On May 31, when beach clubs and resorts were given the green light to open for the season, following the government mandated COVID-19 lockdown measures, operators of such properties were faced with a dreary grey seascape.
Not only did they need to learn and invest in new sanitization protocols in an attempt to severely reduce the risk of exposure of their staff and clients to the pandemic, they also had to deal with the implications of the ongoing economic and COVID-19 related crises in Lebanon.
On the demand side, these implications included less people willing to spend on leisure, because of their collapsing purchasing power, and some avoiding crowded places, even if outdoors, for fear of being exposed to the coronavirus.
On the operational side, the increase in the foreign exchange rate has meant an increase in almost all the costs beach clubs and resorts incur, including diesel for generators and chemicals for pool hygiene.
With this in mind, Executive met with some of Lebanon’s beach club and resort operators to understand how the current situation is impacting them and the ways in which they are adapting.
Paying the price of a swim
While there are several public free beaches along the Lebanese coast, such as the ones in Sour in the south or Anfeh in the north (see Executive’s 2018 coverage on public beaches), the majority of the shoreline is taken up by private beach clubs (private properties where customers have to pay a fee to access the pool area and services) or resorts (a similar concept to a beach club but with a hotel on the premises), both of which charge entrance fees.
Those fees have been gradually increasing over the years. Back in 2015, Executive reported that the average entry fee for a beach club in Lebanon was LL40,000 on a weekend day. In summer 2019, according to the beach club operators Executive spoke to this year, average weekend day rates were LL45,000.
This summer, three of the six beach club and resort operators Executive spoke to, Sporting Beach Club in Beirut, and Lazy B and Pangea Beach Resort in Jiyeh, say they have increased their entry fees by LL5,000 (meaning LL50,000 during weekend days), an 11 percent increase from 2019 and a 25 percent increase when compared with 2015. Comparing these price increases to the Central Administration of Statistics’ Consumer Price Index (CPI) in the same period underlines the difficulty businesses have in matching admissions to rising costs without becoming unaffordable for potential clientele. Between 2015 and 2019 the CPI had only increased by 14 percent (from 97.22 at the start of the summer season in June 2015 to 110.69 in June 2019) in line with the price increases at beach clubs and resorts, but between June 2019 and June of this year, the CPI has jumped up by 87 percent (up to 206.83)—had admission fees followed suit they would have been as high as LL84,000.
Operators Executive spoke with say they will not be increasing their entry fees any further this summer, for fear of discouraging customers from visiting. “We are not going to play around with these prices at all this season,” says Waleed Abu Nassar, partner at Sporting Beach Club. “Because at the end of the day, the client that is coming to the beach can only afford to allocate this much money for a beach outing and he or she needs to allocate the rest of their money for their other expenses, especially if they have kids or families.” Following the same line of reasoning as Abu Nassar, some resort managers opted to not increase their entrance fees at all this season. “We did not increase our entrance fees because we know that the demand this season will not be as high as previous years and we wanted to encourage customers to keep on coming,” says Slavy Ghazal, director of sales and marketing at Coral Beach Hotel and Resort in Beirut. “Let others increase their prices if they want to and we will attract more business that way (laughs).”
Sweetening the deal
Considering the current dismal economic situation and the competition among beach clubs and resorts, operators have implemented different strategies to attract clients to their waters.
Resorts Executive spoke with that had existing membership plans that allowed customers to buy entry passes valid for the season and save some money, either did not increase the package price this season or lowered it in hopes of developing loyalty among their clients. “Our four-month seasonal membership was for $500 [last year] but we made it for LL500,000 this season,” says Lazy B’s owner George Boustany. “We did this to encourage people to keep visiting the beach and to create some sort of loyalty scheme. With this kind of offer, we should have had hundreds knocking at our doors but the reality is not the case. It’s a very tough year.”
Hussein Charafeddine, owner and operator of Pangea Beach Resort in Jiyeh, says he offers 50 percent discounts on entrance fees to the resort through GoSawa, a platform that features discounts on various local experiences. He says 2,500 people have purchased the GoSawa deal so far in the season (mid-July) noting that they have until the end of September to redeem it. Charafeddine says this is so far “much less” than the number of people who bought the same deal last season, although no exact figures can be shared until the season ends.
Some resorts followed the strategy of keeping their entrance rates the same as the previous season but increasing the price of services within the property, such as the price of massages or access to VIP areas. “We went into market survey to compare places that are a bit similar to us in terms of service and we saw that they did some changes in the price of the menus but kept the entrance fee as is,” says Walid Yammine, general manager of Eddésands Hotel and Wellness Resort in Byblos. “Keeping it as it is means they want people to enter the place and then, whatever they spend in there will be good. You would have attracted them to your place with the price.” Eddésands has kept its weekend entrance fee at LL50,000 but is promoting its VIP area, at an additional LL100,000 per person, and its cabanas (cabins with private hot tubs that customers can rent for the day), which run for LL850,000 on a weekend for ten people—eight of whom can access the resort without paying an entry fee.
A lonely shore
Despite all these efforts, the number of guests frequenting beach clubs and resorts is roughly half of what it was last year, according to all the beach club and resort operators interviewed for this article. “This year, on a busy weekend day, we get 300 to 350 people at most. Whereas last season we had up to almost 800 customers at times with an average of 700 on a weekend day,” says Pangea’s Charafeddine.
Last summer the airport was operating normally, this has not been the case this summer season due to COVID-19 restrictions and was bound to affect visitor numbers to beach clubs and resorts. At the time of most of these interviews, the airp on a busy weekend day, we get 300 to 350 people at most. weekend day, we get 300 to 350 people at most. Whereas last season we had up to almost 800 customers at times with an average of 700 on a weekend day,” says Pangea’s Charafeddine.
In June, the airport was still closed—its reopening on July 1, according to Boustany, led to an increase in the number of visitors to beach clubs and resorts but still not comparable to summer 2019.
This drop can be primarily explained by the economic situation. “The economic situation played a big role in the dwindling numbers,” says Sporting’s Abu Nassar. “Those who are coming to the beach club, and who do not have businesses outside of Lebanon are, in my opinion, living in denial.”
There are also other reasons for the decrease in the number of beach clubs’ customers. To begin with, road closures and protests on weekends—both in the north and south of Beirut—made a comeback once lockdown measures were eased, starting early June and were still frequent at the time of interviews in early July.
Such occurrences make people think twice before venturing on the road to beach clubs relatively far from their homes. “We remain heavily affected by road closures since our opening on the first of June,” says Michel Abchee, CEO of Damour Beach Resort sal, which owns and operates Lost at Sea and Damour Beach Club, in an interview early July. “You cannot build tourism while you are closing the roads almost every day, but you cannot but close the roads if people are hungry and are not getting their salaries.”
Road closures aside, traffic congestion on the highway connecting Beirut to the north—especially in the Nahr el-Kalb to Adma stretch—is a long-standing complaint made by beach club and resort operators in the area and one that has shown no signs of abating. “Another [challenging] factor is the traffic back and forth to Beirut: On Saturdays, because people are not worried about traffic going back to Beirut, they stay until 8 p.m. and have dinner at our restaurant. But on Sunday, you will notice that people start leaving the place at 5:30 p.m. or before to avoid traffic,” says Yammine, who explains that Eddésands’ clientele are mainly from Beirut.
The value of a hotel
Although customer numbers were low overall, resorts fared slightly better than beach clubs because of the presence of a hotel on the premises.
Since most Lebanese are unable to travel this year (because of COVID-19 related travel restrictions and limits on their local credit cards), those who can afford it are opting for staycations instead. “When you are Lebanese and are in Beirut—and can afford it—and you are starting to really psychologically collapse because of the lockdown and you used to be in the south of France or Italy or elsewhere every year around this time, for you to have Eddésands, it is paradise. We have guests who are staying weeks and months and we are fully booked at full price,” says Roger Eddé, owner of Eddésands, which has 20 rooms in total, between the boutique hotel adjacent to the beach club and the three suites on the beach club itself.
In line with Eddé, Ghazal says 60 percent of the guests in the 98 rooms of Coral Beach are long stayers—mainly Lebanese expats who came home for the summer and benefit from the strength of their dollars. He says that the reopening of the airport has increased occupancy of the hotel by 15 percent. “We have expats coming in and booking for one month, instead of opening up their homes or renting an apartment in the mountains they take advantage of the exchange rate to book rooms here,” Ghazal says, explaining that at LL220,000 per night and with the current exchange rate, room prices have become significantly less than last year. (At Lebanon’s official exchange rate, the room would be $147/night, at the current bank rate it is more than halved to $57/night—at the time of writing, if exchanging dollars on the black market, the room could go for roughly $28).
Corona and the beach
COVID-19 related restrictions and measures have also played a role in decreasing footfall to beach clubs this season. One measure that would have had a negative impact on business had things been operating normally this year is the 50 percent capacity restriction on beach clubs. However, the way things are going this season, operators tell Executive they are not reaching that figure anyway. “Once the corona-scare hit Lebanon, most of our clients moved out of Beirut,” Abu Nassar says. “Now they are either in the mountains, Batroun, the south, their hometowns … They simply got away from the city to avoid being in clusters where they could get infected. So the 50 percent came naturally and we were not affected in that sense.”
Yammine says that there has not been a major pickup in the beach club-side of their business (as opposed to the hotel and villas), despite the reopening of the airport (speaking a week after the reopening in a follow-up interview with Executive), blaming the rise in numbers of those infected with coronavirus for that. “We thought at first that business would pick up one distance learning and exams ended for the academic year and once the airport reopened,” he says. “But we later realized that, although they know we are following all safety precautions to the dot, people simply prefer not to be too close to others these days.”
Paying the bills
Whatever the reasons behind this overall drop in customer numbers, it translates into a decrease in revenues at the worst possible time for beach club and resort operators, when the lira’s unofficial depreciation has increased their operational costs substantially.
Several operators mentioned maintenance as their biggest cost, explaining that it is fast becoming unaffordable especially as spare parts are calculated in cash dollars. “We have eight large generators, 300 rooms, 1000 cabanas, a marina, and so on,” says Chadi Gedeon, general manager of Mövenpick Hotel Beirut. “So a lot of maintenance is needed and all suppliers are asking for cash dollars. The more the lira devalues, the more of a challenge this is becoming.”
Abu Nassar says the cost of pre-season maintenance and upkeep for Sporting ranges from between $150,000 to $400,000, depending on the severity of damages incurred in the winter (repairs after storm Yuhan in 2015 cost $400,000). “This year the damages were not that major so we were able to sustain them out of pocket, hoping that this upcoming winter will not cost us tremendous damages,” he says, adding that their strategy nowadays is to put aside some money for repairs for the upcoming season in spring 2021. “The reasoning is the following: Banks may or may not be around next year,” he says. “And if they are around, they probably will not be available to loan us the money to do repairs and then pay them back like we did every year (before this year).”
Another major cost for beach clubs and resorts is chlorine and other chemicals needed for pool maintenance. “The cost of chlorine and other chemicals needed for a clean pool is $900 per month this year, whereas it was $200 per month last season. But the cost of everything has increased this year,” says Eddésands’ Yammine.
Lazy B’s Boustany considers himself lucky that he bought his chlorine supply for the season at the LL1,500 exchange rate back in October when he says he felt that the lira was becoming unstable. “Recently, we bought everything we need for the generators in terms of filters and parts at the rate of LL4,000, whereas today you have to buy them at the rate of LL9,000,” he says. “These will finish though and then what do we do? If the situation continues like this next year, I am telling you the entrance fee will be a minimum of a LL100,000.”
While on-site restaurants are usually magnets for hungry swimmers, and therefore are cash cows for operators, this season is different, again because of the exchange rate. “We increased the price of food by about 10 to 20 percent [to date, meaning early July] on some items and reduced the number of items on the menu to 30 percent of what it used to be last year,” says Pangea’s Charafiddine. “I stopped serving steak, frozen shrimps … everything imported. I wanted to work with local products only so that we don’t have to increase our prices by much but even the price of such items has increased.”
Finally, COVID-19 related safety measures, which all beach clubs and resorts had to comply with, were an additional cost this season. “Added cost this year is that of corona safety measures, which includes lots of disinfecting material, you have to fumigate seating areas daily, provide gels, pools need to be monitored every two hours,” Abu Nassar says. “The ministry of health put up regulations and we felt that it is in our interest to abide by them because at the end of the day, if you have one client that comes out with corona, I will have to shut down the institution so it is in my interest to do it.”
Faced with all this pressure, beach club and resort operators say they are just trying to make it through the season. “The situation now is no longer about sustaining a business, it is survival mode,” Damour Beach Club’s Abchee says. “Today to stay afloat we have to manage with the minimum resources possible and try to do the best you can.”
To limit expenditure, all operators Executive spoke with say they have reduced their number of employees to the bare minimum when compared to previous seasons. “Last year a hundred families were directly living out of Lazy B and now we have 50 employees or families,” Boustany says. “And these are being paid at the exchange rate of 1,500. Imagine how hard it is.”
Another way some beach club operators are reducing cost is by keeping one of their restaurants closed for the season. “We closed the pool side restaurant and started the season with self-service kiosks,” Charafeddine says. “When we saw that that was negatively impacting the business, we started having customers order food at the huts and have waiters deliver it to them at the pool and that helped matters more.”
Sporting Beach Club, which usually operates both the beach club and restaurant year-round, is considering shutting down in the winter for the first time since it opened its doors in 1953. “When we get to the fall, we will have to take the hard decision of either closing down for the winter so that we have enough money to launch next season or we play ostrich and expect that next year everything will be fine and rosy,” Abu Nassar says. “It is very risky.”
With all these costs and challenges and with the still comparatively low number of customers this season, it seems the tide is pulling Lebanon’s operators toward murky waters. Whether the tide will turn with the Adha holidays and the relative stability Lebanon is currently passing through (with no major protests the past few weeks and decreased exchange rate volatility), will need to be reassessed at the end of the season. The hope is that even if this season cannot be salvaged anymore, resort and beach club operators can survive to see another, brighter season in 2021.