Executive Magazine

Exiting the fast lane

by Executive Staff December 17, 2009

written by Executive Staff

Lebanese auto dealers have had to handle a mixed bag of issues in 2009 as they worked to retain last year’s 45 percent rise in sales.

For the dealership Bassoul-Heneine, BMW sales were up 56 percent this year, the second highest growth for the German brand in the Middle East after Syria, with sales up 94 percent on 2008 — a stark contrast to the region, where sales dropped 8 percent in 2009.

“Our business plan was to sell 680 BMWs, but we will reach 1,000 units. In 2007 we sold 512 units, 624 in 2008 and this year until October, 824 units. For all our brands, our [total] target became 2009 units in 2009, and we’re going to do that,” said Nagy Heneine, general manager at Bassoul-Heneine, which is also the dealer for Mini, Alfa Romeo, Dacia and Renault.

Heneine attributed the rise in sales to the new X6 Sports Activity Vehicle, the broad range of BMW models and purchases by rental companies.

“The X6 had huge success. We were not expecting this and had budgeted on 120 cars at the beginning of the year, but we’ve sold 270 units as of November,” he said.

Fleet sales to car rental companies also boosted sales, since the summer months saw a boom for the sector.

“In this country nothing has changed, yet everything is upside down,” said Negib Debs, brand manager of Mercedes and Smart dealership T. Gargour & Fils.

“Usually the summer is the worst time [for sales] but in 2008 [they were] our best months ever, and this year too. And we are not selling cars to Saudi [summer tourists], but to Lebanese,” he added.

US troubles didn’t knock sales

For American brands, 2009 has been a tough year. United States manufacturers sought financial aid from their government and underwent severe restructuring of administration and production.

“At the beginning of the year we were a bit skeptical [about the year ahead] but after 10 months, sales are almost like last year,” said Cesar Aoun, manager of the Chrysler Car Group of Chrysler, Jeep and Dodge, which reported 25 percent growth in 2008. “This is despite everything the US brands went through — near bankruptcy, Chapter 11 [of US bankruptcy law] and all the turbulence.

“But this did affect the brands’ images and consumers were hesitant to buy US, [which is] why US brands have dropped by 16 percent to date in volume, although we will close the year at the same level as 2008.”

“However, compared to the rest of the Middle East, we are the only country maintaining the same level [of sales] as last year,” he added.

Ford is another American name to have seen an up-tick in sales, from 75 units overall last year and 63 units at end-October 2008 rising to 101 units sold this year at end-October.

Aoun said that Jeep sales have performed the best for the Chrysler group, followed by the Chrysler and Dodge brands.

“The four door Wrangler has been a hit, and the four cylinders have been doing well, as people are keen on engines with low fuel consumption. Sales are positive despite all the turbulence and we are optimistic about the Fiat partnership next year,” said Aoun.

Sales saved by advertising

Although sales have been buoyant this year, companies have had to invest heavily in advertising to entice customers; with mother companies having a tough year financially, Lebanese dealerships have had to dip into their own reserves to maintain ad spending.

“The marketing budget was cut, and we had to spend more from our own budget and move aggressively in offers and margins,” said Aoun.

But for companies like T. Gargour & Fils, it has not been the financial crisis that has affected marketing so much as the degree of advertising in Lebanon that assaults the public, on billboards, in magazines, in newspapers and on television.

“Advertising is increasingly crowded, so whatever you do has no effect, due to the mass out there. We are now focusing more on [organizing] special occasions and test drive events. And maybe we’ll try to shift to more below the line ads by [direct] mailing and by being more niche orientated,” said Debs. Advertising is shifting from the traditional product-based approach to focus on after-sales provisions and customer service.

“We are positive and are marketing very actively to position ourselves outside the box with the Jeep brand, improve customer service and at the same time have aggressive sales and pricing,” said Chrysler Car Group’s Aoun.

Middle class sales dip

While Lebanon appears to have weathered the global financial crisis without suffering major damage, the crisis has affected consumer habits — as have higher fuel prices, rising in cost this year to a dollar a liter.

Out of the three consumer layers in Lebanon — mid to low income, medium to high, and luxury consumers — it is the middle layer that has been “really affected,” said Fayez Rasamny, vice chairman of Rymco, dealer for Nissan, GMC, and Infiniti.

“The SUV consumer, who has been more affected by the financial meltdown, held off purchase decisions, whereas the Nissan Sunny buyer still needs a car,” he added. As a result, SUV sales have been fairly stagnant across the board, with sales strongest for sedans.

“Lebanese have not been affected much by the crisis but are conscious of fuel consumption and there is a trend for smaller cars,” said Aoun. “The SUV segment is [quite] stable, although not up much. People want small cars but also need to fit five.”

Smart cars, part of the Mercedes-Benz group, were hoping to tap into this market for smaller cars, but it has been a perception problem to shift units, said Debs.

“Customers don’t perceive the Smart S42 as it should be — it is a very safe car, able to crash into say an SUV without even a break in the windshield,” he said. “People have the notion that a small car is not safe, but it is expensive, at $19,000, because it is safe. However, we’re still selling 30 to 40 units per year.”

Italian opulence

Italy’s Lancia returned to Lebanon in November with the Delta, a 1.8-liter mid-size car, distributed by G.A Bazerji & Sons. A new version of Lancia’s Ypsilon is expected in 2010.

“Lancia interrupted production of mid-range cars since 1997 for a decade or so, and so was out of the Lebanese market,” said Managing Director Nabil Bazerji. “We are very optimistic, provided the situation in the country [remains] positive.”

G.A. Bazerji & Sons is also the distributor for Maserati, which saw sales grow by 75 percent from 8 units in 2008 to 14 units in 2009. All sales were to Lebanese, which Bazerji put down to confidence, unlike in the Gulf, where luxury sales have dipped 30 percent.

“The Gulf is a balloon, it was in good health for 30 years during which Lebanon was at war and in recovery,” he added. “Give Lebanon a chance, have normal production and everything will follow. Then we can compare the two regions.”

Association of Car Importers in Lebanon (AIA)

New cars registered in Lebanon by AIA members in 2009

December 17, 2009 0 comments

Automotive

Downshifting an industry

by Executive Staff December 17, 2009

written by Executive Staff

Car sales in the Gulf dipped by an estimated 27 percent this year in the wake of the financial crisis, but Lebanon, like Syria, has had a second successive year of burgeoning sales, defying the tumultuous 16 months car manufacturers and dealers have faced in most of the world.

However, while growth in 2009 met and in certain cases exceeded 2008’s record year, the sector has not been immune to the global financial crisis. Dealers have had to adjust to restructuring at mother companies, American brands have had to handle their manufacturers’ brush with near bankruptcy, and marketing budgets have been constrained.

On top of this, there has been a surge in imports of used luxury and sport utility vehicles (SUV) from impacted markets in the United States, Europe and Japan, due to excessive inventories and dealership downsizing. Currently two used cars are sold for every one new car bought in Lebanon, up 10 percent from an estimated 60/40 split in 2008.

These used high-end vehicles foster the perception that the transportation of choice for the Lebanese is in the luxury range, whereas in terms of actual volumes of new cars sold it is the less flashy mid-range cars — the Nissan Sunnys, Renault Clios, and Hyundais — that account for the lion’s share of sales in the Lebanese market.

Dominating the sector is Rasamny Younis Motor Company (Rymco), dealer for Nissan, GMC and Infiniti, with 6,182 units sold as of October, the bulk in Nissan sales at 5,638 units. This is up 8.57 percent from the 5,193 Nissan units sold in the same period of 2008.

Last year, the car sector had an “exceptional year, the best year ever,” said Cesar Aoun, manager of the Chrysler Car Group of Chrysler, Jeep and Dodge, with the sector up 45 percent from 2007, increasing from 20,082 registered new units to 35,416 new units in 2008. As of October 2009, new car sales totaled 26,664 units, down by 2.48 percent on the October 2008 count of 27,341 units, according to the Association of Car Importers in Lebanon.

Last year set a new benchmark for the sector, said Fayez Rasamny, vice chairman of Rymco, adding that while 2009 may not be as strong a year, “it is a good indicator for the auto sector that the market has increased considerably.”

That new benchmark is now between 31,000-35,000 new units a year. But back in January, few dealers expected a successive year of strong sales, thinking that consumers would be wary about purchasing in the uncertain world financial climate and ongoing political turbulence of Lebanon.

“We started 2009 pretty weak and I don’t know what happened, but June, July and August were fantastic. We are projecting 2009 sales will be up 9 percent on 2008,” said Negib Debs, brand manager of Mercedes and Smart dealership T. Gargour & Fils.

BMW was also caught off guard, said Nagy Heneine, general manager of Bassoul-Heneine, dealer for BMW, Mini, Alfa Romeo, Dacia and Renault.

“Nobody expected the market to be as strong as it was,” he said.

Riding market fluctuations

While sales have defied expectations, Rasamny expects cumulative sales for 2009 will be “a bit less” than 2008. Profit-wise however, 2009 will not be as good as last year.

“The margin on sales has definitely deteriorated because of promotions and inventories,” Rasamny said. “Even if Lebanon has not been affected by the recession, consumers are well aware that they can bargain for prices and purchases. All companies have campaigned to liquidate stocks. Companies are really scared to have large inventories,” he added.

Dealerships have been offering a slew of incentives to entice customers, from low interest payments to subsidized interest, trade-ins, lotteries and assorted gifts. But it is loans from banks that have been crucial to keeping sales buoyant at a time when financial institutions elsewhere have reined in lending.

“At the beginning of the year banks were a bit cautious about lending, but from June to July onwards [it was] back to aggressive competitive offerings and it helped the sector not be affected by the financial crisis,” said Aoun.

The summer boom appears to have tided the sector over given the slow start to the year, with the fall months seeing a downturn in consumer purchasing.

“We started seeing from September onwards that the market was slowing down, like the crisis had hit Lebanon with some delay,” said Heneine. “October and November have been weak and did not meet sales expectations, but we’re confident we will hit 1,000 cars this year.”

It is sales to rental companies that have been the real boon for the sector, as firms had held off purchasing new cars on a mass scale after being stung in 2006 during the July war between Israel and Hizbullah, with rental companies having significantly expanded their fleets in the expectation of a bumper summer. The following year witnessed reduced demand for rentals, rising again in 2008 and this year. Bolstering demand was the legal requirement for rental companies to buy new cars every three years.

“Every year something happened [politically in the country], so rental companies didn’t buy until they had to,” said Heneine.

But such unexpected demand has presented problems for dealerships in regard to inventory, cagey about ordering too many in case there is insufficient demand, yet given the time lag for delivery, wanting to meet consumers immediate needs.

“It’s like juggling with fire,” said Debs. “You need a lady with a crystal ball because sometimes you hold onto stock too long, then suddenly in three months you’re empty and need more. The hardest thing to do is inventory.”

“We don’t have anything to hook onto and say, this is sustainable when you have 60 percent growth in one year – who would’ve expected that? And is this a new trend? We hope so,” he added.

A dime a dozen

The biggest struggle for new car importers has been the flood of used cars into the country, with used car dealers and individuals taking advantage of the glut of cheap, secondhand cars on sale in the US from Americans selling up and downsizing. This is in addition to the thousands of dealerships affected by forced closures, with GM eliminating up to 40 percent of its US dealers and Chrysler closing 789 dealerships this year.

“Any individual has the right to import cars from the US and sell them under their house, it’s a joke, and control is starting to be a joke, despite the “mechanique” [required road safety tests at authorized mechanics],” said Debs. “We are not only competing with used car dealers, but with doctors and lawyers who have friends in the US. When the euro went up, all used car dealers rushed to the US. Some dealers have so much stock there is no space in their parking lots, so there are cars for sale even out on the streets.”

Heneine said that used car sales have risen from 60 percent of the market to 70 percent.

“I don’t want a war with the used car dealers, but they’re waging a war on us,” he said.

Damaged goods

Dealers say that the used car sector needs to be better regulated, as it is not only affecting the sales of new cars, which pay higher taxes to the government, but it also results in inefficient vehicles entering the country, cars that would not be allowed on roads in other countries. One dealer highlighted this with an anecdote about an acquaintance that bought a used car and had the vehicle checked with a key reader, which can assess mileage.

“When we checked the key reader, we found that the car should have been put out of circulation,” he said. Other dealers related accounts of cars that were flooded during hurricanes in the US being on sale in Lebanon.

“There should be a government strategy to improve the quality of vehicles on the roads of Lebanon, and a correlation in duties between new and used cars,” said Aoun. “To change this, to have safer and more ecological cars, needs a whole strategy between ministers.”

“You can still import cars from 2001, and the majority come with high mileage that are changed here, or they are damaged and then fixed here,” he added. “I don’t understand how it’s open for everyone to import and compete with a registered company that employs people, pays taxes and has proper representation.”

“The government should apply a lot of laws, and be strict on the flow of cars, such as those from the Gulf as many people bring luxury cars, don’t pay customs or VAT and profit in the long term at the expense of dealers and the government,” he said.

Car importers have lobbied the government to bolster regulations, with scarce results.

“We will always try, but we didn’t succeed in the past,” said Rasamny. “If the tax on new vehicles was dropped by 5 percent, income for the government would go up by 50 percent. When you decrease taxation you promote sales of new cars and take out all the used crap, as used cars are not as environmentally friendly. What’s happening is the recycling of a whole industry,” he added.

A mixed forecast

Dealerships are upbeat about the year ahead, although they realize that sales may not reach the same levels as this year, due to inventory expansion in the rental car sector, as well as after effects from the financial crisis. Nonetheless, with new models being launched, dealerships are banking on new inventories to keep sales buoyant.

“We expect growth again in 2010 from new models, and 2011 even more volume due to new vehicles,” said Aoun. But with a new benchmark set for the sector in 2008 and 2009, any decrease in sales will be difficult for the sector to handle, particularly when reporting back to mother companies expecting such strong growth.

“At the beginning of 2008, we thought maybe we’ll reach 500 units, but we closed near 600. Now it is difficult to go back to these [lower] figures,” said Debs.

Rasamny expects a good year ahead, albeit with a need for cautious optimism.

“I think 2010 will be similar to 2009, but we need to increase margins, be smart about inventories and focus on after sales to sustain the market,” he said. “But if in 2009 we sell 32,000 units, it doesn’t mean 2010 will be the same, we need to be careful.”

December 17, 2009 0 comments

Tourism

Elie Marouni (Q&A)

by Executive Staff December 17, 2009

written by Executive Staff

Elie Marouni was appointed Lebanon’s minister of tourism in July 2008 and held the chair until the new cabinet was formed in November 2009. Executive sat with Marouni shortly before he left office in order to discuss the strategy that the ministry had adopted to promote tourism in Lebanon and the major issues and concerns of the tourism industry.

E What is the Ministry of Tourism’s marketing strategy to promote Lebanon?

We do this in several ways: first, by signing tourism cooperation agreements with other ministries of tourism or other responsible authorities. We sign agreements for tourism exchange and promotion. This year we signed 12 of these, the most important being with Spain, China, Mexico, Kuwait, Egypt and Jordan, among others.

Other than that, we are members of the Arab Tourism Organization, which aims to strengthen tourism between Arab countries, and the Lebanese Minister of Tourism (being myself at this time) was elected to be the president of the Arab Tourism Organization until 2011. We are also members of the World Tourism Organization, based in Madrid. This international and regional exposure is the first way.

Second, we have promotional movies about Lebanon that are broadcasted on international television channels and through embassies, and also through direct collaboration with the companies responsible for organizing incoming trips.

Last, we participate in international tourism exhibitions, in London, Berlin, and Moscow, as well as elsewhere around the world. We also organize exhibitions in Lebanon for all countries to have tourism stands. Next year the exhibition will be in April and a lot of Arab countries will be participating.

E What are the major obstacles facing the ministry?

Today, in a country like Lebanon, the economy depends heavily on income from tourism. And in a country where there is no oil and not enough agriculture and manufacturing, we need the tourism sector as well as the ministry to be well supported so that it can perform all its duties.

Unfortunately, the ministry of tourism has the smallest budget in the Lebanese government, and therefore the first problem it faces is a weak financial status. The other weakness is the lack of coordination between the different ministries, because today you can’t have tourism without roads, without electricity or water, and you can’t have tourism in a polluted environment. All of these need emergency solutions in Lebanon, in addition to problems we face in regards to some hotels and restaurants, which also need immediate solutions.

E What problems are there with hotels and restaurants? And what is the role of the tourism police?

With some restaurants, we had problems with price manipulation; they weren’t abiding by the prices on the menus. We also had problems with booking cancellations made without customers’ knowledge. Sometimes it is because [owners] are greedy and think one customer will pay more than another — therefore we also need more tourism police. Their role is to monitor prices and implement the decisions we make regarding the complaints that we receive, and also to monitor problems… Their role is to implement the decisions of the ministry. Now the number [of tourism police] is very low and the ministry’s abilities are very weak – if their number increases, we will be better able to do our duties.

E How much is the budget?

The budget does not surpass $6 million or $7 million a year, including wages.

E When we say that this country depends on tourism and services, why do you think that the budget is still so low?

Because there is a misperception that says we depend on the private sector, so let it do the promotional work. There is also the perception, from some authorities, that Lebanon is a tourism destination and that people will come with or without promotion. And that is wrong, because there are generations that know Lebanon but others don’t. And because of my own travels and conversations I’ve had, I realized that some people don’t know anything about Lebanon — therefore publicity becomes essential.

E Since the budget is that low, are you trying to work with the private sector?

We are collaborating with the private sector when it comes to festivals; we contribute to them financially despite the circumstances. We are contributing to the Baalbek festival, as well as those in Saida and Tripoli. We also contribute symbolically to small festivals in towns. We also make many promotional movies.

All of our work is with the private sector, because the ministry cannot, for example, open a restaurant, but it offers licenses and monitors, and all the things related to the revival of tourism.

E I’ve heard that there are not enough three-star hotels in Lebanon and other hotels are expensive – is this one of the reasons why Europeans are less keen to visit? Do you think that is true?

Yes it is very true, because those who come from the United States or Europe come for cultural reasons, and don’t look for five or six-star hotels, they look for cheaper and more affordable hotels. So we need a high number of two to three-star hotels in order to stir activity for the middle class. Now there is more awareness and some old two-star hotels are being fixed in order to absorb these people. We are also trying to secure some loans with the collaboration of banks. More than that my concentration was to develop balanced tourism so that it is not concentrated on the capital, but in all areas, especially in areas where we can showcase our natural beauty, monuments and religious places, which can attract a large amount of tourists.

E What kind of tourism is the most targeted? Is it mostly nightlife tourism?

No, that is not true. We have health tourism, and we have intellectual tourism. For example, this month there will be a gathering for Arab women writers that are coming to Lebanon, and a while ago we had the Francophone games, where 4,000 players came…and we have conference tourism. We also have sports and religious tourism, leisure tourism because some people travel simply to have a good time, and Lebanon is known for its hotels and restaurants, which are of a very high quality.

E Do you think we should concentrate more on cultural tourism?

We are observing millions on their way to see Jerash and Petra (in Jordan) and the Pyramids (in Egypt). Our historical tourism is a little bit weak, and we want to concentrate on the fact that we were able to take Lebanon’s Jeita Grotto to the final stage of the “Seven Wonders of the World” competition.

E Are there any other concerns that you would like to highlight?

I put forward a plan for Lebanon and called it ‘the visions for the manufacturing of tourism in Lebanon’, because in my view tourism is not a hobby anymore — today it is a whole basket of things, starting with the guest’s arrival at the airport, and extending to hotels, restaurants, means of transportation, and phone lines…all these should be secured.

I made my plan to accomplish balanced tourism development in the country and to include all these matters, and I submitted it to all the authorities and I will present it to the next minister in case he wants to follow it.

Also as a parliamentarian…I will follow up with the tourism committees to upgrade tourism regulations, because the problem is that tourism regulations are very old and obsolete and it is very important to upgrade them and to give incentives for investing in Lebanon.

A part of regulations refers to taxes and another part regards the bureaucratic process, which takes a very long time, so also we should ease these procedures in order to enhance tourism investments.

The ministry also needs to reinvigorate the labor force. We need new blood to enter the ministry and offer new ideas, because the ministry should present a beautiful picture of Lebanon and I think that the youth are the ones who can give that picture. The tourism ministry should be more highly regarded than it currently is due to the fact that it doesn’t contribute to the deficit in Lebanon but is in fact rather profitable, and helps to support the economy.

December 17, 2009 0 comments

Tourism

Ready to run

by Executive Staff December 17, 2009

written by Executive Staff

Ihab Kanawati General manager, Crowne Plaza Hotel

The most important thing in Lebanon is its natural beauty. That is a big advantage we should always remember. We are becoming a preferred destination and a safe haven for all business and leisure people. There is no reason to be afraid if our prices (room rates) exceed those of neighboring or other regional countries. We should also work on developing our advantages because if we are prepared to work hard and deliver exquisite service, there is nothing stopping us from climbing the ranks. At the moment, Gulf countries are the main source of tourists; however, we should open up to other markets like Europe, Australia, Japan…these are very big suppliers if we know how to tackle them. The private sector should also meet under the umbrella of the Ministry of Tourism, and not only to say Hello and Goodbye, but there should be an action plan, starting by pouring additional funds to advertise our country internationally and also creating new job opportunities to retain our talented human resources. The ministry should act upon this.

Paul Ariss President of Lebanon’s Restaurant Owners’ Association

The Beirut Central District is no longer an attraction for pubs, restaurants and cafes for locals. Only people who work downtown keep visiting the actual entities, and some tourists in the summer time. Nothing — nothing has been done to revive this area or to help the 104 restaurants that were operating there before 2007. Less than 30 remain and they hardly break even. Moreover, the decentralization of pubs, restaurants and cafes towards other parts of Beirut and Greater Beirut does not help the BCD recover.

Nather Auchi Vice president, Le Royal Hotel

*“There is no collaboration or support from the ministry”*

A couple of days ago, a delegation came from Germany. It was a group of photographers and TV reporters from the main tourism channel in Germany. They were doing a report about Lebanon to show the real image of this country. They were very impressed because they had always held the wrong impression about the country. We tried to bring them closer to the Ministry of Tourism in order to promote Lebanon, and it was hard for us to do so. There is no collaboration and support from the Ministry of Tourism. It is not a matter of money, but services for example. They are signing tourism agreements, but what are they and how will they affect the tourism industry? So there should be more collaboration between the ministry and the private sectors and it would have been better if there was backup from the ministry or from embassies abroad on this subject.

Sandro Saade Chief executive officer, Wild Discovery

*“We need to work on a solution to meet [all] budgets”*

To be able to attract a higher number of tourists, Lebanon needs to work on several issues among which is a public transportation solution. When tourists come to visit Lebanon, some of them can afford to pay on a weekly basis from $300 to $400 for taxis only and others cannot. Therefore, we need to work on a suitable solution to meet both the high and average budgets, a plus to the overall Lebanese tourism industry. The will is certainly there. There is also a large number of tourists who were planning to come to Lebanon this year; however, we believe that many of them did not because of the expensive image the country holds abroad. The ministry has put in great effort towards increasing the number of tourists and the target has been reached. Nevertheless, there is still a huge potential that we are missing out on from the Western countries.

Gordon Campbell Chairman, Campbell Gray Hotels

*“[Beirut] is the safest city in the world”*

Beirut is not a beautiful city, it is a big sprawling mix, it is beautiful, ugly, damaged, sexy, complicated, annoying, fascinating…all of the above. But beautiful it’s not, really. It is the safest city in the world: you can walk around at two in the morning and it is totally safe. I wouldn’t walk around London or Paris or New York in the morning without being very careful. So I am promoting that. But [foreign] people’s perceptions have to change. I think the driving is ghastly, horrible, and the police need to sort that out. You drive in Rome and it’s crazy, but no one is dying in Rome. Here they die. I had to drive off the road to save my life, and it’s not funny, that is the only thing I object to. The powers of the police need to be strong to say “stop it.”

Joseph Coubat Area vice president, Rotana Lebanon, Bahrain, Kuwait & Qatar

*“Travel still remains the internet’s largest business”*

Online booking provides hotels with a simple yet powerful way to sell their products online. All recently published statistics on Internet sales confirm that hotel bookings represent almost 50 percent of all Internet transactions worldwide, travel still remains the Internet’s largest business and it is set to grow even more. There is huge potential in this region for online technology and this sector will inevitably replace the more conventional methods of revenue generating communication and interaction with our guests. The region is catching up quickly and this is exactly why major online partners have now opened offices in the Middle East, as the potential is tremendous. In Lebanon this new trend is picking up as we are slowly seeing more bookings coming via online channels every day.

December 17, 2009 0 comments

Tourism

Closing the distance

by Executive Staff December 17, 2009

written by Executive Staff

Lebanon’s tourism sector may have achieved record-high numbers in 2009, but still has a long way to go before it achieves its full growth potential. The long years of civil war devastated infrastructure and the tourism industry was left with outdated laws and little government investment. Experts say that authorities have a lot to do in order to better promote the country and make it tourism-friendly.

The major issue facing the tourism industry is the security problems and political instability that have reigned over the country the last few years. In this climate, industry players such as hotels, restaurants and even the tourism ministry can do little but sit and hope for the situation to remain at least as calm as it was this year, when more than 1.4 million tourists arrived in the first nine months, despite the parliamentary elections and a four month delay to the government formation.

“[The elections] had no effect on tourism flow towards Lebanon, as was confirmed by concerned authorities, statistical institutions and the media,” said Jean Abboud, president of the Association of Travel and Tourist Agents in Lebanon.

A destination unknown?

Industry experts say the most important step the authorities need to take is to promote Lebanon in foreign countries, especially in Europe, where some still have a poor perception of the country’s political and security situation, while others still have difficulty finding Lebanon on the map.

“There is no campaign for Lebanon. We are happy that Arabs are coming…but it’s not enough,” said Sandro Saade, chief executive officer of Wild Discovery, the tourism entity of Lebanon-based Johnny R. Saadé Holdings.

The Ministry of Tourism, with its small budget – estimated at between $6 million to $7 million by its former minister Elie Marouni – can do very little in promoting Lebanon abroad. To perform better, the ministry should either have its budget increased or collaborate with the private sector.

“The ministry is trying to do the most it can with two things, the budget that it has and the human capital that it has,” said Pierre Achkar, president of the Federation for Tourism and Hotel Association in Lebanon. However, Achkar said that considering the salaries the ministry is offering, it is unlikely that it will be able to attract the skilled workforce it needs to help create a marketing strategy.

Achkar’s solution would be to re-create the “National Council of Tourism,” which existed before 1992. It would be made up of experts in the private sector and its role would be to develop the needed promotional strategy. It would operate on the budget originally allocated to the marketing department in the ministry.

“We have many suggestions, such as taking the percentage of the VAT that the restaurants and hotels are paying and using it to finance the council,” said Achkar.

This might not be the only solution to better promote Lebanon, and different experts have different ideas, but what they all seem to agree upon is that more capital should be invested in the sector to ensure its continuous growth.

“The tourism industry has been a major source of revenue, a major provider for all kinds of jobs,” said Abboud. “Authorities should start spending more money to promote the country abroad.”

“The hotels would help the Ministry of Tourism but they have to come up with a plan,” said Ihab Kanawati, general manager at the Crowne Plaza in Beirut. “Let them knock on the doors of the hotels and tell them we need your help… I don’t think anyone would say no,” said Kanawati.

Europe as an untapped market

Arab gulf nationals represent 41 percent of the total number of tourists coming to Lebanon, while Europeans represent only 26 percent, according to numbers provided by the Ministry of Tourism. Statistics also indicate that the number of Europeans visiting increased by some 30 percent in the first nine months of the year, compared to the same period in 2008.

“We are definitely seeing more Europeans, but we are still not at the level that we should be,” said Wild Discovery’s Saade.

According to the tourism ministry, one of the major reasons Europeans shy away is political instability and security issues.

“When things started to happen, some governments forbade or

advised their citizens not to come to Lebanon,” said Nather Auchi, vice president at Le Royal Hotel.

Gordon Campbell Gray, owner of Le Gray Hotel — recently opened in Beirut Central District – said that “most people do not understand politics and foreigners have no idea [about the reality of Lebanon].”

Gray said that when he came to Lebanon, a lot of people in England said he was crazy. “For me, political stability is all that’s needed,” he said. “Everything else is there and at the moment it is very good.”

The other reason, said Saade, is that Europeans usually come with lower budgets and find Lebanon expensive. In order to attract a larger number, more three-star hotels should be built to provide tourists with clean rooms at cheaper rates.

“If Europeans want to come to Lebanon, they need to have a budget, they have to be relatively wealthy to come,” said Saade. “We need to invest more in this [three-star hotel] concept, which is not always easy due to real estate prices.”

The experts consider European tourists a viable potential growth market since Europeans have a tendancy to travel for cultural tourism, which is a segment still lacking much development in Lebanon, as opposed to business or entertainment tourism.

“They are close, only three to four hours by plane…so they are a big potential for Lebanon,” said Achkar. He added that occupancy rates drop significantly outside Beirut. Given that many of Lebanon’s cultural attractions lie outside the capital, increased numbers of European visitors would help balance the distribution of tourism across the country.

Infrastructural blues

Hotels and resorts usually have their own electricity generators and water supplies in order to mitigate power cuts and water shortages, but one of the major issues the industry is suffering from is the lack of adequate public transportation.

“The private transportation sector (buses and taxis) are not sufficient and are not well controlled,” said Abboud. “Beirut’s Rafiq Hariri International Airport taxis have their own authority and charge as much as they decide to.”

The incomplete and outdated infrastructure also creates a lot of traffic, which experts say has a negative effect on tourists.

“They come without knowing what it is like, but when they see it they get annoyed,” said George Petrakian, owner of Tania Travel. “The traffic laws and regulations should be changed.”

Help wanted

Another major concern is the lack of a professional workforce, which for the last few years has been drawn to the booming economies of the Gulf. Though many predicted that with the financial crisis a large number of workers would return home, such a trend has not materialized.

“The situation got worse in 2009; none of those who left came back,” said Paul Ariss, president of the Syndicate of Restaurant and Café Owners in Lebanon. “All hotels and restaurants [in Lebanon] faced dramatic recruitment situations last summer and they had to rely on amateurs…the crisis in the Gulf area had a very minor effect on the restaurant business, except in Dubai. Qatar and Saudi Arabia are still recruiting.”

“When any hotel wants to open [over there], we feel it,” agreed Achkar. “People start taking days off and resignations start to appear.”

Obey the law…or don’t

Some tourists, mainly Gulf visitors who are known to be wealthy, also face issues of overpricing.

“We had problems with pricing manipulation; they (restaurants) weren’t abiding by the prices on the menus,” said the former Minister of Tourism Elie Marouni. “The role [of the tourism police] is to monitor the pricing and implement the decisions we make regarding the complaints that we receive.”

However, some question whether or not the tourism police are taking appropriate action on complaints. “The Ministry of Tourism, although having received many complaints, did not take any administrative or legal measures against any institutions,” said Ariss. “By law, all institutions are obliged to expose their price list (confirmed by the ministry) at their entrances and no one did any checking.”

Business keeps on booming

Although several challenges still need to be addressed in the industry, all the market players Executive spoke with said that even if all current problems remain in place, as long as political stability holds, the industry will grow.

“We have no reason to expect slow business,” said Kanawati. “Things are moving in the right direction and if we move with them we should expect more business flowing to Lebanon in the next few years.”

December 17, 2009 0 comments

Tourism

Holiday hustle

by Executive Staff December 17, 2009

written by Executive Staff

Whether for business, leisure, entertainment, health or cultural tourism, visitors flocked to Lebanon in 2009, and the country is regaining its position as a major tourism destination in the Middle East.

Since the onset of the global financial crisis, tourism numbers dropped not only in the Middle East, but also around the globe. In Lebanon, however, visitor numbers are reaching record highs. New hotels and restaurants are opening, investment in the tourism sector is pouring into the country and new jobs are being generated. Is Lebanon back to being the tourism and business hub of the region? Experts say that as long as security prevails, the answer to that question is a definite “Yes.”

Sky-high numbers

In the first nine months of this year, Lebanon received nearly 1,439,000 tourists, according to the Ministry of Tourism. This number is 46 percent higher relative to the same period in 2008, and 88 percent higher relative to 2007. Most of these tourists come from Arab countries (41 percent), while Europeans (26 percent) appear to still shy away from potential insecurity and political conflicts.

Lebanon saw the highest growth of incoming tourists in the first eight months of the year out of 165 countries worldwide, according to the United Nations World Tourism Organization World Tourism Barometer, issued in late October.

Only 15 countries witnessed positive numbers, with Lebanon being followed by Kenya (43 percent), Korea (15 percent), China and Syria (10 percent), and then the others. In the Middle East, overall tourism dropped 13 percent for the same period.

Hotel occupancy in Beirut reached 69 percent in the first nine months of 2009, according to the international accounting and consulting firm Deloitte & Touche, which was 41 percent higher than the same period last year. At the same time, the occupancy rate in the Middle East reached only 60.9 percent, down 11 percent compared to the same period in 2008.

According to Jean Abboud, president of the Association of Travel and Tourist Agents in Lebanon, around 35 percent of the total number of tourists used travel agencies in 2009: an increase of some 20 percent over last year.

Where tourism stands in the economy

The travel and tourism industry (T&T) is expected to generate $2.6 billion in economic activity in 2009, equivalent to 9.3 percent of the country’s economy, according to the World Travel and Tourism Council (WTTC). Direct industry employment is 150,000 (9.6 percent of total employment) this year. The WTTC 2009 report also said that since the industry touched different sectors of the economy, its real impact was expected to be higher: $7.8 billion (28 percent of GDP) and 440,000 jobs (28 percent of total employment).

As for the next 10 years, WTTC expects the T&T industry to achieve annualized real growth of 3.1 percent (reaching $4.8 billion in 2019) and 0.7 percent growth in the number of jobs (reaching 468,000 in 2019).

Number of hotels in Lebanon

Source : Syndicate of Hotel Owners in Lebanon

Number of tourists (in 1000s)

First nine months of each year

Source: Ministry of Tourism, Bank Audi’s research department

Tourism investment

Investment into the tourism sector averaged around 18 percent of the total foreign direct investment (FDI) flowing into Lebanon over the past three years. Many of these investments were made through the Investment Development Authority in Lebanon (IDAL), a public investment promotion agency that aims to attract and facilitate investment in Lebanon through different schemes. So far, 33 projects have been completed through IDAL, said its Chairman Nabil Itani. Another five are in the pipeline.

“If you look at these projects by [the] numbers you can say that 40 to 50 percent are in the tourism sector,” said Itani. “In value, the number goes up to 93 percent, because tourism is a huge investment and mega projects are involved.”

Most of these projects are in the coastal areas (zone A, as classified by IDAL) and the bulk of the investment comes from Lebanese expatriates, followed by Arabs and international companies, explained Itani.

He added that future potential lies in investing in health resorts that include hotels, restaurants and medical services, as these are relatively cheaper in Lebanon than abroad.

“This is what we are studying now…but it needs incentives from the government to simplify the investment in this sector and to highlight its advantages,” he added.

An example health resort is the new $60 million Naas project in Bekfaya, developed by FFA Real Estate, an arm of FFA Private Bank.

“Creating a wellness resort is a good move…as it combines two booming sectors, namely real estate and health tourism,” said Georges Abou Jaoude, general manager at FFA Private Bank.

FDI inflow into the tourism sector

FDI inflow from Arab countries into the tourism sector

Hotels and restaurants

In the hotel industry, Pierre Achkar, the president of the Federation for Tourism and Hotel Association in Lebanon, said that in 2005 investment rolled in for 3,000 new rooms, with companies buying land and beginning construction. A few of these are Le Gray, the Four Seasons and Rotana, which are opening this year after many delays.

“These 3,000 rooms are a $2 billion investment and they represent 6,000 new working opportunities – minimum,” said Achkar.

Not only are hotels opening, but also new pubs, nightclubs and restaurants, which are a major attraction for tourists from neighboring countries.

“We believe that more than 500 new restaurants of all types have been established between 2008 and 2009: 75 percent in the Greater Beirut area and the balance in other regions,” said Paul Ariss, president of Lebanon’s Restaurant Owners’ Association.

Tax-free tourist spending by nationality, 2009 (Jan-Sept)

Source : Global Refund and Bank Audi’s research department.

Tourist arrivals by origin, 2009 (Jan-Sept)

Back on the map

The international attention Lebanon received was a huge help to the tourism sector this year. The New York Times in January ranked Beirut as the top tourist destination out of 44 places, writing that, “The capital of Lebanon is poised to reclaim its title as the Paris of the Middle East.” British daily The Guardian also published an article in November that said “Beirut is back…and it’s beautiful.”

Fingers crossed

The fact that Lebanon finally formed a Cabinet in November is reassuring to those planning to visit, yet the lack of a government did not dissuade more than 1.4 million tourists who came to the country so far this year, nor did it decrease FDIs pouring into the sector.

Experts differentiate between security and political instability, which are not always correlated, and some are taking the government’s formation with a pinch of salt, hoping that security issues will not arise.

“Security is the main issue and not political instability,” said Itani. “That is what hurt the investment climate in Lebanon.”

This is not only the opinion of local experts, but also international professionals, who think prevailing peace in the region will stimulate further growth in the tourism sector.

“If peace returns to Iraq, Lebanon, Palestine and Iran, can you imagine how it will boost tourism in the region?” Jean-Claude Baumgarten, president and chief executive officer of the WTTC, told Gulf News.

“Hundreds of millions of people will travel across the region for business, pleasure and other purposes.”

December 17, 2009 0 comments

Environment

Natural, not neutral

by Executive Staff December 17, 2009

written by Executive Staff

Nabil Habayeb President and CEO, General Electric Middle East

The environmental problems in the Middle East are huge, and as of yet we still don’t have a common approach to resolve them. As a technology provider, we at GE are doing everything we can to address these issues, but the key thing is implementation of policies and solutions.

This will require a good understanding of the problem by the leadership, a commitment to resolve the problems, and a partnership with all stakeholders — public, private, non-governmental organizations, governmental and financiers — to act accordingly. The main thing is to make sure that we bring awareness and solutions, and have a debate, and come up with reports that focus on the region’s specific issues, in which the different sectors can take an interest.

Five years ago our chairman started the “Ecomagination” initiative, which takes the products that we have and invests in solutions that are environmentally friendly. These products have to go through several kinds of certification to ensure that we reduce gasses, purify water, have more efficient power generation equipment and produce sustainable energy…so, from a company point of view, we’re doing what we think is our responsibility, not just from a corporate social responsibility perspective — of course we have shareholders who will be looking for their return since we are not an NGO. A company like ours can now develop products that are environmentally safe and at the same time profitable. That is why we dub the initiative “Green is Green.”

Ziad Abichaker President, Cedar Environmental

Since 1992 our country has been under an emergency plan for solid waste collection and disposal — an emergency plan that lasts 17 years? Something is amiss here. First, the plan has 50 percent of Lebanon’s waste centralized in one landfill site; it was Bourj Hammoud until 1997 and since then it has been Naameh. Soon, space will no longer be available to keep on this environmentally destructive path in Naameh and an alternative would be in order.

There are two alternatives. Either we keep extending the current “emergency” plan and keep centralizing waste disposal in a mega landfill or we decide to reverse the road and start doing what most other countries are doing, which is sorting, recycling and composting. Some would argue that we are doing this now under the current plan, but what they don’t know is that we are barely doing this for 6 percent of our total daily waste load.

Soon, it will be a nearly impossible task to convince another region to accommodate the waste of Beirut and Mount Lebanon in their valleys and open spaces, which makes the alternative of continuing with the current plan practically impossible to pursue.

Every region will have to select a technology that will have the least destructive footprint geographically and environmentally. The problem is it might already be too late. Such an endeavor would require at least a two year planning and execution period. Are the people in charge of the solid waste file doing any thinking about this eventuality?

“The problem is, it might already be too late”- Ziad Abichaker

Garabed Kazanjian Oceans campaigner, Greenpeace, Lebanon Branch

*“More than 50 pipes continue to discharge untreated sewage… into the sea”*

It is astounding to see a country like Lebanon, which relies greatly on tourism to rebuild its economy, gradually and consistently obliterating its ecotourism assets. Two-thirds of the Lebanese population reside on the coast, a fact that naturally exerts great pressure on coastal resources. Twenty years on after the end of the civil war, solid waste dumps still exist in the form of coastal mountains, constituting a health hazard to the public and a source of toxic discharge to the marine life in their vicinity. Some sites, such as the Saida dump, continue to grow to this date like a cancerous tumor in the absence of waste treatment plans. Moreover, more than 50 pipes continue to discharge untreated sewage on a daily basis into the sea. Chaotic urban development contributes to the destruction of vital marine habitat, primarily the nursery areas of numerous commercially important fish species.

Fragile as our marine ecosystem is, due in great part to the pollution and destruction it is subjected to daily, not to mention the intensely destructive and unsustainable fishing practices throughout the whole Lebanese coast, it will not have the resilience to combat the effects of global catastrophes, primarily climate change and ocean acidification.

That is precisely why Greenpeace is campaigning for the establishment of fully protected marine reserves covering 40 percent of the Mediterranean. These no take/no dump areas (areas protected from both fishing and pollution) aim at protecting vital habitats, such as spawning grounds and nursery areas of threatened marine species, and aid in the recovery of depleted stocks.

Furthermore, the new Lebanese government should impose stricter regulations on coastal industries in regards to their waste disposal, update and implement fishing regulations, and put into practice the zero waste program.

Rima Habib Associate professor, Faculty of Health Sciences, American University of Beirut

We know that pollutants are responsible for a number of public health problems in Lebanon and beyond… In Akkar in North Lebanon, for example, we performed studies that found evidence of heavy microbiological contamination in water sources, usually as a result of infrastructural problems. In these areas, outbreaks of diarrhea and other symptoms are common… In some communities as much as 80 percent of household water sources can be contaminated, and close to 30 percent of households report sicknesses as a result of contaminated water. Children, of course, are particularly susceptible. This problem is more endemic to rural areas where there is a lack of proper infrastructure to treat and transport water. Another health risk is air pollution. Lebanon is not a highly industrialized country, so the largest contributors to air pollution are traffic emissions, which are usually concentrated in and around urban centers where there is a lot of traffic – Beirut, Tripoli, etc. Air pollution leads to respiratory ailments and to a lesser extent cardiovascular disease as well. Another problem with air pollution is CO2 emissions, of course. To deal with these dangers, it is necessary to apply environmental and public health standards and involve major branches of government…it would be truly excellent if Lebanon could establish a multi-disciplinary agency that involved all the ministries, something like the Environmental Protection Agency in the United States, that has “teeth” to enforce standards and make real changes to address human health from the preventive angle first, meeting possible threats before they result in illness.

“In some communities as much as 80 percent of household water sources are contaminated” – Rima Habib

December 17, 2009 0 comments

Environment

Eco-economy: a worthy catch

by Executive Staff December 14, 2009

written by Executive Staff

Politician turned climate change champion Al Gore told The New York Times that “Once the world makes it clear that we are going to follow a roadmap to a low-carbon economy, the best-managed businesses will seek to race out in front of that emerging trend.”

In other words, as public awareness of the causes and consequences of environmental degradation increases with time, market demand for “green” products — those that are produced in an environmentally friendly way, and can be used without risk of environmental damage — will increase as well.

“The environment is no longer a burden on the market,” said Edgar Chehab, energy and environment program manager of the United Nations Development Project in Lebanon. “Now it’s part of being a competitive industry: if you don’t produce products in an environmentally friendly way, you lose out on key markets.”

In the last few years, markets in Europe and the United States in particular have demonstrated a willingness to pay more for green products, he said.

All over Lebanon, new “green” markets are expanding and old industries are modifying practices to soften their impact on the environment. While many environmental advocates argue that measures have not gone far enough, an overview of reforms indicates that individuals and industries have not been wholly unresponsive to the country’s environmental problems.

One man’s trash…

New industries are rising to meet the challenges of the 21st century. Among them is the recycling and composting industry, which seeks to capitalize on, rather than simply dispose of, solid waste.

Ziad Abichaker, president of Cedar Environmental, is one of a growing number of entrepreneurs turning recycling and composting into a viable business model.

“In Lebanon, 80 percent of municipal solid waste is organic, compostable material,” said Abichaker. “That’s roughly 3,200 tons of compostable garbage generated every day. After composting, that mass is reduced to around 1,750 tons.”

With one ton of high-quality compost selling for as much as $100, Abichaker said the economic viability of going green speaks for itself.

Cedar Environmental has built 11 material recovery facilities (MRFs), capable of handling close to 10 to 12 tons each of municipal solid waste per day, and a larger MRF for the Jbeil area capable of handling 200 tons per day.

The MRFs use a “Dynamic Composting” technique, in which an enzymatic bacterial component is added to organic waste to accelerate the degradation process that converts waste to compost. In this way, organic waste can be rendered safe — from a bacterial point of view — in three days, compared to the 90 days required by ordinary composting.

Inert materials such as glass, metal and plastic are recycled according to conventional methods, said Abichaker, adding that the profits gained from these materials are significantly less than those of compost.

“The real advantage of our MRFs is that they are modular,” he said. “We can bring them directly to communities, and place them in close proximity to where people live because dynamic composting is practically odorless.”

This also cuts down on transportation costs, he added.

Do you feel the Lebanese government is taking appropriate action on climate change?

Living off the land

The environment itself is a valuable resource, and continues to directly sustain a significant segment of Lebanon’s population through small scale agricultural and fishing enterprises. However, both of these occupations face present and future challenges due to environmental degradation. Many experts predict that the agricultural sector will be the hardest hit by the effects of climate change in the years to come.

Another factor that impacts agricultural markets is the improper use of synthetic pesticides, a phenomenon that has received increasing attention from specialists and monitors over the last few months.

Researchers at the American University of Beirut’s (AUB) Faculty of Agriculture, as well as studies conducted by the Fanar research station in Mount Lebanon, noted the presence of pesticide residue above internationally tolerated levels.

The issue came to a head in November when produce exported from Lebanon was returned because pesticide levels were deemed unacceptable by destination countries.

Yusuf Abou-Jawad, professor of plant pathology at the AUB Faculty of Agriculture said educating farmers about the proper use of pesticides was the key to reducing residue levels.

“The major solution is to convince farmers to depend less on pesticides and to follow an integrated pest management approach or a rational use of pesticides,” he said.“If farmers start abiding by the preharvest interval [the waiting period necessary for pesticides to take effect and be rendered harmless] mentioned on the label of each pesticide [canister], the residue problem will be solved immediately.”

Living off the sea

The challenges faced by Lebanon’s coastal ecosystems, upon which the country’s fishing industry relies, may not be so simple to solve. The coastal waters face an array of harmful influences, from industrial dumping, municipal wastewater and, particularly, unsustainable fishing practices.

The Lebanon branch of the international organization Greenpeace has made the rehabilitation of coastal zones its top priority.

“In terms of biomass, the Levantine basin is the poorest region of the Mediterranean in terms of harvestable fish,” said Greenpeace representative and oceans campaigner Garabed Kazanjian. “At the same time, it is a very important region, as many types of fish come here to spawn.” This makes Lebanon’s coastal ecosystems particularly delicate to external influence, he said.

“It’s a vicious cycle,” added Kazanjian. “Overfishing reduces aquatic populations, so fishers have to turn to more destructive fishing methods — like small mesh nets — to catch whatever they can.”

Using small mesh nets traps young fish that have not yet reached maturity, destroying the new generations before they have had a chance to spawn.

To fight these issues, Greenpeace has launched a multi-fronted campaign to raise awareness of safe and sustainable practices among fishers.

“There’s already a big fear among fishers that their industry could be on its way to collapse,” said Kazanjian. “Even though we’re telling them they have to change — and even limit — their methods of fishing, most of the people we’ve talked to have welcomed our advice because they’re looking for a solution too.”

Kicking the oil habit

In 2008, the Lebanese Energy Society and the Lebanese Center for Energy Efficiency and Planning released a report, authored by engineer Chafic Abisaid, detailing the country’s current energy practices and potential for future expansion into renewable energy sources. It noted that thermal, solar, wind, hydroelectric and bioenergy technologies all have long-term potential in Lebanon, but that these remain distant possibilities as the country is still in the early stages of data acquisition.

Ronald Diab, general manager of the Energy Efficiency Group in Lebanon said that the realistic first step for Lebanon to reduce its energy consumption would be to optimize the efficiency of its industry and institutions.

“In terms of economically viable solutions, you need to develop utility-oriented projects,” he said.

“Besides some cases of using solar-thermal energy to heat water, most renewable energy technologies are not economically viable in Lebanon at this time…there is still a lot of preliminary research that needs to be done.”

On the other hand, improving existing infrastructure in order to maximize the benefits of energy consumed is an immediate first step to reducing dependence on fossil fuels, said Diab.

His group has performed more than 500 energy audits of companies and launched more than 80 energy efficiency projects since it was founded. Because it lowers costs, energy efficiency carries its own market incentive.

“The most important aspect at this point is regulation,” said Diab. “A lot of the products entering Lebanon — light bulbs, for example — don’t meet international standards of energy efficiency.”

And as long as energy is cheap, the consumer base isn’t going to exert its influence over the market to select energy-efficient products, he said.

While a steep reduction in the country’s consumption of fossil fuels may not be a feasible option in the short-term, awareness of the need for a transition to sustainable energy is growing steadily.

On November 19-20, the Arab Forum for Environment and Development convened to present its 2009 report on climate change and the possibilities of sustainable energy solutions.

The event brought together

major players from industry and non-governmental organizations, with governmental and public speakers.

While highlighting major areas of concern, the conference showcased a wide array of industry and public groups working to transition the Middle East to a more environmentally friendly future.

“It’s going to have to be an evolving process,” said Nabil Habayeb, president and chief executive officer of General Electric in the Middle East, who attended the event.

“Some things can be done now…others will take time,” he said. “Inevitably, we are going to phase out non-renewable resources — this is why leaders need to think ahead about how they will diversify their economies into new fields.”

December 14, 2009 0 comments

Environment

Waste not want not

by Executive Staff December 14, 2009

written by Executive Staff

In their most basic elements, humanity and the natural environment share a common foundation. While the environment and its resources can be harnessed, overexploitation and degradation must eventually take a toll on human life too.

As the first decade of the 21st century comes to an end, those costs are becoming evident. Car exhaust thickens the air we breathe. Industrial waste poisons the water we drink. In the Mediterranean, overfishing threatens what once seemed a boundless source of food. And year by year, the specter of a slowly warming planet looms larger, its dangers fully recognized if not yet fully understood.

Though set within relatively limited boundaries, Lebanon’s environment is characterized by a diversity of geographical zones: from its coastal beaches to the peaks of Mount Lebanon, from the fields of the Bekaa Valley to the banks of the Litani River. In a region marked by a scarcity of natural resources, Lebanon enjoys a relatively mild climate, plentiful rainfall and a number of fertile agricultural zones. Yet these advantages are not without limit.

Pollution and overuse of key resources degrade the country’s ecology and impact the human life tied to it.

To a certain degree, these costs are quantifiable. In 2004, the World Bank, along with the Mediterranean Environmental Technical Assistance Program (METAP), published a report estimating that in the year 2000, environmental degradation costs in Lebanon — primarily in terms of public health costs, but also taking into account prospective revenue, either from impacted industry or loss of productivity — amounted to some $565 million, or around 2.8 percent of the nation’s economy. The report, The Cost of Environmental Degradation (COED), also points out that due to limitations in existing data, the above figure is likely an underestimation of the true costs of environmental degradation.

Invisible threat

Water resources lead METAP’s list of impacted areas, with degradation costs estimated at $175 million in health related expenditures. Every year, contaminated or unsanitary water leads to sickness and even death, particularly in rural communities where adequate water treatment facilities are often absent.

Children, who are particularly susceptible to infection, are the hardest hit: the report notes that 10 percent of all child deaths in Lebanon result from diarrheal disease directly linked to unsanitary water, sanitation and hygiene.

Contamination isn’t the only threat to Lebanon’s water. Though it is often identified as a water-surplus country in a water-deficit region, Edgar Chehab, energy and environment program manager of the United Nations Development Program in Lebanon, told Executive that long- term water security should be a matter of major national concern.

“It’s a myth that this country has limitless water reserves,” he said. “The truth is, we barely have enough to meet our present needs.”

Lack of water management, particularly with regards to the run-off following Lebanon’s heavy rainfalls, means that the vast majority of Lebanon’s “water surplus” runs into the sea instead of being absorbed into underground aquifers, he said.

This causes water shortages and erosion of topsoil, weakening growing conditions in Lebanon’s agricultural sector. Without an adequate water management system in place, farmers draw on dwindling underground reserves to irrigate their crops.

As a basic formula, the system is unsustainable, Chehab said, adding that unchecked, the current pattern could lead to increased water shortages and desertification.

Though other sources contested the severity of Chehab’s estimate, few argue with his prediction that these problems will increase in coming years, as climate change alters the region’s weather patterns.

A 2001 report by Fadi Karam of the Department of Irrigation and Agro-Meteorology at the Lebanese Agricultural Research Institute, notes that in the latter part of the 20th century, Lebanon’s water systems were marked by a number of detrimental changes, including lower ground water levels, disappearance of certain springs and wetlands and a cessation of certain rivers — including the Litani — during dry seasons.

Paradoxically, these changes have been accompanied by an increase in rainfall, said Chehab. The ecological danger lies in the rainfall’s frequency and intensity: the last decades saw rains occur with greater intensity in a narrower window of time, meaning less time to absorb into groundwater reserves, and higher degrees of runoff and topsoil erosion.

Solid waste management in Lebanon

Lebanon’s annual environmental damage costs (2000)

Going green or going greenhouse?

Beside implementing an appropriate water management strategy, there is little Lebanon can do to mitigate the effects of climate change in the short term. Climate change — the accelerated warming of the planet due to the build-up of greenhouse gasses trapped in the atmosphere and shifts in meteorological patterns that result — is reaching all corners of the globe, and stems from collective practices; namely, the world’s heavy reliance on fossil fuels for energy.

The vast majority of greenhouse gas emissions originate in the burning of coal and gas, and the drive to shift to clean, renewable energy sources has become a global undertaking.

Though responsible for only around 0.07 percent of global greenhouse gas emissions, Lebanon’s energy sector is almost exclusively reliant on liquid fossil fuels for electricity generation, with only a small fraction of total energy supplied by hydroelectric dams.

Vahakn Kabakian, project manager for the Second National Communication to the UN Framework Convention on Climate Change, told Executive that Lebanon will face serious consequences if the causes of climate change continue unchecked. By some estimates, Lebanon could see a 15 to 20 percent reduction in rainfall in certain areas by the year 2050, resulting in water shortages, shifting agricultural patterns and health impacts, he said.

The burning of fossil fuels by both the public and private sectors already takes a toll on public health due to urban air pollution. Air pollution raises the likelihood that urban dwellers develop chronic bronchitis and respiratory disorders, and can exacerbate the likelihood of lung cancer. The COED report estimates that the cost of air pollution in Lebanon is roughly $256 million annually.

Lebanon is party to the Kyoto protocol, and has therefore pledged to work toward the protocol’s targets of reducing emissions by 12 percent globally by 2010, and by 35 percent by 2030. Kabakian is currently working in partnership with the Ministry of Environment to establish a nationwide inventory of greenhouse gas emissions, by evaluating the intensity of emissions in each region of Lebanon.

“The first step is to assess Lebanon’s vulnerability,” he said. “Once you have the data you can run models to see what will likely happen in the future… When your predictions are established, then you can begin to discuss your mitigation options.”

Not in my backyard

While consumption of fossil fuels leads to air pollution and a rise in greenhouse gasses, consumption of material resources — whether in the form of ordinary household products or industrial solids — generates solid waste. Managed and treated correctly, solid waste is not a threat to the environment. However, leading environmental advocates say that just by the sheer quantity of Lebanon’s waste alone, it is evident that the country’s solid waste management programs have a long way to go in achieving ecological balance.

“Dumping solid waste is not the main problem,” said Ali Darwish, chairman of the non-governmental organization Greenline. “Problems arise in terms of what is being lost. Waste represents an enormous amount of primary material, material that could and should be recycled and reused.”

“When we make something only to dispose of it and bury it, we create a continuous demand on raw materials, which have to be extracted from the environment,” he added.

METAP estimates that each person in Lebanon generates roughly a kilogram of solid waste every day (the figure is slightly lower for those in rural areas and slightly higher in urban areas).

That means total solid waste generation for one year is some 1.4 million tons, growing at a yearly rate of about 6 percent. Of that waste, about 8 percent is composted and 8 percent recycled. Some 46 percent is landfilled and 38 percent is left in open dumps.

Lebanon has no national solid waste strategy. Management of waste is left up to the country’s municipal authorities, which sometimes contract private treatment facilities to dispose of the problem but often resort to open dumping, said Darwish.

Even in the Greater Beirut and Mount Lebanon areas, dumping and landfilling remain the primary final destinations for the majority of municipal waste.

Besides wasting valuable resources, open dumping can contaminate soil and groundwater reserves, leading to health problems in communities close to dumping sites.

According to a report released in 2007 by the MORES agency, under the Mediterranean Environmental Technical Assistance Program, the two most prominent sources of pollution to Lebanon’s groundwater are solid waste and waste water.

When waste is dumped in one place consistently, it forms a compact layer over time. Rain water filtering through this layer picks up toxic chemicals and heavy metals from waste that has not been correctly sorted or treated, continuing into the soil below, and draining into groundwater. The contaminated water may be used later in irrigation or consumption, posing serious health risks for consumers.

As the problem of solid waste shows, pollution rarely remains confined to a single sector. Just as the elements pass through different states, so too is contamination spread to all corners of the environment; hitching a ride on the natural cycle of life.

December 14, 2009 0 comments

Advertising

New media

by Executive Staff December 14, 2009

written by Executive Staff

Joe Ayache Managing director, Impact BBDO

E Where does Lebanon stand today in terms of developing new media outlets?

‘New advertising’ services refer to media outlets outside the basic vehicles that we know, such as television, radio, print, outdoor etc. The new approach today is that, when you have done your basics, as a communicator you will find yourself compelled to tread new avenues in order to further maximize audience reach.

For that we are talking about ‘touchpoints’ with the target audience. These touchpoints vary with the attitudes and behaviors of consumers. There is, therefore, not one given solution. The error would be to stereotype once again and replicate what has been done in the basic media. To some people, direct marketing is the answer, for others product experience works better, while to others digital marketing solutions are key.

In Lebanon, we are still in the early stages of this new era. The rest of the world is already seeing its ‘new advertising’ services outgrow traditional media in market share, as well as in growth trend.

Antonio Vincenti Chief executive officer, Pikasso

E Should Beirut follow Amman’s example, which heavily reduced and regulated the use of billboards?

Everyone in the sector agrees that something needs to be done about the overgrowth of outdoor [advertising] in the country, yet we should definitely not take Amman as an example. That is too extreme. Amman has reduced the outdoor sector to such an extent that the city is today facing a shortage of billboards.

Of course, good regulation is beneficial for everyone. If done well, less means more. A reduced number of billboards improves the city’s image, leads to better visibility and thus more effective campaigns. We should start by implementing the existing regulation.

Paul Boulos Regional director of business development, Drive Communication

“If it takes going back to the drawing board to redefine what we do, it is…time we have the courage to do so”

E Where does the Lebanese advertising industry stand today?

After a period of growth in joint ventures with international chains, and expanding both vertically and horizontally in the Middle East and North Africa region, it is as if the industry today is living on past laurels. The idea that “the Lebanese are coming” is a myth. The question is: how do we measure success?

If we take an in-depth look at the market, what factors do we judge? Annual ad spend? If so, we have not seen significant change over the years, and the discrepancy between rate card and real figures is beyond any healthy business explanation.

Advertising plays an important role in building brands, sales, jobs and funding media. If the Lebanese advertising industry found business even during the blackest days of the Civil War, why can’t we do it today?

If it takes going back to the drawing board to redefine what we do, it is about time we have the courage to do so, without grudges. I think it is time to earn respect at home, so we can add value and create a positive change in the region, and be looked upon as ‘leaders.’ We have become too comfortable.

December 14, 2009 0 comments