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Business

Keeping up appearances

by Michael Karam March 1, 2005
written by Michael Karam

What were you doing the moment you heard Rafik Hariri was dead? Ramzi Ghosn was selling his wine at a trade fair in Dubai. “Ronald Hochar [co-owner of Chateau Musar] came over to our stand and told me about the explosion,” recalls Ghosn, who with his brother, Sami, in 1996 founded Massaya, the winery that has been credited with being a major force in Lebanon’s wine revival. “One hour later I was sitting, funnily enough, with Laurent Rigaux, who was the F&B manager at the Phoenicia when it reopened, and I received a text message confirming the sad news. I did not say anything. I wanted to keep it minimal, but I knew we were not selling wine anymore. We were saving the image of Lebanon and protecting a brand, and I don’t just mean Massaya, but Lebanese wine in general.”

Ghosn is painfully aware how perceptions can change. “Before last Wednesday, we felt as wine producers, that we had moved away from the images of war. Sure, people would come to us and ask how things were in Lebanon these days, but the dark old images had gone.” It could be argued that the Ghosns have been partly responsible for erasing those images. The brothers made Lebanese wine cool, with their New-World-look bottles and minimalist labels. Dovetailing nicely with the first genuine stirrings of post-war optimism, Lebanese wine was no longer associated with dusty bottles on the shelf of the local store. It was wine that said summer dining and carefree, beautiful people.

It was also of a good enough quality to attract a trio of high-profile French partners: Daniel Brunier, owner of Domaine Le Vieux Télégraphe, one the greatest of all the Châteauneuf du Papes, Hubert de Boüard de Laforest of Château Angélus and Dominique Hébrard, formerly of Château Cheval Blanc. They all invested in the Ghosn’s Oriental dream, putting their gut instinct, sense of romance, call it what you will, into the brothers’ tiny winery, that five years earlier had been a plot of barren land.

Essentially the brothers needed a comparative advantage and they saw it in French know-how. “They were in for 10% (today that investment has reached nearly $1 million) but it was enough to get started,” explains Sami Ghosn. “The use of their name was the key. Without it, no one would have cared. Still, the French initially had to be convinced by what they were lending their name to. They came and they saw the soil, the grapes and the Bekaa, and they believed in it.” Today, in post-Hariri Lebanon, that confidence is more important than ever. In his office, Ramzi is playing a DVD of the six short films made by the Lebanese government to promote tourism. They cover skiing, food, archeology, beach fun, Solidere’s achievements and, of course, wine. Ghosn is the star, portrayed as the archetypal wine producer, resplendent in linen shirt and Panama hat, striding among his vines looking for all the world like the Man from del Monte.

The short clip, which paints Lebanese wine in a generic Mediterranean aspect, will come as a welcome change to those whose mental stock of Middle East images is comprised mainly of despots, bombs and sand dunes. In fact all the films are seductive. Who wouldn’t want to visit Lebanon after watching them? Ghosn hits the remote and the screen goes blank. “Now we need to sell Lebanon doubly hard after last week’s events,” he says. “Wine consumers have three options: price, availability and image. Image and price are crucial. In terms of image, chaos does not work. Only Serge Hochar [of Chateau Musar] was able to capitalize upon the war and the intrigue.”

The relationship between wine and the internal machinations of a country is particularly tight. “When you choose a wine you are choosing the taste of a country. Look at the Chileans and the South Africans. When Pinochet and his generals were in charge no one wanted Chilean wine. Look at South Africa; it wad almost immoral to serve South African wine.” Now that all these countries have freed themselves of repression they are sexy and so are their wines. Lebanese wine is becoming sexy. We have to keep it sexy.”

The events of February 14 aside, things are getting sexier. For the record, Lebanon’s microscopic (by global standards) wine sector saw 11% growth in exports this year, part of an overall curve, representing a 74% increase since 2000. Massaya’s production levels are also on the rise and now stand at a respectable 300,000 bottles annually. The winery has a strong export instinct and has developed a strong presence in France and the UK (the two countries account for a whopping 70% of all Lebanese wine exports) as well as Canada. As of this year, Massaya has also been probing the equally attractive and relatively untapped US market, especially in New York, Florida, Illinois and Texas. The Ghosns are still uncertain what volumes they will be allocating to the US market, but both are confident that they can break out of the clichéd Lebanese on-trade and into the mainstream as they have done in Europe. Clichés are forbidden at Massaya. From the outset, the brothers and their partners did not call the winery a “château,” despite the Lebanese fondness for classy superlatives. Instead they opted for a New World wine approach, color coding the three main reds – white (Classic), Silver (Selection) and Gold (Reserve). The signal they were sending market was that they were breaking away from the old order. The range is a nod to both Lebanese and French influences

Most people forget that Massaya began life as Arak producers with the, by now ubiquitous and oft copied blue bottle adorned with Arabic calligraphy. The decision to make wine was taken in 1996, with the first forty-eight-thousand-bottle harvest made from locally purchased grapes one year later. Ramzi leans back in his chair. “It was just like the arak,” he sighs. “No one took us seriously. They said we were kids playing. Then, within two years we had French partners.”

Suddenly, the wine venture had taken on a different rhythm. Until then it was romance, now it had an international dimension. Has it worked? “Today we are on the wine list of the Paris Ritz, Le Crillon, the Georges V and the Wine Society in the UK. Massaya is running its own show,” says Sami. “Our partners opened doors, but without the quality, we would not have lasted.”

Over the next five years, the brothers want to expand and plant in areas other than the Bekaa. They want to experiment with TERROIR. And now is the time. New grape plantations have changed the lives of many of the Bekaa Valley’s struggling farmers, who were forced to grow illegal hashish and opium or fruit and vegetables that were severely undercut by those from neighbouring countries. The landscape of many towns like Mansoura and Rashaya is changing as the demand for good TERROIR increases.

Ramzi is at pains to stress that for him and Sami, theirs is a national collaboration. “My brother and I were driving through Byblos, in the area where the Lebanese forces militia wanted to build an airstrip that would serve Christian Lebanon. Sami pointed out that it’s ironic that many Lebanese wanted to be separate, when in actual fact we cannot produce without each other. Our suppliers are Muslim; our financiers are Muslim and much of our hardware comes from Muslim manufacturers. We cannot be on our own.”

March 1, 2005 0 comments
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Society

Q&A: Pascal Gauvin, GM Phoenicia

by Executive Staff March 1, 2005
written by Executive Staff

The massive explosion that ripped through former Lebanese Prime Minister Rafiq Hariri’s motorcade also damaged the nearby Phoenicia Intercontinental, arguably the jewel in Lebanon’s post-war tourist sector. On the day of the bomb, was running at 80% occupancy. Since then, the hotel has been losing tens of thousands of dollars a day and when EXECUTIVE visited the site he only occupants were the orange-jacketed “Crisis Response Team.” General Manager Pascal Gauvin – also clad in an orange Crisis Response jacket – gave an exclusive interview and spoke about the impact of the assassination on his hotel and the sector.

How did you, as manager of the Phoenicia hotel, respond to the bombing?

My immediate reaction was concern for the customers and staff, a sudden realization that all the emergency drills now had to be put into practice, and an effort to recall every aspect of the crisis management plan. It all went very well. That is my consolation in all of this. No one from the hotel was injured. No one lost so much as a mobile phone or a dollar. They all returned home safely. We wrote them letters and have been receiving positive comments. Of course very quickly you also start thinking: Wow, what will the impact on business be? In the 12 or 14 hours following the explosion, we had to close down the hotel and secure the assets. We bought plywood directly from Tripoli to protect the building against looters. Then it was back to business. An insurance representative, who happened to be in Beirut, came in on the day itself. We met at six in the evening and started planning the next step in the recovery process – it’s all about money, about who is going to pay for everything, about the planning and scheduling. And decisions had to be taken very quickly.

How much damage did the explosion do to the hotel?

It’s too early to say exactly, and I’m not a technician. But we suppose the damage will turn out to be around $10 million. It could be $15 million.

What loss in revenue will the business interruption translate into?

This hotel finished last year at 80% occupancy. Last year, our revenue was $63 million. So if we have an average of five to six million dollars in revenue a month, you can imagine what our losses will be.

When do you plan to reopen?

We plan to partially reopen on 1 April with restaurants and 250 rooms – out of a total of 460. The renovation should be completely finished by June 1.

What has happened to your staff?

We have released around 260 seasonal, extra or casual or task force staff. It’s a temporary move. As soon as business has returned to normal they will have first priority in terms of return to the hotel. After all, they have been trained and have developed skills. In an agreement with the insurance, a task force composed of hotel staff is securing the building and supervising the contractors. The involvement of staff in the task force allows me to secure the 876 contract staff jobs we had on the day of the explosion for the next two to three months, until the hotel is fully open again.

What medium- to long-term effect on business do you expect?

We don’t know how long the recovery process will be. Right now, Lebanon is not trading at the same rate as before 14 February. As things stand now, we do however have good indications. Reservations are still coming in. Conferences scheduled for March and April are being rescheduled for a few months later. We’ve had many examples of customers saying: no way am I going to move my conference to another country. I don’t mind if I do it six weeks or two months later. I want to come back to Lebanon. The only cancellations we’ve had are those during the period where we are unable to receive people – and we were expecting 80% to 90% occupancy. But we are moving business forward from March for e.g. to June. Of course, some of the meetings can’t wait. But most congresses, like in the fields of banking, education, pharmaceuticals and product launches, have simply been postponed. We are planning to reopen the ballroom on 2 April. And it’s already almost fully booked from then on. We already had a good number of reservations and we are filling up the remaining space with postponed congresses.

What is your role as hotel operator during this period?

I have to administrate the problem from the Intercontinental point of view, the owners’ point of view, the customers’ point of view, and from the insurance point of view. This requires a change of structure, a reorganization of staff, and a checking of legal issues – all in fast decisions. We have set up a Crisis Management Team and have started cleaning the building. We had to prepare the hotel for the contractor so they could come in and start working. I had to meet with the owners, contractors and loss adjusters. After four days, the contractors came in. We have one – sometimes two – daily progress meetings. Our role as operator is to keep the business alive, to prepare a sales and marketing campaign, to keep customers informed and staff trained and skilled. I want to use the time until reopening to become stronger than before. We are developing three training programs over the next two months. We are also moving forward some projects in the hotel. For example, the whole club floor will be reopened with new LCD screens and Hi Fi technology systems. We will have a new interactive TV system for the whole hotel and IP telephony in all rooms – something that was supposed to be done only in June, July or perhaps August. We are also changing operating systems – a process much easier implemented in a closed hotel. We are trying to ensure that when we reopen we have added value.

What has the reaction from owners and insurers been?

They have been very businesslike. They haven’t panicked. They have experience with Lebanon. Remember, this hotel opened in 1961. It closed when the war started in 1975 and then reopened in 2000. I wouldn’t say what is happening now is routine, but the reaction has been very calm. The insurers have also been very professional. What could they do? They couldn’t minimize the incident.

How will the attack affect the tourism sector in Lebanon as a whole?

We have a very positive outlook on the future. We don’t think this attack will put an end to Lebanon as a tourism destination. And that’s an outlook I share with the owners. Of course, we are experiencing a difficult time but we have to be ready for business as soon as possible.

Is there no concern at all – on your part and on that of the owners, insurers and contractors – that the massive chunk taken out of revenues by the post-attack closure, as well as the danger of continued political instability and violence and their effect on hotel business, could result in serious financial trouble for the Phoenicia and the hotel sector in general?

Of course. That’s not something that can be discounted. And we have a plan that takes that possibility into account. But right now we are focusing on the damage to the hotel. That’s the main, urgent concern. We are upgrading systems, replacing windows, redoing false ceilings, changing carpets. The business interruption, the future situation are not as much a concern. We can’t predict. And insurance works on fact and not predictions. Now we are closed; that’s a fact. If we reopen after two or three months and it’s business as usual, great, that will be a fact too. Insurance will take care of the interruption. If we reopen and for a few months business is below normal, insurance will have to take care of that as well. But this is not a concern of ours, of the owners, or of the adjusters right now. And why should business not come back at 80% of what it was – which would already be very very good.

What is the plan?

There are actually two scenarios: In the first, we open after two to three months and it’s business as usual. In the second, come June the business is not there. Of course, we will have a sales and marketing campaign but if there is instability there is instability. In that case, we would have to reduce the capacity of the hotel like we did during the Iraq war. For a month and a half, we reduced staff to a minimum level, asked them to take unpaid leave, reduced the capacity of the hotel from 460 to 200 rooms. We have no problem running a smaller operation and reducing costs to try to generate profit.

Right now we think it will be business as usual as of the first of June. I think people will come back for the summer. We have received faxes over the last three or four days asking for sizeable summer reservations – suites plus rooms, and not just for a few days, but for 20, 30, 40 days. So, despite the attack, people are planning to come back to Lebanon for the summer. If anything like what happened on 14 February happens in the meantime, of course the plan will have to be revised. But if nothing else happens I expect a very strong summer, given that last summer we were refusing 250 rooms – 50% of our capacity – a day. So even if I lose 20% to 25% of interest I can still fill up this hotel.

What are your realistic predictions for summer occupancy?

Things will probably go back to what they were. I think what happened was an isolated albeit unfortunate incident. As things stand, the summer figures in my 12 month 2005 forecast remain unchanged. In January, we did really well – above 85% occupancy. February was great – about 85% occupancy. There will be no revenue for the second half of February and the month of March. April and May will be a recovery process. As of 1 June I predict 80% occupancy, 95% during the summer and 85% for the end of the year, with the same average room rate.

What will be the parameters of your marketing campaign?

It’s important to recapture sustained business pretty quickly. We have to target local, regional and international business. The strength of our company is the global network over which it presides. On a local level, we are developing a plan around the reopening of our outlets. The message is: we are coming back; there are new things for you, new menus, an attractive look. On a regional level, we are advising all airlines and all the countries in which we work that we will be back. And we are preparing an ad for magazines – in airplanes as well. We will also be participating, as every year, in the Arab Travel Market in May. Perhaps this year our participation will be even more significant. This will show us coming back full blast into the market. We will be doing a road show in Europe and also in the GCC countries. Our staff and cooperating agencies will be advising people of dates and helping them reschedule conferences. And we will be using all our loyalty and rewards programs, along with brochures, posters and our network of hotels, to put not only the Phoenicia but Beirut and Lebanon back on the tourist map as a destination.

Although Lebanon still relies primarily on Gulf Arab tourists, we were seeing an increase in European tourists, especially in low periods of Gulf Arab activity – like in May. It took a lot of effort to get the Europeans to start coming. They are very sensitive to violence in any Arab country, especially Lebanon. What effect will news of a lethal attack on one of Lebanon’s most famed tourist stretches, have on European tourists?

We have worked on diversifying our clientele for the past three years. That was our main targeted marketing goal. We wanted, during low periods of Gulf traveling, to expand into the European market. It was becoming successful. That kind of campaign needs two to three years to really have an effect. In fact on the day of the attack I had people from France in the hotel on a site inspection for a group expecting to come in June. Of course what happened has had an impact. We will have to go back and start working really hard again almost from where we were two to three years ago.

March 1, 2005 0 comments
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The Buzz

The art of leading yourself

by Tommy Weir March 1, 2005
written by Tommy Weir

“Men and women with great vision…are able to recognize patterns when others see chaos… That’s how they spot unexploited niche opportunities. And they are passionate about their ideas, which are revolutionary ways to change the way people live their lives or the way businesses operate. When they come to me they have conviction.” Geoff Yang, Venture capitalist

In Peter Drucker’s seminal 1999 article, “Managing Oneself” he states that “Success in the knowledge economy comes to those who know themselves—their strengths, their values, and how they best perform.” What I’ve come to realize over the last few years of consulting and counseling, very few people know what they are good at, what they want from a given situation and/or person, or what they are really passionate about.

All leaders regardless of their calling want to leave a legacy, they want to accomplish something that no one else has yet achieved. This something else has to come from within. In order to inspire others, leaders must be inspired themselves. When we are looking for exceptional results, the motivation has to come from within the self. People who work from the heart will work even if they don’t have any assurance of reward. Leaders who inspire a sense of meaning and purpose offer something very exciting: vision!

Self-leadership requires that we have clarity that we know where we are going even when things are uncertain, moving fast and contain multiple distractions, which is a fact of life and business in the current global economy. The difficult part about this for many to understand is that Self-Leadership is not a five-year plan; it is a lifelong investment in personal development, which requires constant introspection and inspection. The driving force behind this desire to grow and learn can be tapped into by discovering your passion. Passion is an important part of the internal force that keeps a person curious, inspired and driven.

Many career men and women I meet understand this, but have very little idea of what drives them at a deeper level, and there seems to be an epidemic of dissatisfaction out there. To a certain extent many people operate on automatic pilot and never even dream of reaching their full potential, and instead settle for the security of what they fool themselves into believing is a “no risk” “limited risk” situation. This of course is a fallacy. For one thing, there is no security in the global capitalist market and another is that how can anyone claim that reaching your full potential can be accomplished without change. “Everyone loves innovation, but no one likes change.”

In order to improve, we have to focus on our strengths. “A person can perform only from strength. One cannot build performance on weaknesses, let alone on something one cannot do at all.” We have to discover what we do well, how we do it and for what reasons. This may sound simple, but in fact it’s a mystery to most people.

In order to begin this journey, I would like to ask you to begin your own Self-Leadership journal. Use this journal as a strategic feedback and tracking record of your personal development and creative ideas. In order to help you get started, I have included three important modules that I use in my coaching and training.

Finding Your Talents

Begin by writing down all the words that best describe your abilities. Don’t limit yourself to the words on this list; add your own. Remember that your strengths lie in what you like.

Reading/ Analyzing/ Operating/ Managing/ Giving orders/ Discussing/ Explaining/ Preparing/ Managing/ Estimating/ Finding/ Learning by ear/ Discussing/ Clarifying/ / Taking part/ Cooperating/ Writing/ Deciding/ Mediating/ Translating/ Marketing/ Putting to use/ Simplifying/ Recruiting/ Coordinating/ Calculating/ Choosing/ Encouraging/ Changing/ Advising/ Organizing/ Predicting/ Convincing/ Evaluating/ Putting together/ Serving/ Talking/ Remembering/Ordering/ Performing/ Categorizing/ Collecting/ Acquiring/ Selling/ Creating/ Mapping/ Starting things/ Classifying/ Defining/ Communicating/ Recognizing/ Researching/ Demonstrating/ Interviewing/ Constructing/ Localizing/ Orienting/ Drawing/ Checking off/ Transferring/ Matching/ Being part of/ Questioning/ Using/ Formulating/ Reorganizing/ Giving/ Reporting/ Identifying/ Revising/ Budgeting/ Selecting/ Illustrating/ Delegating/ Overseeing/ Teaching/ Bettering/ Inspiring/ Increasing/ Repairing/ Playing/ Looking into/ Deciding/ Arranging/ Collecting information/ Entertaining/ Producing

Discover Who You Are

Now write all the phrases that you feel best describe you. Add you own phrases if you don’t see them here.

I like details/ I’m responsible/ I enjoy playing/ I like people/ I work hard/ I’m practical/ I like to support others/ I like groups/ I’m analytical/ I’m stubborn, rigid/ I’m well organized/ I’m conservative/ I like to control and dominate/ I’m handy/ I’m independent/ I like to make decisions/ I’m an organizer/ I enjoy competition/ I’m a dreamer/ I like ideas/ I’m lazy/ I like planning/ I’m a spokesperson for change/ I’m imaginative/ I like to manage people/ I never give up/ I’m not particularly sociable/ I’m systematic/ I like to take orders/ I like to coordinate/ I work with stability/ I’m not self reliant/ I get the right to the point/ I’m exacting/ I have a creative mind/ I’m verbal/ I’m technical/ I like to motivate people/ I’m artistic/ I give up easily/ I like to give orders/ I’m easily bored/ I’m sociable

Ten Power Questions

The following questions are powerful catalysts to personal growth and fulfillment. Contemplate each of these questions, write answers and review them constantly. This will help you to stay in touch with your passion and vision.

• When am I most naturally myself? What people, places, and activities allow me to feel most fully myself?

• What is one thing I could stop doing, or start doing, or do differently, starting today that would most improve the quality of my life?

• What is my greatest talent?

• How can I get paid for doing what I love?

• Who are my most inspiring role models?

• How can I best be of service to others?

• What is my heart’s deepest desire?

• How am I perceived by: my closest friend, my worst enemy, my boss, my children, my co-workers, etc./

• What are the blessings of my life?

• What legacy would I like to leave?


Next month, I will explore specific strategies for Self-Leadership and improved decision-making. Self-Leadership requires a deep knowledge and understanding of ourselves, along with a full contemplation of our life experiences. Knowledge, experience and reflection build the bridge to wisdom, the ultimate quality of leadership.

March 1, 2005 0 comments
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Society

Crisis Coverage: Spotlight on Arab Media

by Abu-Fadil Magda, Michael Karam & Nicholas Blanford March 1, 2005
written by Abu-Fadil Magda, Michael Karam & Nicholas Blanford

Magda Abu Fadil*, Michael Karam and Nicholas Blanford examine how the media, operating in a partisan and emotive environment, styled its coverage, beginning with the brutal killing of Rafik Hariri and culminating in the toppling of the government.

 

If a week is a long time in politics, then two weeks is an eternity in journalism. While Lebanon may never be the same again, the same could be said for its media. In the space of 14 epoch-forming days, from the killing of Rafik Hariri to the toppling of the Karami government by the so-called Cedar Revolution, Lebanese news coverage, by its reporting, opinion-forming and dialogue, was enjoying its finest hour.

It was never going to be easy. The popular consensus was that Rafik Hariri had been brutally murdered in a bid to silence him and send a message to all those contemplating criticism of the country’s ruling elite and their backers. A hot potato if ever there was.

But, cometh the hour, cometh the media. Lebanon’s television stations – for so long deemed only capable of serving up silicone-enhanced fluff – found themselves thrust into the bloody limelight, covering political murder and its repercussions under extreme pressures of grief. They did with a rare display of accurate and balanced reporting that had been painfully absent in the recent political mudslinging and finger pointing as Lebanon braced itself for the parliamentary elections that had been scheduled for May.

In a culture with a huge appetite for conspiracy theories it was a relief that the local media held its nerve. Others couldn’t resist. Qatar’s Al Jazeera TV did its credibility no favors by hinting at outlandish Israeli-backed plots and repeatedly airing a dubious message from a self-styled Islamist group claiming responsibility for Hariri’s death. Other stations, including the BBC and CNN, broadcast brief snatches of the tape but were more skeptical about its provenance. Elsewhere, in a bid to capture a whiff of pathos, Al Arabiya dispatched anchor Najwa Qassem to cover the death of her former boss, while Arabic News Broadcast, a relative newcomer did a credible job of covering the event despite lacking the resources of its more established competitors.

Print media had more time to digest the news and turn it into analysis, editorials and background features, while newspapers on opposite sides of the political spectrum were united in their condemnation of the atrocity and uncharacteristically agreeing that it was time for Syria to go. While some elements of the foreign press often resorted to clichés, either out of ignorance or sloth, the local Daily Star finally fulfilled its role as a regional English language paper that provides value-added reporting and weighty editorials. All of which will have found willing online readers, seeking an Arab voice in English. For many however Naharnet, remains the most reactive online resource, even if its fervent allegiance to the Tueni cause may on occasions cloud its objectivity.

It’s interesting that while newspapers did not point an accusatory finger at a specific culprit, they diligently reported the displeasure of ordinary Lebanese of all confessions who turned out in droves at the funeral.

On the cyber front, Arab media websites were abuzz with news of the assassination, but mostly mirrored what viewers saw in gruesome video detail. Supplementing the cyber-press were weblogs (blogs) that put forward numerous conspiracy theories about what had happened. It was a reflection of the region’s realities, where censorship and low journalistic professional standards has led those hungry for news to seek alternative sources of information. This situation has not been helped by the advent of 24-hour news, slashed budgets, lower circulation figures and competition from an explosion of satellite channels.

But there may be a ray of hope for Arab journalism. Inspired by unity and driven by the media, a new democracy is seeking to take root. Every day new advances in communication give us more choices, making it easier to act and interact with our environment. With any luck, we may be witnessing a move from partisan to truly national media in Lebanon if the momentum of unity initiated by Hariri’s death and the downfall of the government is sustained and professional standards, encouraged by genuine change, become the defining goal for our profession.
The Circus Comes to Town

Lebanon’s brushes with the international mass media have been few and far between since the end of the civil war and the release of the last Western hostages in 1991. Only bouts of extreme violence between Hizbullah and Israel, notably in 1996 with Operation Grapes of Wrath and the Israeli withdrawal in May 2000, were to drag the media circus back to Beirut. Otherwise, the stories that Lebanon generated in the 1990s were usually favorable but cliché-ridden reconstruction features on Beirut’s “phoenix-like rise from the ashes of war-time devastation.”

It was to be the spectacular and brutal murder of the man behind that phoenix that brought the foreign press back to Beirut. The appalling images of burning cars, plumes of black smoke and blood-splattered casualties had foreign news anchors predictably likening the bombing to Lebanon’s bloody past and asking whether the civil war was about to resume. However although by the time the people had taken to the street, they had thankfully given up on that particular theme, concentrating instead on the recent phenomenon of people power – as seen in Ukraine and Georgia – and promise of a new democratic dawn in the Middle East.

Other than the handful of foreign correspondents that live in Beirut and jumped on the story immediately, it was not until the following day that the Western media machine cranked into gear and arrived en masse. It included Fox Television’s Geraldo Rivera, no doubt catering to what has been referred to as the “guns and ammo” segment of American TV audiences. Rivera is renowned for carrying a gun with which he hoped to shoot Osama bin Laden while reporting in Afghanistan in 2001. He was also famously booted out of Iraq during the US-led invasion for compromising US military security. Enough said.

The major foreign television networks, CNN International’s on-the-spot coverage was strong by comparison, helped by the presence of Brent Sadler, and the Arabic-speaking, Cairo-based Ben Wedeman. CNN International even provided live coverage of Hariri’s funeral, while most of the mainstream American networks continued with their Michael Jackson obsession.

Sadler’s long experience in Lebanon (he reported the civil war and has been permanently based in Beirut since 1997) allowed him to put the assassination into perspective, providing reliable analysis for an international audience rather than glib clichés.

By contrast, Sami Khiyami, Syria’s ambassador to London, escaped unscathed from his encounter with the BBC’s Hardtalk program (a respected forum in which, as its name suggests, guests are traditionally given a tough half-hour’s grilling) on February 23. The BBC interviewer – on this occasion it was not the usually incisive Tim Lewellyn – clearly knew nothing of the relationship between Lebanon and Syria beyond what her researcher had handed her on a piece of paper, and it showed in her faltering and muddled questions.

The English-language foreign print media generally provided reliable coverage of the bombing, its aftermath and the toppling of the Karami government, aided by the fact that most mainstream American newspapers have begun relying increasingly on Arab, or at least Arabic-speaking, reporters, rather than flying in “visiting firemen” with little or no experience of the Middle East. Maybe one day the penny will drop.

* Magda Abu-Fadil is the director of the Institute for Professional Journalists at the Lebanese American University

March 1, 2005 0 comments
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Business

Trading guns for butter

by Michael Young March 1, 2005
written by Michael Young

Amid the threatening talk in the past month or so of a return to civil war if the opposition continues demanding a Syrian withdrawal, it is remarkable that there has seemed so little patience in Lebanese national culture during the past 15 years to investigate that war. It was particularly ironic that the assassination of former Prime Minister Rafik Hariri, an event harking back to the war years, targeted the very man who more than any other defended this amnesia in order to satisfy the national passion to pursuit of profit.

If one were to catalogue the cultural works on Lebanon’s war, the results would be anemic. By and large, scholars, artists, filmmakers, playwrights and novelists have mostly been asleep. And when they have not, one must navigate through a mediocre wasteland indeed to reach an occasional oasis; for example the novel White Faces by Elias Khoury, Little Wars by the late filmmaker Maroun Baghdadi, Failure by the playwright Ziad Rahbani, Roger Assaf’s theater production of Elias Khoury’s The Memoirs of Job, or the flawed but daring West Beirut by emigrant filmmaker Ziad Doueiri. Why is that? Why is the single most overpowering event in modern Lebanese history so rarely grist for the country’s mills of imagination? Trauma is hardly a sufficient explanation: wars, no matter how devastating, have long produced reams of texts, films, novels, plays, documentaries and other cultural artifacts, on the implicit understanding that such manifestations represent part of the “getting over” process; or, at least, an effort to learn from a conflict’s lessons. Invariably, the therapeutic or educational are invoked, but also a sense that big events must naturally produce great works.

In Lebanon, at the end of the war precisely the opposite justification was offered up, and underlining it once Hariri came to power was a hefty dose of capitalist pragmatism. In effect a swap was effected, where the need to secure profits was regarded as incompatible with raking up memories of the war years, since that threatened to undermine confidence. However, in that context, the former prime minister’s death has put an end to the bizarre zero sum game between confidence and wartime memory.

In February, CNN aired a report on Lebanon’s basketball league, in which it highlighted the fact that the sport was a repository for wartime divisions. The argument was surely overstated, ignoring, for example, the fact that there is virtually no animosity between players of different religions or political persuasions. However, as any follower of the sport will admit, there are often disheartening examples of confessional behavior among spectators. But odder still is the average age of those behaving this way: by and large most were children during the war years. If culture has little room for wartime memory, Lebanese sport apparently has a lot.

Hariri’s death has changed that.

How so? Lebanon’s economic appeal was always based on its ability to allow an open economy, a direct result of the country’s democracy, itself a product of the sectarian system. As Michel Chiha, a leading ideologue of independent Lebanon, wrote: “Countries [like Lebanon] that don’t have natural wealth must be given economic freedom as their wealth …” He grounded his reasoning in a subtle understanding that a country of different confessional minorities could not, logically, be one where an all-powerful state could limit freedoms, whether political or economic. In effect, sectarianism helped make Lebanon’s capitalist culture inevitable, and in avoiding talking about the war, Hariri showed that he understood this intimately.

However, with Hariri dead, and Lebanon in the midst of a divisive debate on its own future, the role of the war in national culture has morphed. In the face of a government that has repeated the mantra that war might be inevitable if the opposition raises its demands on Syria, a large number of Lebanese have vindicated Hariri posthumously by publicly expressing their disdain for such reasoning. In a way, then, they have declared their war truly over, and the multi-confessional turnout at Hariri’s funeral confirmed this. That’s perfectly acceptable, even admirable, but it raises two observations: with respect to cultural manifestations, there will be even less public tolerance in the future for possibly divisive references to the war, which means that that great gold mine of inspiration will remain largely untapped; and this dearth will no longer be exchanged as easily, as it had been, for economic confidence, largely because the man who symbolized that tradeoff now lies dead, his promise of better times far less convincing in the hands of his successors. With culture having lost a past to feed off of, and the economy having temporarily lost a future, Lebanon finds itself at an ambiguous crossroads, devoid of both memory and desire. And yet for some reason, for the first time in a long time, that loss actually seems to spell hope for change.

March 1, 2005 0 comments
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For your information

A nose for a bargain

by Executive Contributor February 14, 2005
written by Executive Contributor

“In February, get your nose done with a special discount,” ran the ad placed by plastic surgeon Dr. Elie Gharios on his website. With a price of only $700 instead of the regular $900, Gharios had expected a 50% business increase. “Unfortunately,” he said, “business was very slow following the death of [Rafik] Hariri.”

Educated in France, Canada and the United States, Gharios runs three plastic and aesthetic surgery clinics in and around Beirut. He does on average 20 nose jobs, or rhinoplasties as it is officially called, a month.  “Some 80% of the Lebanese have a small bump on their noses,” he said. “That is just genetically determined as such, but most people wish a straighter, more European nose.”

These days, having your nose done is no big deal in Lebanon, where women wear their after-surgery plaster with pride. Yet, plastic surgery is not just for women. An estimated 30% of clients are in fact men. The nose job and other corrective surgeries are big business. Ever since the end of the Lebanese civil war, the number of plastic surgeons increased from but a handful to some 70 today.

The sector matured, as it introduced the marketing and financing methods you find in any sector of the economy. Gharios has offered special group packages for bank employees, for example, and is currently negotiating with a travel agency to create a travel package that, apart from surgery, includes a plane ticket and hotel stay. While it is often virtually impossible to get a mortgage loan in Lebanon, many banks today offer a personal loan for plastic surgery, which allows you to pay for your beautification in installments.

Though surgery may be just business, Gharios does not operate on anyone. “Sometimes people come in with a picture from a magazine, saying ‘that’s what I want,’” he explained. “But I don’t work like that. Beauty is about harmony and aesthetic surgery is about re-shaping and re-fining, not about creating something completely new. ”

World Bank initiative

The World Bank and the United Nations Development Program announced February 8, the 18 finalists in the first round of Lebanon’s Development Marketplace competition, in which social entrepreneurs compete for grants to fund their projects. Entitled “Harvesting Youth and Community Ideas for a Better Environment,” the competition – a first in Lebanon – aims to support local creative initiatives to clean up the environment.

“We chose the theme of the environment because it is one of the main areas of concern in Lebanon where you can really do some good,” said Zeina al-Khalil, a World Bank spokeswoman. “Furthermore, it’s one of the three pillars of the World Bank’s 2004-2008 Country Assistance Strategy. Currently, the Bank has no environmental projects in Lebanon – we have projects in community development, infrastructure, education, but no loans targeting the environment.”

Open to youth groups, local communities, NGOs and academic institutions, the competition offers start-up funding of up to $20,000 per project. The organizers expect between five to right of the finalists to walk away with funds for their projects. “There is a pool of $130,000 in total, from which each winner can receive up to $20,000,” said Khalil. “The final amount granted will be based on the amount requested, and also on whether the candidate can leverage additional funds elsewhere.”

The 18 finalists were selected out of a pool of 87 participants by a panel of independent assessors, on the basis of their innovation, impact, sustainability, replicability and the institutional capacity of the bidders. They included: the Regional Cooperative Union in South Lebanon, the Lebanese House for Environment, the Association of Chouf Cedars, the Lebanese Association for the Protection of Natural and Archaeological Sites in the Chouf, the Association of the Friends of Tannourine Cedars, the Association of Rural Development in Aarsal, the Lebanese Scouts Association, the Cultural Charity Association-Al-Doha Secondary School, the Catholic School of Christ the Savior, the Torch of Passion and Unity, the Lebanese Geological  Society, the Animal Encounter, the Baldati Association, A Rocha, Friends of Nature, the Association for Volunteer Services, the Public School of Haqleet and the Scouts of Lebanon-St. Joseph Group.

The winners will be announced later in the spring, at the Innovation Day, where the finalists will display their projects at a public location before an independent panel of jurors.

More good new for Gemaizeh

Want to know where to drink and dine in Gemaizeh or what artist is exhibiting where? Check out www.gemayze.com. To promote one of Beirut’s most popular areas, the website offers a short history of Gemaizeh, articles written about the area, as well as an event list and the contacts information of café’s, restaurants, galleries, shops and even pharmacies.

“The aim of the website is twofold: on the one hand, to promote my Convivium Projects and on the other to promote Gemaizeh, the area I love,” said Kareem Bassil, the man behind the virtual initiative and sole owner of project development company Bassil Real Estate Investments.

Although technically launched in 2004, the focus then was mainly on promoting Bassil’s real estate developments. In recent months however, the site has grown into a portal that is actually worth its name. “I want to make the site more and more appealing,” Bassil said. “As people like to read about people, soon we will introduce the day-to-day adventures of an English lady living in the area.”

Of course, the young entrepreneur is well aware that by promoting the area and its events, the site promotes living in the area and thus, Convivium, which, derived from Latin, loosely means “living with.” There are currently five Convivium projects, which combine contemporary architecture with the traditional building style in the area. The buildings are characterized by the use of tiles and arches, and they are not higher than surrounding buildings to preserve Gemaizeh’s traditional character, which according to Bassil, is one of the last areas representing “old Beirut.”

While Convivium I and II have been built and sold, number III will be finished by the end of the year. Convivium IV is an old townhouse waiting for a buyer, and V is currently being built. It consists of two boutique hotels and three apartment blocks.

“Even considering what happened to [Rafik] Hariri, I remain positive for the future, so Convivium VI has already been planned,” reasoned Bassil. “It appears on the edge of Gemaizeh and downtown, and will consist of 70m2 to 90m2 studios.

Horeca 2005 still on course

From April 5 to April 8, the 12th annual Horeca 2005 trade fair will take place at Beirut International Exhibition and Leisure Center (BIEL). Some 300 exhibitors have agreed to participate in what is the Arab world’s largest trade fair for hospitality industries. “So far,” claimed Joumanna Damous of the fair’s organizers Hospitality Services, “we only had a handful of cancellations, which has surprised us in a positive way.”

The Jdeidet based Hospitality Services have been organizing the annual event since 1994. With offices in Jordan and Kuwait it organizes among other fairs the International Hospitality Forum in Jordan and the Horeca fair in Kuwait. It also publishes the bi-monthly trade magazine Hospitality News and the bi-annual Lebanon Hospitality and Foodservice Directory.  Why an annual fair in Beirut?

“Because Lebanon is market leader in the Middle East,” said Damous. “Taking into account the 9/11 effect, the amount of foreign investments in Lebanon has reached some $850 million in 2004, 80% of which went to the hospitality industry. Total demand on travel and tourism on services reached some $4.1 billion in 2004, some 25% of which was generated by foreign tourists.”

Exhibitors at the fair vary from hotels, supermarkets, schools and universities to pubs, clubs, caterers, and restaurants. Some 85% is Lebanese and 15% foreign, which is double the number last year. Products and services include equipment – everything from fridges and coffee machines to pots and pans – decorations, tabletops and cutlery, uniforms, linens, bedding and technology. Last year, more than 18,000 visitors attended the fair, which was held in late April. “If we would record a 10% increase in visitors this year,” Damous said, “that would be perfect.”

Tapping into Adma

The SABIS International School is still on course to open a third school in Lebanon after signing a contract with Intered (the managing arm of the SABIS School network) and the Beirut-based Abniah general contractor company at the end of last year. The construction of the school is expected to total $8 million. The move comes as part of a greater international strategy, which will see the opening of five new schools in Syria, the UAE and the United States.

The new school in Lebanon, to be called ‘SIS Adma’, will be located on the hills of Adma and is scheduled to open its doors for the 2005-2006 academic year. “We chose Adma because we believe that there is a need for a trilingual international school in that part of Lebanon,” said Victor Saad, VP of operations and development. “The idea of a school became a reality once we were able to find what we believe is an outstanding location for it.”

The purpose-built campus will span 75,000m2 and will be composed of 10 buildings, including educational facilities, a performance hall and sports facilities, such as an Olympic-size swimming pool and a soccer field. It will offer kindergarten, primary and secondary classes, with the capacity to accommodate up to 1,800 students.

An educational system which started in Choueifat, Lebanon in 1886 as an all-girls school, SABIS now counts 27 schools across four continents – Africa, Asia, Europe and the United States – totaling approximately 25,000 students. It is all part of the school’s strategy of catering to “mobile” families. “We have 29 different nationalities at Choueifat, including children of United Nations employees and foreign companies – families that move around,” said Saad.

The tuition fees for the SABIS schools vary, even within countries. The Choueifat fees, for example, are higher than those of Khoura. “The fees are based on different criteria, most important of which is providing a top quality education to a wider sector of students,” Saad commented. The tuition fees for Adma have tentatively been set to range from $3,600 for the nursery to $4,000 for the upper secondary classes.

February 14, 2005 0 comments
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For your information

On the scene

by Marianne Stigset February 14, 2005
written by Marianne Stigset

According to Pierre Achkar, the owner of the Monroe Hotel and president of the Lebanese Hotel Owners Syndicate, the bomb that killed former prime minister, Rafik Hariri, cost of the hotel district more than $60 million. But, it was the sight of panic-stricken guests fleeing to the airport (in some case not even waiting to pack) that sent a shiver down the spine.

That said, there were some losses that could not be replaced at Lebanon’s own Ground Zero. The St. George’s club lost five employees in the attack, and had an additional 15 employees wounded, five seriously.

The loss of life aside, it was everyone’s nightmare. “Beyond the external damage, you also have the water pipes, the gas pipes, the fire system, a whole number of things – assessing all of this is a big project which takes time,” commented the manager of the Monroe Hotel, who assessed the total costs incurred by the physical damages to the hotel at over $1 million.

Elsewhere, hotel executives who had worked hard to drum up trade on the back of Lebanon’s tourist revival were not impressed. It had become almost personal. “I just got back from Egypt, where I had worked hard to shore up business guests, and I was happy because all these groups had booked with us,” seethed Nada Ghawi, spokeswoman for the InterContinental Le Vendôme, which had an 80% occupancy rate prior to the incident, commented. “Now they have all cancelled. This whole thing makes me so angry.”

The majority of the hotels are likely to have to bear the brunt of the costs themselves because they have not taken the premium insurance policy that protects businesses against acts of political violence and terrorism.

“To my knowledge, the only hotel that is covered is the Phoenicia, which is protected by InterContinental’s global coverage,” said Fateh Bekdache, general manager at Arope Insurance. “It is very rare for hotels to have [this level of insurance] in Lebanon – the policy is too expensive for them, especially in such a tight market.”

Others pinned their hopes on assistance from the government. “Our hotel needs to be entirely renovated, just like it had to be after the civil war,” said Joseph Hanna, the auditor of the Beverly Residence Hotel. “Our insurance has told us it doesn’t cover such incidents. The government should consider us victims, as we were after the war, and reimburse us, so we can restart our businesses again.”

In the meantime, staff members were being put on annual leave. “Security, housekeeping, and engineering are being kept, but the rest of staff has been put on annual leave,” said the hotel manager of the Monroe Hotel. “Keeping them here would only depress them.”

Equally affected were the shops and restaurants surrounding site of the explosion. Within hours of the blast, Rafik Khazen, the owner representative of Awtar restaurant on the ground floor of the Monroe Hotel, was already overseeing the clearing up of his heavily damaged venue. “All the windows are broken, the ceiling is damaged, as is our kitchen,” he said, standing amid the debris. “We’re looking at a minimum of $20,000 to $25,000 in damages here. It makes me feel bad when I see this, because we are a popular restaurant. Now we won’t be opening for weeks.”

Down the road, the employees of the Bassoul Heneine car dealership were also hard at work, with the firm intention of re-opening fast. “We’re working every day from eight to eight, Monday through Sunday to rebuild the shop so we can re-open as soon as possible,” said Henri Nawar, a sales manager. “The store was badly damaged: all the windows were broken, the ceiling, the lighting, the fixtures, the phone lines. The cars were also scratched up and had windows broken.”

February 14, 2005 0 comments
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Lifestyle

Wine Advertorial

by Michael Karam February 13, 2005
written by Michael Karam

Welcome to the first ever Vintage Executive Wine Club. Every month it will be my pleasure to review five wines supplied by Vintage, Lebanon’s leading vintners, from their outlet in Saifi Village. From the comfort of the pages of EXECUTIVE, we will take on a journey of wine, grapes, famous (and not so famous) winemaking families and regions, explain what makes them so special and how you can get the best out of them. 

The wines are selected by the very capable Wadih Riachi, manager of Vintage, whose knowledge of the wines in his shop makes buying and visiting the Vintage shop an education in itself.

This month Wadih has selected three reds, all with a strong Cabernet Sauvignon presence: Michel Lynch 2000 (Bordeaux), Torres Gran Coronas Reserva 2000 (Penèdes, Spain) and one from Lebanon’s very own Domaine Wardy (Lebanon).

Cabernet Sauvignon is probably the most famous red grape on the planet. Typically giving aromas and flavours of blackcurrants, peppers, chocolate and spices, it is planted almost everywhere in the wine growing world, but is most associated with the wines of Bordeaux, in which it is almost universally present and where it has thrived since the 18th century.

The Michel Lynch 2000 is an elegant blend of Cabernet Sauvignon, Merlot and Cabernet Franc (two other hugely important Bordeaux grapes), in the best tradition of the Medoc region of Bordeaux, where the lynch family has been making wine since the 17th century. The wine is firm in the mouth with supple tannins and gives notes of berries and sweet spices. I found it needed at least an hour or two to “open up,” so decanting is advised if one wants to appreciate the understated elegance of this wine.

The Torres family of Penèdes in North-East Spain is one of the powerhouses of the modern wine sector and the Gran Coronas is one of their most consistent performers, made as it is with 85% cabernet and backed up with 15% local Tempranillo, Spain’s most famous grape, giving it a dryer, measured feel in the mouth, while losing none of the Cabernet’s traditional characteristics.

In Lebanon, the Cabernet Sauvignon has replaced the Cinsault as the backbone of the modern Lebanese wine industry. Domaine Wardy’s monovarietal is a fine example of how the grape has taken in the Bekaa With its intense fruits, the wine is big in the mouth and keen to express the formidable terroir from when it came. Salim Wardy has done a fine job with this and his two other ‘mono’ blends and above all represent excellent value.   

For the whites, Wadih has gone for Chardonnays, one from the historic Burgundy vineyards of Joseph Drouhin in Beune and the other from the mighty Frescobaldi holdings in Tuscany in central Italy. The Chardonnay may have become a cliché among today’s white wine drinkers, but this should not detract from its popularity, versatility, consistency and quality. It is a grape that ranks among the most important and widely planted on Earth and, in France, makes some of the finest Burgundies and Champagnes.

Beune, in the Côte d’Or region of Burgundy, is home to Joseph Drouhin, whose ancestors have been producing wines for centuries. The Macon-Villages 2002, comes from an AC (appellation contrôlée) of the same name and is known for its Chardonnay. It is a medium bodied white, fruity with hints of flowers and like most of the whites from the region is drinking well now.

Frescobaldi is one of the most powerful vineyard-owning families in Tuscany, of which Pomino, situated at 650 meters, is a DOGC (denominazione din original controllata e garantita) the highest category of Italian wines. It is no wonder then that the Fescobaldi’s Pomino Bianco 2002, a blend of Chardonnay and Pinot Blanc is one of its best whites. I concur with Wadih: it is indeed long and elegant and bristling with Tuscan spirit. On the nose it is awash with flowers, peaches and pears. It is a wine to savor and is also drinking very well now. 

Till next month, enjoy!

Michael Karam’s Wines of Lebanon will be published this spring by Saqi Books of London. He is a contributor to the Award winning Wine Report and Jancis Robinson’s Oxford Wine Companion.

February 13, 2005 0 comments
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Money Matters

by Executive Contributor February 13, 2005
written by Executive Contributor

Economy and Finance

Riyadh Bank Posts 26% Growth in 2004 Profits

Riyadh Bank, the second largest Saudi bank, released its 2004 figures featuring a growth of 26% in net income to $533.3 million compared to $424.5 million in 2003. The bank attributed this rise in profits primarily to its increase in capital reaching $1.3 billion through distributing one free share for every four shares owned and $4.8 of annual profits per share. It is to note that Riyadh bank, 29%-owned by the government, has witnessed since 1997 a fast growth in profits due to the strategies and plans undertaken by the bank to develop its services and adapt to all the economic developments on both national and international scales.

NBK Records Net Profits of $515m in 2004

The National Bank of Kuwait (NBK), the country’s largest bank and the top-rated Arab bank, posted net profits of $515 million during 2004, compared to $412 million in 2003. NBK’s CEO explained that the growth in profits was achieved amid a strategy of diversification in the sources of income and prudent risk management besides taking advantage of growth opportunities presented by an improving operating environment. The bank’s total assets reached $19 billion at end 2004, while shareholders’ equity amounted to $2 billion. In turn, NBK’s return on equity (RoE) and return on assets (RoA) stood at 29.9% and 2.73% respectively, among the highest worldwide.

Country Profile: UAE

International rating agency, Moody’s Investors Service, upgraded the United Arab Emirates’ sovereign long-term foreign currency debt ratings to A1. The agency also raised the sovereign’s short-term foreign currency ceiling one grade to Prime-1 and currency issuer rating to A1 from A2. The outlook on these revised ratings was given as stable. The agency cited that the main reason behind this upgrade was UAE’s stellar economic performance in recent years in addition to the continued domestic political stability. Moody’s mentioned in its positive commentary that nominal GDP growth has averaged 11% since 1999 and consumer price inflation has remained very low. To a large extent, economic expansion has been driven by the oil sector, which generates about one third of GDP. However, the non-oil sector has also registered strong growth. The agency concluded that both the fiscal and current account positions remain in significant surplus.

February 13, 2005 0 comments
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Special Report

Q&A: Eli Khoury

by Executive Contributor February 13, 2005
written by Executive Contributor

The CEO of Saatchi & Saatchi Levant discusses the political and economic factors impeding the growth of the advertising industry in Lebanon.

Economic recession, political instability and the advertising industry do not make for happy bedfellows. A $100 million industry during the war, the advertising business has steadily shrunk in subsequent years, despite all indicators pointing to the potential for growth. As the best and the brightest among Lebanon’s young advertising professionals turn their eyes toward the Gulf, Eli Khoury maintains that Beirut still boasts more assets than its competitor to the East. Executive finds out what the long-standing head of Saatchi & Saatchi Levant views as his industry’s main challenges and some of the remedies he recommends for the ailing patient.

What do you see as the key challenges facing the advertising industry both at the local and at the regional level?

The future of the industry both regionally and locally is linked to politics. In Lebanon, the current political situation is having a major impact on the industry’s development. It already has had an impact, and it will have even more of an impact should the situation deteriorate. If the situation changes, it ought to have a positive effect. And the same goes for the Middle East – the clash of civilizations, the war in Iraq, the Israeli-Palestinian conflict, terrorism… all of this has direct implications on the business. So how the industry will fare in 2005 and beyond really depends on how the political situation evolves.

In what way has politics in Lebanon affected the business?

Firstly, let’s look at the state of the media in this country. A healthy media is a media that works for its buck. The others will survive regardless, because they are politically funded. Of course we all know who is subsidizing this. Because this industry thrives on competition and freedom of speech, a media, which is in the pockets of the politicians, is not beneficial to it. Nor is the audio-visual law, which was passed. The whole purpose of introducing that law was to prevent regional media from moving to Beirut. And of course there was the whole MTV incident. So these are the issues on the media side. On the advertisers and audience side, i.e. our clients and our clients’ clients, there is the problem of poor purchasing power, which makes advertisers stingier and exclusively sales oriented. To give you an idea, the size of the industry during the war was around $100 million.

And now?

For the year 2004, I doubt the total revenue of the industry was worth much more than $60 to $65 million. And this despite the fact that post-war economic predictions estimated the advertising industry’s potential at up to $300 million. So the impact the political situation has had on the economy has directly affected our industry – advertising is after all frequently considered a luxury, which is the first to go during cut-backs. And the manner in which the politicians have minimized all competition within the media in the country, has had an impact on us. As a result, both the media and the advertising industries are suffering.

Is Dubai then becoming a more attractive location for the advertising industry in the region?

Dubai is trying to take our place, but if you look at its human resources, it’s purely based on expatriates, so this endeavor is economically unfeasible.

Why would an expatriate haven not result in an area bustling with creativity that could compete with Beirut?

Creativity has soul, it comes from within a society. You cannot import different talents and put them in a basket and tell them to be creative. Furthermore, from a financial perspective, there are significant differences between Beirut and Dubai. Having spoken to TV stations that operate in both cities, I have discovered that the difference in operating costs between the two is tremendous. There is a difference between having to import ten talents from abroad and pay them hefty, and having to import your entire staff, down to the person who makes coffee. In Beirut, the basic HR infrastructure is already there, and then you can get fancy when it comes to above-the-line positions. In Dubai, you need to hire your entire staff from abroad and provide them with a house, a car, etc. For an operation such as my own, the difference in operating costs would be at least 180-200%.

Could you not justify the higher expenditures required to set up shop in Dubai with the greater market size the Gulf has to offer?

Dubai is the center for a lot of the business in the Gulf, which allows it to be somewhat of a regional player. But if you look at the advertising industry in Dubai today, it is merely composed of sales ads. I don’t know what the size of this business is, but I doubt it is enough to sustain an entire industry. There is no creativity involved, so the revenue generated will be minimal. The industry there gets by because it is also servicing Saudi Arabia and surrounding Gulf countries, which Beirut does as well. There isn’t much Dubai can offer that Beirut cannot. The difference lies in the fact that in Dubai, they don’t have the political problems that we have here, and there are more economic incentives offered. In Lebanon, that local market is tired.

What is the share of local clients vs. international clients in Saatchi’s Lebanon portfolio?

It terms of volume, local business represents barely 30% of my portfolio. And seeing how money is scarce here, you usually can’t get fancy with many of these projects. The clients are more interested in pushing the product rather than building the brand, at the cost of creativity. There are no big expectations – people just want to address their urgent needs. What worries me with this trend is the impact it has on the new, young ambitious talents that are entering the industry. At Saatchi we try to push for creativity as much as possible, even at our own expense sometimes, regardless of what the client is willing to pay, partly to give these people the opportunity to use their talent to the fullest.  

Is the brain drain among the young Lebanese advertising professionals significant?

Yes it is. They are leaving Lebanon for Dubai, where the pay is better, and there are less hassles. It may not be fulfilling professionally, as the requirements there are low, but the pay makes up for that. Yet I don’t mind this so much, as long as we keep the manufacturing brains. I can export HR, as long as I produce here. The challenge I face in my company is that in order to keep the brains here in Beirut, I need to pay them the same salaries as I would in Dubai. Otherwise I end up with a team of graduates, and one senior manager. This incidentally, is what you will find in a lot of advertising agencies in Beirut. Middle and senior management has been wiped out. In Saatchi, we prefer having more chiefs than Indians. But this requires paying high salaries.

Has branding awareness among Lebanese companies improved?

Let’s face it – they don’t have time for such a luxury. They need to focus on the bottom line, on breaking even. The economic times are not propitious to educate people about branding. Some companies have the money to delve into it, but you also need to create a momentum. If the market is about this, everybody wants to be a part of it. We can’t blame the Lebanese companies – they are probably more ready for this and more apt at it than most in the region, but there are other concerns that need to take priority for now.

There is a tendency here to view advertising as an expense rather than an investment. Is this a concern for you?

To consider the cost of advertising as either a CAPEX (capital expenditure) or an OPEX (operational expenditure) depends on what you are advertising and the nature of the advertising job. Any brand investment is a CAPEX. Any sales investment is an OPEX. Most people don’t want to invest right now – they want to keep advertising within operating expenses, and minimal operating expenses at that. Above the line, mass media, brand awareness campaign is a CAPEX that people can’t give priority to at present.

So it is a question of economic necessity rather than a question of understanding on the part of the advertisers?

It is in part a question of understanding, but it is important to note that you will only see a difference once the accounting principles here change. Of course I will benefit from advertisers understanding that what I do for them is an investment. But the real change will come the day advertisers can, in accounting terms, present their balance sheets to the authorities and say that advertising is part of their capital expenditures. This is the trend in the West, especially in the United States. So clients here need to understand advertising as an investment, but the government and other organizations involved, such as the trade lobby groups, need to create a new accounting principle for the country. Therefore, addressing this issue has a conceptual facet to it, as well as an economic and a legislative one.

The advertising industry is characterized by global consolidation. Recently 5the regional tv industry was impacted by the rapprochement of Choueiry Group and Ara Group How do you view the impact of this development on the industry?

In absolute terms one should be against it, but when examining the situation one cannot help but think that it will be beneficial to the industry for now. It will help stabilize it, and establish some rules of competition. Having this market be dominated by a semi-monopoly provides for a good balance until it picks up.

Do you expect business for the advertising industry to be picking up?

Only if and when the political system changes in this country will the advertising industry grow. Otherwise, you are facing further deterioration. The primary engine of economic growth according to George Soros is mood, it is trust. And I really believe in this. If you feel confident in the future, then you will operate well.

You talk a lot about the need for political and economic change, but the advertising industry in Lebanon has been marred by internal conflicts and feuds. Is it fair to place the entire blame for the current situation of the industry on the political system?

Yes it is. The problems you have in this sector are identical to those you have in any other sector – look at the banking industry, the publishing industry…. It’s a plague that has hit all of our houses. Why? Because there is less money to go around, and therefore competition gets nasty. It’s question of survival. The wrongdoings that have marred the advertising industry are a result of a shrinking market. Granted, the ruthlessness may be accentuated when it comes to the advertising industry here in Lebanon, because we are more visible. But at the end of the day this problem has less to do with the industry than with the country.

Are the Lebanese chapter of the International Advertising Association (IAA) and the local industry syndicate making any difference for the industry?

They are nice social clubs. If you are looking to meet new people, or even a husband or a wife, they would be good places to go to. But they have neither made an impact for the industry here, nor have they shown any willingness to do so.

What has come of the project to establish a body to monitor and establish accurate data on the advertising industry in Lebanon?

We would love to get some accurate figures on the industry, but we don’t seem to be any nearer to getting these than we have been in the past. This is one of the reasons why I labeled local syndicate and the IAA as social clubs. We have a lot of dreams: we dream of an advertising ethics code, we dream of data that provides us with the information we require on the market, we dream of having published figures. Will it happen? Frankly, I don’t know. I won’t be getting involved in this until I see a change in the political system.

February 13, 2005 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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