do to prepare for better business in the time after the crisis?

Recovery in Lebanon is very quick. After the 2006 war, within ten days we were fully booked and in 2008 after they signed in Qatar, they were fully booked after 10 days. Give us stability and security and we don’t need anything.

Is there any significant activity that the association is planning for the coming months?

We are discussing a lot of things, especially for the mountain hotels to have a 5-year tax holiday.

You are not planning activities such as employee training during the downtime?
We have no money for that. All hotels are partially closed and we are managing a crisis, looking at items such as switching off the lights in rooms that are not used. 

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Thomas Schellen

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