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Beiteddine Festival
SocietyTourism 2014

Plans for this summer’s festivals

by Nabila Rahhal May 16, 2014
written by Nabila Rahhal

“We have a cultural role to play; the festival is a form of cultural and touristic resistance which says that the country is still here,” says Hala Chahine, director of Beiteddine Art Festival.

Lately, the country’s music festivals have had many challenges to resist, yet, much like Lebanon itself, they are taking the hits but managing to hang on year after year.

The unpredictable security situation in the country creates its own obstacles for the various festivals. Last summer, Baalbeck International Festival had to relocate to Jdeidet el Metn because of safety concerns in the Bekaa area: “We had the choice to either cancel the festival or to relocate to symbolically keep Baalbeck Festival’s name alive, so we chose to relocate,” says Nayla de Freige, president of the festival’s committee. This year, with the security plan already in implementation throughout the country, de Freige is planning to return the festival to its home.

Klaus Meine, lead vocalist of the rock band Scorpions at the 2013 Byblos music festival

[/media-credit]Klaus Meine, lead vocalist of the rock band Scorpions at the 2013 Byblos music festival AFPPHOTO/JOSEPH EID

Singing through security woes

Security issues also make it harder to attract performers to Lebanon, and the country’s major international festivals have had to rely on their historic reputation and proven track record to convince artists to sign contracts.

Naji Baz, Byblos Festival’s manager, says he sells the name of Byblos Festival which, after thirteen solid years of performances, has become well known among international artists’ managers, and attracts new talent. “I’d say our former artists are our best ambassadors, and of course we rely on that, but I feel that despite the very good reputation of Byblos abroad, we have to start from scratch every year,” says Baz, adding that it was as hard as ever to sign this year’s lineup since foreign artists don’t distinguish between areas in Lebanon and tend to deem the whole country as unsafe if they hear of an incident.

De Freige says some artists refuse to come to Lebanon while others dream of performing among the historical temples of Baalbeck which, throughout the sixty years of the festival, has hosted such talent as Umm Kulthum, Ella Fitzgerald and Fairuz. “We choose those artists who trust us and know we have a sense of responsibility so if we choose to be there, it is safe. It is usually easier to deal with Europeans because they know more about the reality of the country,” says de Freige.

Al Bustan Festival’s organizer, Nada Massoud, also admits that it is difficult to attract international talent to a country with security issues, but says that once artists get here, they are often pleasantly surprised, “fall in love with the country and some consider settling here.” She adds that the name of their artistic director, Gianluca Marciano, is very helpful in attracting classical music performers.

This has led some festivals to rely on domestic talent with Beiteddine Festival to open with Majida Al Roumi. “We try to give as many chances to young Lebanese talents as we can with at least one mainstream Lebanese program and one or two edgy ones as well,” says Baz.

Budgeting for tough times

Though all organizers Executive spoke to agree that the festival attendees are mainly Lebanese, the lack of a solid touristic season for the past three years has caused a decrease in the number of expats returning home for the summer and in the purchasing power of resident Lebanese. This has left many festivals struggling to maintain their standards and budget — which is largely from ticket sales — while keeping fair ticket prices.

Baz explains that artists’ fees have gone through a global inflation with the decline of CD sales and artists’ reliance on concert tours for their income. “This inflation has made it tougher to practice reasonable selling prices for your tickets especially since you want to remain close to the means of the Lebanese middle class,” says Baz.

[pullquote]Artists’ fees have gone through a global inflation with the decline of CD sales[/pullquote]

Chahine agrees with Baz and adds that since the festival is attended mainly by Lebanese, they offer a wide range of prices to suit most purchasing powers in the country. Beiteddine Festival also offers affordable transportation to Beiteddine and free parking.

The festival organizers Executive spoke to derive between 60 to 80 percent of their budget from ticket sales, with some, such as Beiteddine and Baalbeck, receiving financial government support through the Ministry of Tourism. This support, explains Chahine, is often two years late forcing the organizers to take loans from banks in order to pay their dues on time. According to de Freige, 33 percent of the Baalbeck festival’s budget is spent on taxes which include the value added tax (VAT), and a tax on each international artist contract they sign. This, along with the delay in government support, makes planning in advance and attracting renowned talent hard. De Freige joins Al Bustan’s Massoud in asking that those taxes be reduced. “It’s true we are receiving government support but still we ask for the taxes to be reduced. We want the festival to be financially sustainable,” he says.

Chahine warns of a new law which would increase the VAT tax by 2 percent and the international talent tax by 10 percent in order to fund the Lebanese Artists Fund. “As private nonprofit organizations, we are not supposed to be responsible for this fund,” says Chahine who fears that, should this law pass, ticket prices would need to be increased to a level many people would not be able to afford, adding that they are working to stop this law from passing.

With these obstacles in their path, one might wonder why the festival organizers still give their time year after year. All the organizers Executive spoke to see it as their civic duty to the area they are in and for Lebanon as a whole. They are proud of the close relationships they have with the municipalities of the areas the festivals are held in and the support they receive from the residents who volunteer their time.

Baz sums it up: “We care that the festival takes place in Lebanon though it is very tough. Every market has its difficulties but at least abroad you can predict them and work with them but here there is nothing you can do to save yourself if the situation goes bad. It’s an act of hope.”

May 16, 2014 1 comment
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Lebanese real estate projects will compete to win REAL awards in different categories.
Real Estate

Competing constructions

by Tiziana Cauli May 15, 2014
written by Tiziana Cauli

In mid-June this year, some of Lebanon’s newest real estate projects will be judged by a pool of experts in the sector, including architects, academics, consultants and entrepreneurs. While transparency is not among the main qualities of Lebanon’s property market, judges in the Real Estate Awards Lebanon, launched for the first time by the Real Estate Syndicate of Lebanon (REAL), will have the challenge of fairly evaluating the most outstanding development projects in the country. The contest is open to all Lebanese property projects in different categories, including high and low rise buildings, design and architecture, landscape design, gated communities, eco-friendly and sustainable projects, social responsibility, specialized developments, commercial and mixed-use schemes, office projects and real estate communication campaigns. The winners in every category will receive a trophy and will be able to use the competition logo in their marketing.

Executive spoke with Walid Moussa, secretary of the syndicate’s board of trustees and organizer of the contest, to find out what measures REAL takes to ensure fair judging and avoid conflicts of interest.

 

The way judges are selected is particularly relevant in a country like Lebanon, whose real estate market is not big in size and business connections link together major and small players. How will you make sure that these dynamics will not affect the judging?

Based on our rules, if any judge has a direct or indirect interest in the project that is being graded, he or she will be removed from the board for that particular case. The jury members also sign a paper where they declare whether they have a direct or indirect interest in any of the projects.

 

In some cases, though, interests may not be immediately recognizable. What happens if a judge lies or fails to declare them? Would you invalidate the contest?

This will not happen. I am sure. Lebanon is a small country and we would know. We did everything to keep these awards impartial, even at the level of sponsorship. The sponsors of real estate projects taking part in the awards cannot act as sponsors of the event.

 

Are there any official procedures to check on the judges’ ruling in case participants feel that their projects have not been given a fair score? How can they complain?

No, there is no official procedure but they can complain to us. If anything wrong is found we will make sure that we check and that the results are fair.

 

Are there any projects managed or marketed by PBM which are taking part in the awards? [Walid Moussa is the Chairman and CEO of PBM Properties]

No, there aren’t.

 

How did you select your judges? Do they all come from the Lebanese real estate industry?

We did some research and spoke with people in the market. We started by identifying what we would need in every category, knowing that we wanted the best people. So, for example, for projects in the leading landscape design we needed the best landscape designers in the country. We called the most renowned ones and the first ones who accepted were in. Some people we called had to say no because they didn’t have the time so we had to call somebody else. This is how we selected them. We did the same for architects, marketing experts and so on. Also, because we wanted to give [the event] international relevance, we appointed two foreign judges. One of them is Farook Mahmood, chairman of the International Consortium of Real Estate Associations [a partner of the international property association FIABCI, of which REAL is a member]. The other is Claudine Speltz, president of the European Council of Real Estate Professions.

 

What criteria will the jury consider when rating the projects? Is there a specific list?

Every category of projects has over 30 criteria of judgment, which may vary, but each category has some specific ones. If we are talking about eco-friendly and sustainable projects, for example, sustainability and green features as well as all issues related to sustainable construction will be taken into account. But we can say that the concept — the idea behind a project — is particularly important in all categories.

 

Can Executive see the scoring sheets to get an idea of how projects will be rated?

No, I can’t show you the sheets. Projects will get scores based on the criteria, but the scoring sheets are confidential.

 

These are the first Real Estate Awards to be held in Lebanon. Did you base the format of the contest on any particular example outside the country?

I am a jury member in the international real estate awards organized by FIABCI. The way they do it is they pick a judge from each country. My main inspiration came from them, but I have also attended other international real estate contests such as that of [the international property trade fair] MIPIM in Cannes and the international property awards Arabia in Dubai. I was inspired by them as well.

 

How did you apply international standards to the peculiarities of Lebanon’s real estate market? Did you have to make any changes?

We started working on this project in June last year to make it suitable for Lebanon’s real estate developments. We customized it to fit the country’s market. We did a lot of consulting with brokers and architects, especially to develop the criteria and the different categories. We created a category for heritage projects, for example. Nothing in real estate is specific to any particular country but heritage is very significant in Lebanon’s property market. To me, this is the most relevant category. It is important to us because we want to encourage developers to engage in renovation.

 

What is the motivation for these awards?

The idea is that of lifting up the standards in Lebanon’s real estate market so that people can work better and we can improve the quality of our properties. This is not a private project — it is organized by a syndicate — so its purpose is not making a profit but encouraging developers to find better concepts and to make the best choices. We want to push developers to reach quality in construction design and projects.

 

How many projects have registered in the contest?

I prefer not to say. All I can tell is that they are more than 30 but I don’t want to say how many because some people may think that they are not enough. All the categories are full though, even if there was not a limit in the number of submissions.

 

Did you select the projects before they could enter the competition?

No, there was no pre-selection. All the projects that met the submission criteria could sign up.

 

How much will the event cost the syndicate?

The total cost is around $200,000. We are now working with the sponsors to see how much we can raise.

 

Will the awards be held on a yearly basis or were they conceived as a one-off event?

It depends on how everything goes. For sure they will not be held every year but we may have them every two or three years. Before we decide, we need to see how many participants we have and what the feedback is.

May 15, 2014 0 comments
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Utilizing Big Data effectively offers big benefits
Business

Meeting the Big Data challenge

by Bahjat el-Darwiche & Walid Tohme May 15, 2014
written by Bahjat el-Darwiche & Walid Tohme

Recent research on Big Data should sound an alarm bell for companies. On the one hand, there is a link between usage of Big Data and the quality of corporate performance, on the other, very few companies are actually making use of Big Data. Companies therefore need to grasp the commercial advantages that Big Data can bring, and determine how they can develop their capabilities and culture to exploit its potential.

Writing in the Harvard Business Review in 2012, Andrew McAfee and Erik Brynjolfsson revealed the extent of Big Data’s impact. They interviewed executives in 330 publicly traded companies in the United States and found that those organizations which believed most in the power of Big Data gained a marked advantage over their rivals. According to McAfee and Brynjolfsson, the enterprises that were in the top third of their industry in terms of using data-driven decision making were more productive and more profitable than competitor companies by average margins of 5 percent and 6 percent respectively.

Despite such findings, companies have not broadly adopted Big Data practices. Indeed, a 2013 Gartner survey found that less than 8 percent of surveyed companies had actually deployed Big Data technology. Although this figure is set to rise substantially in coming years, companies will need to adapt considerably to thrive in a data-centric world. In the Aberdeen Group’s “Big Data Trends in 2013,” the authors found that the proportion of executives who reported that their companies were unable to use unstructured data, and who complained that the volume of data was growing too rapidly, had increased by 25 percent during the previous year.

Stages of maturity

So while better technology will help to store and analyze the avalanche of data now being produced, what will make the difference is building the right capabilities and culture. To do this, companies will need to know where they stand in terms of a Big Maturity Framework. The framework consists of three elements — environment readiness, organization-internal capabilities and the ways in which Big Data can be used. It can help companies to see how far they have progressed, and identify what more needs to be done to get where they want to be.

[pullquote]In its most developed phase, it can radically reshape the business landscape[/pullquote]

The framework acknowledges that Big Data can be used in different, progressively more sophisticated, stages of maturity. It can have a limited scope, serving merely to improve the efficiency of existing operations. Or in its most developed phase, it can radically reshape the business landscape, transforming individual companies, and paving the way for disruptive, entrepreneurial start-ups and the creation of wholly new industries.

The first maturity stage, performance management, allows executives to view their own business more clearly through, for example, user-friendly management information dashboards. This would typically involve internally generated data.

The second maturity stage, functional area excellence, involves organizations using both internal and external data to improve selected areas of the business. This may lead to the enhancement of sales and marketing techniques, or to advancements in operational efficiency. For example, one German car manufacturer used real-time performance monitoring of production machinery to achieve a 20 percent increase in productivity. Each machine was closely monitored to pinpoint downtime, enabling the company to optimize the utilization of the overall plant.

The third maturity stage, value proposition enhancement, allows organizations to start to extract a new source of competitive advantage that goes beyond the incremental improvement of existing operations and services. This may entail real-time recommendations, or the personalization of services, to raise the quality of the customer experience.

For example, a global mass merchant was able to increase its profit per customer by 37 percent by applying advanced customer analytics to identify its best customers and then present them with personalized offers. The frequency of those target customers’ purchases rose by approximately a quarter, and the average basket size grew by around 10 percent.

Another example of this third maturity stage comes from a leading European bank. This financial institution managed to increase sales by 12 percent through diversifying its website content. When customers logged in, they were shown one of several alternative websites based on their individual transaction history and segment, and the company’s overall product portfolio. The content was adjusted according to the predicted needs of the customer in order to maximize potential sales.

The fourth and final stage, business model transformation, is when Big Data leads to fundamental change. Big Data practices become deeply entrenched within the organization, shaping the nature of the business as well as the mode of executive decision-making.

Enhancing insight

Both product and services organizations are capable of reaching this stage. General Electric (GE) is a product organization that has made clear that it believes in the power of Big Data. The company anticipates that machinery and equipment will soon be loaded with sensors which will display detailed service data in real time and across longer time periods. GE is therefore spending more than $1 billion on building up its data science capabilities to provide data and analytics services across business functions and regions.

The proposed merger in 2013 of the two advertising companies, Omnicom and Publicis, indicated a broader data-driven transformation among service providers. The advertising industry is moving toward a more science-based, data-driven business that aims to deliver personalized advertising messages. This new world will be dominated by those major players that possess the most comprehensive data about individuals. Although they called off the merger in May 2014, Omnicom and Publicis believed that their combined size would produce the desired volume of data.

Yet despite widespread interest in Big Data, companies face many pitfalls. Many of these relate to their own internal systems and culture.

One prominent obstacle is the shortage of available data-scientists with an advanced education in mathematics or statistics who can also translate raw material into actionable, commercial insights. Although many educational institutions have started to introduce relevant courses, the market demand for such people is already considerable.

Companies must also refashion their current decision making culture. Senior executives should be making more judgements based on clear data insights, rather than simply resorting to their intuition as in the past. Changing corporate culture in this way could well impinge on concerns relating to status, with executive instinct increasingly challenged by the facts of hard data.

[pullquote]Over the next five years, Big Data will become the norm and will enable game-changing opportunities in many industries[/pullquote]

However, while data can be of great assistance in solving an actual problem, it nonetheless holds true that senior management has first of all to ask the questions that the data at their disposal could usefully answer, rather than process it with no clear strategic goal in mind. What this means is that the value of an insightful executive will not be diminished in this new era, but rather can be enhanced thanks to Big Data.

Over the next five years, Big Data will become the norm and will enable game-changing opportunities in many industries. Organizations must react in a timely manner to determine how they can deploy Big Data in the most effective way possible, and then lay the appropriate groundwork. Without the necessary senior-level enthusiasm and sponsorship to realize the huge potential of Big Data, savvier competitors are likely to gain a potentially decisive advantage.

 

Correction: A previous version of this article, which appeared in Executive’s print edition on May 1, mistakenly claimed that Omnicom and Publicis had actually merged.

May 15, 2014 1 comment
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Image from Sarah Francis's documentary "Birds of September" that is now showing at Cannes
The Buzz

Bringing Lebanese cinema to Cannes

by Susannah George May 14, 2014
written by Susannah George

Starting today, film industry elite from all over the world will gather in the south of France for the Cannes film festival. Among the crowds will be a delegation from Lebanon including representatives from Fondation Liban Cinema and the Lebanese Tourism Office in Paris, a small team out to educate festival goers on the history of Lebanese cinema and promote contemporary Lebanese films.

Zeina Toutounji, a publicist and translator who’s been representing Lebanon at Cannes since the ‘Lebanese Pavilion’ first opened nine years ago, says when it comes to Lebanese cinema, most people at the festival have a base of knowledge. “If you talk to people who only go to see blockbusters, of course they may know very little about Lebanese cinema,” she says, “but for people who love cinema, they know there is cinema in Lebanon.”

This awareness is thanks in part to the strong history of Lebanese film at the festival. The first film from Lebanon screened at Cannes was Georges Nasser’s “Where To?” in 1957. The film, made before the 1975–1990 civil war that now dominates most Lebanese cinema, tells the story of emigration and sacrifice in the name of family.

Later, Maroun Baghdadi, considered a pioneer of new Lebanese cinema, screened “Little Wars” at Cannes in 1982 and in 1991 his film “Out of Life” won the Jury Prize.

More recently, Nadine Labaki’s “Caramel” and “Where Do We Go Now” premiered at Cannes in 2007 and 2011, respectively.

But despite these critical achievements, Lebanese film as an industry lacked an official presence at the festival until recently. That’s what Serge Akl, the head of the Lebanese Tourism Office in Paris, hoped to change with the Lebanese Pavilion. He wanted to create a space for filmmakers to talk about the business of making movies in Lebanon, as well as the artistic process.

“What we lack are big production facilities [in Lebanon],” says Akl. He says Lebanese businessmen don’t think of movies as a business, so young directors lack an infrastructure to help them through the movie making process. Most Lebanese directors write their own screenplays and Lebanese producers are often left to search abroad for backing to get movies made and distributed.

While there are no Lebanese films in the official competition at Cannes this year, the Lebanese Pavilion is organizing two screenings. “Stable Unstable,” the feature film debut from Lebanese writer-director Mahmoud Hojeij, will be showing. The film, set in a Beirut psychiatrist’s office on New Year’s Eve, is a collection of vignettes from an ensemble cast. While the country’s civil war is never expressly mentioned in the film, the characters’ struggles address the war’s lingering effects on Lebanon. Each patient, trying to make sense of the past year, is searching for stability in unstable surroundings: battered social fabric, shaky politics and economic uncertainty.

“Birds of September”, a documentary from director, screenwriter and producer Sarah Francis is also showing. The movie, filmed from a glass van roaming the streets of Beirut, is a collection of confessions and snippets of daily life in the Lebanese capital. The film depicts the city’s visible scars: long slow shots of street corners that show signs of rebuilding and neglect, buildings still riddled with old bullet holes. These images serve as backdrops for Beirutis from all different walks of life to tell tales of economic hardship, love and loss, as well as share idle chit chat, making passing references to the war.

Toutounji, the publicist at Cannes, says that for her, Lebanese Cinema is unique because of its voice. “All movies are telling stories; for us it’s the war,” she says. “In Lebanon, cinema is doing what the government hasn’t … it’s addressing issues of our collective memory.”

May 14, 2014 1 comment
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Online persona
Business

Find your online persona

by Tara Nehme May 14, 2014
written by Tara Nehme

If people in the Middle East did not have the faintest clue what creating the perfect résumé entailed, then I was one lucky girl. Because if they didn’t know, and I figured out how, all I had to do was create something that allowed me to exchange my soon-to-be-learned skill for their money. Soon I would be living the life of Scrooge McDuck. Safe to say, the story didn’t pan out that way. Following an intense period of learning about everything related to web design and that horrible language called code, I finally had a website to call my own.

In a matter of months I launched ticklemybrain (TMB) and even though I was utilizing what I assumed were effective online advertisements, the requests did not flow in at the rate I had initially hypothesized. In my search for answers, Steve Jobs came to my rescue. When asked whether he did market research for the iPad he responded, “None, it’s not the consumers’ job to know what they want.” The reality was that my future customers had no idea their résumés needed ‘tickling’ in the first place. That would be one of the many valuable lessons I learned on how to properly establish my brand.

Creating a company brand that is full of life and building an online persona that will perpetuate that life is unbelievably important. Knowing you have something amazing to offer your audience isn’t enough. Customers have too many choices and the competition is simply too strong for you to be floating in a sea of fast fish.

Here are eight tips to help you get there:

1. Research it. We can avoid common branding pitfalls by scoping out the competition. I googled every single business that offered a service similar to TMB. Most companies had a very professional look, as that is the general sentiment associated with anything related to the corporate world. I didn’t want my clients to dread accessing my website because it reminded them of their troubles finding a job so I built a website, though professional, that utilized fun animations.

2. Pick a look. I spent hours deciding between fifty shades of yellow back when I was making choices about my logo. You want things nice but there should be a balance between a minimum viable product and pure obsession (where I usually hang out). So choose a logo, tagline and the colors that make your heart smile. Then move on.

3. Good lingo. If you arrive to your job each morning and speak with a different accent, your colleagues will most likely find you weird. Same goes with your business. You need to decide on a tone, and stick to a method of communicating with your audience that is consistent. If you decide to be funny once a week when using social media, then always be funny once a week.

4. Be social. When it comes to social media, recruit someone who speaks the language of your business really well. The last thing you want is a spelling error on your Facebook page. Consistency of posts and style should be applied across social media platforms, and don’t create a Twitter account if you’re not planning to tweet.

5. Know your audience. Rather than selling the writing service itself, TMB changed to promoting posts that related to résumé facts in order to make potential customers realize they needed help. We ensured, for example, that every person who landed on our Facebook page knew that recruiters only spent 10 seconds looking at a résumé so logically, what a reviewer sees in these 10 seconds was worth investing in.

6. Set up a solid platform. Technology is your arsenal so make sure to have a proper website equipped with search engine optimization (SEO) tools and any other tools pertinent to your business.

7. Reel them in. Provide people with reasons to visit your website. One obvious approach is a blog that you can use to generate free, powerful content that adds to your credibility as a company. WordPress or Tumblr are good sites to generate blogs.

8. Tracking. If you don’t monitor your online presence with a tool like Google Analytics, how will you know what works and what doesn’t? Don’t ignore the numbers.

Your brand’s personality, and more so your online presence, brings you closer to achieving your business goals, whatever they may be.

May 14, 2014 0 comments
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The 3D animated movie “The Prophet”, based on Gebran Khalil Gebran’s book, will premiere during this year’s Festival de Cannes.
The Buzz

“The Prophet” heads to Cannes

by Micheline Tobia May 13, 2014
written by Micheline Tobia

The long awaited 3D animated movie “The Prophet”, based on Gebran Khalil Gebran’s book, will be partially screened for the first time during this year’s Cannes Festival on Saturday, May 17. The movie, produced by Salma Hayek and directed by Roger Allers (who was behind “The Lion King”) gathers a group of internationally acclaimed artists: the music was composed by Oscar winning Gabriel Yared, and voice casts include actors such as Liam Neeson, John Krasinski, Frank Langella and Alfred Molina.

“The Prophet”, first published in 1923, is one of the best-selling books of all times, having sold over 100 million copies. Gebran’s work has been translated into more than 40 languages, and he is one of the world’s most well known poets.

“The Prophet” had a $12 million budget, which FFA Private Bank co-financed by providing $4 million from different investors it represents. “FFA Private Bank’s Investment Banking division structured and proposed this investment to the bank’s clients as a way to diversify in an alternative asset class with high potential returns,” says Julien Khabbaz, head of investment banking at FFA.

The movie is not FFA Private Bank’s first venture into movie industry. It previously co-financed the French biographical drama film “Cloclo” in 2012, and the Hollywood action movie “Two Guns” in 2013 starring Denzel Washington.

Khabbaz is proud of the film’s initial success: “Being included in Cannes, the most prestigious film festival in the world, is a testament of this movie’s true potential and meaning; and it will be great for Lebanon to be represented in this way.”

 

Correction: A previous version of this article mistakenly claimed that the film would premiere at Cannes. Instead, parts of it will be screened for the first time.

May 13, 2014 1 comment
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Joummana Salame, managing director at Hospitality Services sarl
BusinessTourism 2014

Hope for Lebanon’s hospitality sector

by Nabila Rahhal May 13, 2014
written by Nabila Rahhal

Shortly after the 21st edition of HORECA, Lebanon’s largest food and beverage conference, Executive sat down with Joummana Dammous Salame, Managing Director at Hospitality Services sarl to discuss HORECA, the hospitality sector over the past three years and upcoming trends. 

 

Could you briefly describe the highlights and major events of HORECA 2014?

It was a beautiful show! We had a bit fewer exhibitors than we did last year — around 335 in total — but in the same size space so it was more spread out and comfortable.

We had more events and competitions this year though, with 19 competition categories at the Hospitality Salon Culinaire including the Live Lebanese Sweets, Live Pastry and the Junior Chef competitions for the students of the culinary and hospitality universities in Lebanon.

There were some new additions to the competitions this year such as the Lebanese Barista Competition, the Best Burger Competition (which is a rising trend in hospitality in Lebanon) and a competition among the chefs from the Lebanese Army sporting clubs.

Another new event this year was the Wineries Day in collaboration with the Union Vinicole du Liban. We invited wine journalists and writers to blind taste wine from all the local wineries that were exhibiting and to give their feedback and opinion. The objective here was not to reward the wineries but to educate visitors and experts on Lebanese wines.

This year, the theme for the Lebanese Food Industries National Day, an annual full program for professionals in the industry organized by the Syndicate of Lebanese Food Industries, was around innovation and creativity because of its importance in moving forward. The industry had a very good year in terms of exporting to other countries

We also had the Industry Lounge this year in collaboration with ELCIM (Euro-Lebanese Center for Industrial Modernization) and other organizations that held a series of short presentations relevant to the sector.

Aside from these major events, we had the usual book signings and the Chairmania Design Event, which gave Lebanese designers the opportunity to share their latest chair design creations with hospitality professionals.

 

What was the response and feedback you got from the visitors? How would you describe the mood in HORECA this year?

This is what I am happy about. We have been holding our breath this past year not knowing what outcome to expect. The feedback was absolutely fabulous because the visitors also did not know what to expect.

Everybody in the hospitality sector was toiling away in their own isolated corner for this past year operating in a pure survival mode and at HORECA people met! They saw each other, and they interacted, and when you do that and you network, something positive is bound to occur.

This is the magic that came from this HORECA specifically: there was such positive energy and vibes as people went out of their way to communicate with each other. The thank you’s we received on the visitors’ feedback form this year were more than ever.

 

To your knowledge, did any of the exhibitors at HORECA sell this year?

No exhibitor will give you straight figures on this but quite a few exhibitors told me they had sold out their stock.

 

Hospitality Services currently organizes three other HORECAs in the region: in Saudi Arabia, in Kuwait and now in Jordan. How would you compare the four?

HORECA Beirut has another flavor! It is the biggest by far and the most attended.

Hospitality is naturally in our blood in Lebanon. In the region, we are the capital of good taste, food and gastronomy.

It is fair to say we are the leaders in this industry, taking everything into consideration. We have more than 45 hospitality schools, university programs and technical degrees in Lebanon, more than in any Arab country.

 

Looking back at the past two years in Lebanon, how would you evaluate the performance of the hospitality and tourism sector?

We cannot deny that it has been a tough two years for the industry and it is has been severely hit. But the Lebanese are strong and have been through similar situations in the past. If you think about it, we have more bad years than good years overall and so we are used to operating in this environment.

Still it is not easy: The F&B industry has been badly hit and so have the hotels; though I cannot give you names [of hotels] some are going to close down this summer. It is truly a time when you either swim and stay afloat or drown.

 

What are some of the coping strategies those in the hospitality business can adopt to stay afloat?

There are techniques to survive this critical period: you have to minimize your costs and expenses, and also export concepts abroad.

You see more and more people in the industry going into franchises abroad now, mostly to Dubai. Maybe it is a good opportunity because ultimately things will calm down here and they can continue to grow their business locally while also having established themselves in another market.

 

How do you foresee summer 2014 in Lebanon?

There is a glimmer of hope in summer 2014. The new Minister of Tourism is working with enthusiasm and has adopted a plan that would make a difference.

We only need security, nothing else. The country is well loved in the region and tourists will return as soon as they sense stability. Also, there are many initiatives such as the one recently organized by the Traders Association in Saudi Arabia which highlights willingness to be open and receptive.

It seems there is an agreement to provide us with some stability to be able to breathe, so let us take advantage of that and do the best we can within this framework we are in.

 

What are some of the trends in hospitality in Lebanon this year?

We are working on promoting local tourism through the Travel Lebanon show where we encourage Lebanese to explore the country: our country needs us and we need to travel around it. In Lebanon Traveller, Hospitality Service’s latest magazine, we are promoting rural tourism.

There are a million things we can do in Lebanon, from hikes to culinary and wine tours to art events, but we are not used to that and usually venture out of Beirut only for Sunday lunches, though we should explore different activities. We took our international judges on a street food trip and to Burj Hammoud which they loved! At the recent “Museums at Night” event, there was a cue outside the National Museum. There are many things happening but you need to hear about them.

Though this [local tourism] will not make up for the lack of international tourists, let us build on it at least and promote our domestic tourism among each other, especially since it appeals to expats.

We have to save ourselves hand in hand as no one will do it for us.

 

What are the latest trends in the F&B sector?

This was a good year for street food, snacking and burgers. There is a global trend towards going back to one’s roots and traditions that has made its way to Lebanon, and so you find more Lebanese restaurants in heritage homes.

People are also looking for authenticity in their food and you can feel this. Again, we have to lobby for it and get more people involved in rural tourism because there are beautiful projects to be discovered.

 

Any final words?

This year was harder than last year for all the industry. We are part of the industry and feel their pain, and we felt that this year we made a difference: we put double the effort but it was part of our commitment to our industry and they felt it — and this was the magic we needed.

May 13, 2014 0 comments
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Some tourism projects are on hold waiting for better days.
FinanceTourism 2014

Masters of crisis management

by Livia Murray May 13, 2014
written by Livia Murray

Lebanon’s hospitality and tourism industry is in crisis management mode when it comes to dealing with its finances. As the number of tourists visiting the country has steadily declined, down 8.7 percent in January and 17.8 percent in February compared to the first two months of 2013, companies in the sector are running out of cash.

“The definition of good has changed,” laments Ziad Kamel, treasurer of the Syndicate of Owners of Restaurants, Cafés, Night-Clubs and Pastries in Lebanon and owner of Couqley’s and Gemmayze’s Alleyway. “Good used to mean you’re doing an acceptable margin, you’re paying out dividends regularly and you’re making money from your business. Today, good means you’re not in the red.”

Running out of cash

Different businesses have been put under different financial pressures by the Syrian crisis. In the domain of high-end hotels, businesses face slightly less pressure if they are owned by groups who can afford to continue injecting funds in them, at least until Lebanon’s tourism sector recovers from the crisis. Those who own the real estate can usually continue running and investing in the hotel without resorting to loans.

Two such cases are the Hilton Beirut Habtoor Grand Hotel and the Hilton Beirut Metropolitan Palace in Sin Al Fil, both owned by prominent United Arab Emirates businessman Khalaf al Habtoor, chairman of the UAE-based Al Habtoor Group, which also owns several Dubai hotels. While the two Lebanese properties are able to cover operational costs from their revenues, the investments to bring the two hotels fully up to the Hilton international brand standard are coming out of the pocket of the owner, according to Cluster General Manager Naif Zureikat who is tasked with keeping the hotel at those standards. “It’s a loan-free hotel,” he says.

On the other extreme, some hotels that aren’t operational yet have outright stopped investments. According to Pierre Achkar, head of the Lebanese Hotel Owners’ Association, some investments in hotels have been put on hold. One new investment, a Grand Hyatt project, was stopped to wait for better days.

For many of the remaining hotels in Lebanon that are still operating, but have bigger financial constraints, getting investment is difficult. According to Achkar, it is nearly impossible under these circumstances to find investors ready to buy shares, since their return would be close to zero or negative. In an attempt to find a way to sustain investment through these times, the Lebanese Hotel Owners’ Association has lobbied the government to pass a law making it possible to sell a room or restaurant within a hotel along the model of a “condo hotel,” the profits from which could go back into the business.

On the side of ticketing and tour operators, cash flows have remained stable with the exception of those businesses geared toward incoming tourism, according to Jean Abboud, president of the Association of Travel and Tourist Agents in Lebanon. However, the affected businesses are small, are not faced with repaying loans and could deal with their waning income by downsizing.

Companies in the food and beverage industry have had their cash flows affected adversely, making it difficult to repay loans. According to Khater Abi Habib, chairman of the loan guarantee program for small and medium enterprises Kafalat, there has been a rise in the number of failed loans in the past two years, which, though the numbers are still unaudited, has increased to over 3 percent in the past six months compared with its rate of 1.8 percent in 2011.

The high rate of failure in the industry, exacerbated by the Syrian crisis, has diminished the tourism sector’s drive to take out new loans to finance growth. In the first three months of 2014, Kafalat loans to the tourism sector reached $1.8 million, a 64.5 percent decrease from $5.1 million in the first three months of 2013.

Kafalat has also witnessed an increase in the number of rescheduled loans from their portfolio. Though Abi Habib estimates it is no more than 2 percent, he points out that it is rising. “And I expect it will keep on rising for the next little while,” he adds.

Banks and bankruptcies

For those companies that have taken out loans to finance their businesses, negotiating loans with banks has become part and parcel of the process of running — and closing — a business.

Banks almost universally require personal guarantees from the owners when they are applying for a business loan. “It’s difficult in Lebanon to get a new loan if you don’t own something else to cover it. In the States, if you have idea you can get a loan. Here, you need a personal guarantee,” says Achkar.

For this reason, shareholders of failed businesses often find themselves repaying the loan for years after their company has shut down. Kamel refers to one of his less successful experiences when he and his co-shareholders decided to shut down one of their failing businesses. In 2012, they closed a restaurant that was opened January of that year in Zaitunay Bay. “We opened in January 2012, then [Gulf countries] put the [travel] ban in May. Overnight our revenues decreased by 70 percent. Ever since then, we had a loss every single month,” he says. They were able to renegotiate the terms of the loan, and the shareholders are still personally paying it off.

By having loans guaranteed by personal assets, banks minimize the chance of defaults on loans. Banks will rarely push their clients into bankruptcy, opting rather for negotiations with their clients as they shut down their business. Their supposed lenience comes with a perk: by rescheduling loans, they make some gains on the additional interest that accrues from prolonging the repayment period.

Moreover, in Lebanon the owners of the business cannot file for bankruptcy themselves, according to Elya Haber, managing partner at Haber and Partners Law Firm. And in the unlikely event that their creditors initiate the bankruptcy, the owners of the business would not have a clean state like in the United States. Having a bankruptcy to their name, they would be blocked from many future business transactions such as taking out loans. “To tell the truth, the system of bankruptcy in Lebanon is helping people not go into bankruptcy,” says Haber. Indeed, this system encourages owners of failing businesses to quietly close shop and personally repay the loan.

Re-scheduling loans

Living up to its reputation as an active player in the industry, Banque du Liban (BDL), Lebanon’s central bank, is creating measures to help businesses ride out the storm with a modification to a 2001 circular that would let companies reschedule their loans with banks for an extra three to five years.

Last September, BDL passed an intermediate circular amending Basic Circular 80 that subsidized interest on loans to the tourism, agriculture, industry, crafts and technology sectors. This amendment made it possible for banks to reschedule subsidized loans approved by BDL prior to September 2013, for a total of 10 years. The move was designed to alleviate the financial burden on companies until Lebanon reached more economically prosperous times, according to the BDL’s legal department.

Though the time has been extended, the subsidy itself has not been increased, so a company would have to pay the extra interest that will have accrued from extending the time to pay back the loan. The subsidized loan has a minimum amount of LL50 million ($33,000) and maximum amount of LL15 billion ($10 million) or 20 percent of the bank’s capital, with some exceptions if a single economic group invests in different sectors, according to the legal department at BDL.

This is not the first time BDL has issued amendments to weather a storm. Following the 2006 war, the central bank facilitated one-year loans to the tourism industry, which they could even use to cover operational expenses for that limited duration of time. The amendment to reschedule loans is a slightly less drastic move. According to Achkar, there are efforts currently by the Federation of Tourism Associations to lobby the government and BDL to extend operational loans to companies in the tourism industry, which would help with the cash flow of the day-to-day operations. However, this type of loan would be risky to implement if the Syrian conflict and Lebanon’s low prospects for tourism drag on for a long period of time.

May 13, 2014 0 comments
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The Kuwait Stock Exchange
Finance

Gulf markets hit new highs

by Thomas Schellen May 12, 2014
written by Thomas Schellen

With the E-day of transfer to MSCI Emerging Markets status now less than a month away, the three soon-to-be-upgraded bourses of Dubai, Doha, and Abu Dhabi each moved in a different way in week 19. The Dubai Financial Market leapt out of a flat week 18 to a 300-point rise that took it to a six-year high by market close Tuesday. It ended the week only slightly lower than that peak, with a net weekly gain of 4.4 percent. The Qatar Exchange, which dropped the previous week, recouped lost territory with a 1.8 percent climb, but then ended the week below the 13,000 points line that it had breached on Monday and Tuesday. The ADX Index on the other hand dropped another 0.4 percent, continuing its retreat of week 18.

Stock indices

As the announcement of companies chosen by MSCI for inclusion in the Emerging Markets Index is slated for May 14, many eyes zoomed onto the real estate and banking shares in the running. Interest in Emaar Properties, one of the contenders, drove the stock up to a six-year peak on May 5. The share price receded slightly at the end of week 19, but interest in Emaar looked likely to get another boost as a report in The National newspaper said that Dubai regulators would adjust requirements to enable Emaar to undertake the initial public offering of its malls unit in June entirely on the DFM and not, as previously planned, spread the listing across DFM, Nasdaq Dubai and the London Stock Exchange.

Contagious optimism

Dubai stocks certainly do not look like bargain material after having risen more than 60 percent year-to-date according to Bloomberg. Perhaps the best example of an outlier is construction group Arabtec, whose share price last week was described as “looking expensive” by local analyst Shuaa Capital after more than tripling thus far in 2014. However, the attractiveness of DFM-listed stocks may still be able to feed on continued optimism as Dubai’s Department for Economic Development (DED) reported that the business confidence index rose 20 percent in the first quarter of 2014. Based on the long-term business prospects tied to the 2020 World Expo, large companies were the most confident, according to the DED.

The Saudi bourse, mightier and not concerned with the MSCI, saw the TASI extend its gain for a second week. This made Tadawul the week’s third Arab exchange besides Qatar and Dubai to report a multi-year index high. Now in a six week uptrend, the Bahrain Bourse is again edging closer to 1,500 points, a level last seen four years ago.

The Muscat Securities Market adjusted to the enthusiasm of the other exchanges in the Gulf Cooperation Council and rose 1.2 percent, marking its best weekly gain since falling below the 7,000-points line some eight weeks ago.

Rising tides did not lift all boats, however — the KSE Index fell 0.3 percent. Assessing trends in the Kuwaiti economy, the country’s largest bank, National Bank of Kuwait, last week reported that “real estate as asset class” has been a focus of activity, attributing an 18 percent increase in 2013 property sales to a record $13.1 billion partly to the softness in the equity market. The NBK analysts expect the country to see steady non-oil growth of 4 to 5 percent in 2014 and 2015 and added that the economy “could start to gather considerable momentum sometime in 2015,” contingent on government measures for economic reforms and implementation of infrastructure projects, which are both overdue.

Small change for the rest

In the Levant and North Africa, losers outnumbered gainers three to two, with all weekly index movements staying in the 0.5 percent range. The Beirut Stock Exchange dropped half a percent and the BLOM Index entered the weekend below 1,200 points for the first time since the Salam cabinet took office in early February. The Amman Stock Index did better than in week 18 but never fluctuated more than one percentage point throughout the week; its 0.2 percent net gain was in flat territory.

The MASI in Casablanca gave up half a percent between market opening on May 5 and the close of the week on May 9. The Tunindex of the Tunisian bourse on the other hand advanced half a percent in the same period, making its minute gain the best performance in the Levant and North Africa for the week.

Egypt, North Africa’s center of popular mass, saw its benchmark index fall 0.5 percent. As the country appears set to return into the political embrace of its pre-uprising reality, the primary market last week received its first IPO prospectus since 2010. According to Reuters, it is a flotation seeking $120 million and the measure is being undertaken — perhaps fittingly — by a heavy industry materials producer, the Arabian Cement Co.

May 12, 2014 0 comments
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A protester holds up a sign "#NoLawNoVote"
Leaders

Open the doors of Parliament

by Executive Editors May 12, 2014
written by Executive Editors

There is an old British adage about the frustrations of everyday life. “You wait an hour for a bus,” the saying goes, “and then three come along all at once.”

In the first week of April, after going over a year without passing a single bill, Lebanon’s expired Parliament reconvened and jolted the body politic into action. In total, parliamentarians confirmed over 70 bills in only a few days.

While this magazine agrees that action is certainly preferably to inaction, it is disconcerting that many of these bills only received a cursory analysis in a public forum.

As they rushed to push legislation through, numerous potentially important laws received fewer than 15 minutes deliberation in Parliament. When Executive interviewed Minister of Tourism Michel Pharaon, he mentioned a new bill he personally pushed through that, while potentially positive, has had little analysis by civil society. Even those laws that pricked the public interest remain shrouded in mystery, leaving those whose businesses or lives will be heavily affected at best anxious and at worst infuriated. And with Parliament’s committees often fundamentally rewriting laws, the result is seemingly paradoxical situations such as we saw in early April when women’s rights movement KAFA took to the streets to protest against the passing of a law they had written the first draft of.

More worryingly still, many of these new laws are yet to be signed by President Michel Sleiman and so have not yet been published in the Official Gazette — the primary source for the public and civil society to review new legislation. In simple terms, it is impossible to say whether Parliament’s newfound efficiency is leading to the confirmation of dozens of long-needed bills or pushing through badly written laws that could harm the country. This is yet another issue of a chronic lack of transparency in Lebanon’s politics.

[pullquote]The current system only furthers the public’s fears that politicians have something to hide.[/pullquote]

The country’s Parliament is notoriously closed to the public — major civil society organizations that help draw up legislation regularly have no idea about the status of those laws once they enter Parliament’s maze. Indeed, to get access to a draft law once it has entered the committee stage often requires personally going to a committee member’s office.

This must change. A bare minimum would be the establishment of a website that would allow people to track the status of all of the draft laws in Parliament. This would enable citizens to know who to hold to account when, as happens with alarming regularity, bills get surreptitiously changed. It would also enable the public (and media) to engage in reasoned debate over a draft law’s merits and shortcomings.

The technology is available and affordable. There is no longer any excuse for so little transparency. The current system only furthers the public’s fears that politicians have something to hide.

May 12, 2014 0 comments
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Since its first edition emerged on the newsstands in 1999, Executive Magazine has been dedicated to providing its readers with the most up-to-date local and regional business news. Executive is a monthly business magazine that offers readers in-depth analyses on the Lebanese world of commerce, covering all the major sectors – from banking, finance, and insurance to technology, tourism, hospitality, media, and retail.

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