The buzzword among real estate developers is boutique. As the hotel sector continues to expand with new, bigger hotels – a Hyatt, Four Seasons, and Hilton are all under construction – developers have also hit on the notion that not only is small beautiful, it is also lucrative. It has taken a while for the penny to drop. More than a billion dollars has been invested in hotels since 1995, and only one developer in Beirut, hospitality mogul Bechara Namour, has gone boutique with his 30-room Relais & Chateaux Albergo on Abdel Wahab El Inglizi (even the gilt-edged InterContinental Le Vendôme doesn’t really qualify as boutique). But this is set to change.

At least four boutique hotel projects, with a combined investment of close to $500 million, are already underway in the downtown area, a prime attraction for increasing numbers of both Gulf Arab and Western tourists. There is unconfirmed talk of a fifth boutique project on Uruguay Street, and Solidere is being inundated with inquires by developers eager to cash in on what they see as the shape of things to come.

Real estate insiders and hospitality executives unanimously agree that the boutique hotel segment in Lebanon holds potential, not least because visitors to Lebanon are among the biggest-spending tourists in the world. “A visit to Lebanon is expensive. Life here is expensive. So, the quality of service must be high. Boutique hotels will appeal to them,” said Albergo general manager Michel Chardigny.

“There’s no doubt there’s a market,” concurred real estate adviser Michael Dunn, “although it is fairly seasonal. There are more and more Gulf Arabs, and if we get it right they’ll come all year round. But the boutique hotels will really have to market themselves.”

Out of town, Gulf Arabs accounted for the vast majority of guests at the recently opened Chateau Raphael boutique hotel in Maameltein – a Jounieh coastal strip notorious for its nightlife – according to one of the hotel’s employees. The “Chateau” opened for the beginning of the summer season and offers 17 suites (seven duplexes, seven junior suites, and a royal suite) ranging in rack rates from $285 to $715, as well as two restaurants (one Lebanese and one Italian/Chinese) and a swimming pool.

“We had a group from Germany and we have one coming from Cyprus, but most of the visitors in the summer were Gulf Arabs from Kuwait and Saudi Arabia,” the manager explained. Currently, only two rooms are occupied. “Dead season,” the employee explained.

The Chateau was originally earmarked as the boutique arm of the Safir Hotel group, which runs the Beirut Safir Heliopolitan Hotel, but a spokesperson for the chain said negotiations fell through. Chateau Raphael owner George Anastasiades, who also owns Anastasia Travel, was not available for comment.

Chardigny said the boutique hotel sector potential in Lebanon reflected a global shift in guest preferences towards smaller, more personable, and quieter hotels.

“All around the world now people don’t like big hotels anymore. It’s a new phenomenon. Over the last five years or so, people have begun attaching much more importance to privacy, discretion and top-quality personalized service. I think the time of the big ‘palaces’ like the Savoy is over. Now, rich people want to feel as though they are at home,” said Chardigny.

Some real estate insiders predict that emerging boutique hotels, particularly those associated with international brand names, will provide serious competition for the so far unchallenged Albergo.

“I think they’ll knock the Albergo off its perch. It’ll be downgraded to a three-star boutique hotel,” contended one real estate insider. “If you look at the bar, it’s horrible. The reception area? It’s horrible. It doesn’t create a nice atmosphere when you walk in. The restaurant is, boudoirish, feminine and tacky. The swimming pool might as well not be there.”

Chardigny, however, does not seem concerned. “Everyone is a competitor. For the moment Relais & Chateaux are the best quality chain. But the others are very good too. We are worried. We will wait and see.”

While developers are busy as the proverbial bees, real estate experts doubt that all will be genuine boutique hotels. So what’s the magic formula? According to Dunn, a guest must feel that they are unique, that they couldn’t possibly get a better hotel. A car should be waiting for them at the airport. And from then on, they must be continuously coddled, in a luxurious environment of discrete but unmistakable exclusivity. “It’s service, service, service,” he said. “You’ve forgotten your toothbrush? Don’t worry. Your trousers are pressed at three in the morning. You have a bottle of champagne in bed. These hotels are for spoiled people who want to be pampered. Most hotel rooms are so unmemorable.”

The developers of the Abchee Group boutique hotel next to the Virgin Megastore declined to talk to EXECUTIVE about the project, saying it was too early to do so. But Solidere, the company responsible for most of the revitalization of downtown, said the building had been designed by world-renowned architect Kevin Dash and constituted an overall investment of roughly $70 million. The building will offer private parking and will boast several high-end retail outlets – the marketing of which is to be overseen by RAMCO Real Estate Advisors.

But the project has its critics: one real estate consultant, who asked not to be named, said: “It’s too noisy for a boutique hotel, probably too busy. A traffic intersection like that is going to be busy all through the night, and for the next number of years dirty, dusty and noisy. I’m very surprised, unless their objective is to make money out of the shops.”

Construction of the boutique hotel close to the Banque Audi headquarters downtown represents an $85 million investment by Al-Mawarid Bank, owned by the Kheireddine family. The project – to be completed by the end of 2007 – is the brainchild of Al-Mawarid Chairman Salim Kheireddine. Tranquility will be ensured by the hotel’s location on a roughly 8,000 square meter plot of land in a peaceful corner of the downtown district known as Wadi Abou Jamil. The hotel will be composed of 10 inter-connected buildings arranged around a sizeable garden courtyard. It will incorporate an above-ground built-up area of 15,000 square meters – including three restaurants – and a below-ground area of around 45,000 meters servicing the hotel. Al-Mawarid is hoping to engage in a partnership with the “W” chain luxury boutique hotel arm of Sheraton’s Starwood Group,but is also involved in talks with two other leading hotel chains.

The all-suites hotel will count a hundred “keys”– almost too many for a boutique hotel. The smallest suite will cover about 55 square meters and the largest around 300. Rates will range from about $350 to several thousand.

Naturally keen to emphasize one of the key attributes of any successful boutique hotel, Marwan Kheireddine, Al-Mawarid general manager, said: “The service will be by far superior to existing levels of service in Beirut hotels. Our clients will be high net worth individuals – either tourists or business people – demanding, and willing to pay for, exclusive, personalized services.”

As part of a third boutique hotel development project – owned by Solidere – a building roughly opposite the upper end of Maarad Street, and called “Le Grand Theatre,” or “Grand Theater,” a reference to its previous incarnation, is also being refurbished. It will adjoin two constructed buildings, which will house a boutique hotel and restaurants. The premises will be leased to a tenant, who would manage the entire complex.

Meanwhile, development of an old salmon-colored building abutting the Riyadh El-Solh Square car park, is being overseen by sole owner Mousbah Bakri, who has already spent tens of millions of dollars buying the building from former shareholders – both family members and previous tenants – and refurbishing.

Interestingly, Bakri said he would have preferred to develop office space in the building. But according to the terms of the contract under which he repossessed the building from Solidere, he is obliged to ensure that it retains its original function – that of hotel. Nonetheless, he is equally confident that his boutique hotel will perform, especially among Western tourists enamored with the idea of staying in a quaint heritage-laden building at the heart of the renascent downtown district.

Although some real estate observers suggested Bakri’s hotel would actually do better than the grander boutique hotels under construction, others questioned the building’s suitability for a hotel project, saying the rooms would be too small, and the building was too old. “You would have to spend more money than it was worth,” said one developer.

Solidere is confident the boutique hotels will enhance the appeal of the capital’s Central District. “The developers are doing a wonderful job,” stated Solidere executive Monib Hammoud. “The boutique hotels will complement the other hotels in Lebanon. They will reposition Beirut on the international architecture and design level and will help upgrade the tourist industry to international standards.”

However, as the boutique hotel craze takes hold, it is also attracting profit-hungry investors who don’t know what it takes to establish a successful boutique hotel. And the last thing Solidere wants sullying the Central District is a string of failed boutique hotels. “Many people are approaching us with plans to develop a boutique hotel,” observed Hammoud. “Many don’t have the right conception of what a boutique hotel is. We monitor the supply. We don’t want oversupply. We make sure the mix and the balance are respected.”

“Most prospective developers don’t bother to spend the money on acquiring the necessary expertise for a feasibility study or market research,” said Kheireddine. “There is room for a couple of boutique hotels downtown. That’s all.”

Not everyone is convinced that Gulf Arabs will, in fact, flock to the new boutique hotels. Albergo Manager Chardigny said that although some Gulf Arabs do stay at his hotel, most visitors hail instead from Europe and America. “It’s not really Gulf Arabs’ style,” he said. Other observers agreed that Gulf Arabs may prove hard to lure away from glamorous hotels like the Phoenicia and those that have mushroomed across the Gulf.

Dunn disagreed: “Gulf Arabs love places like boutique hotels,” he said. “And they’ve got the money to pay.”

“The vast majority of our clients are going to be from the Gulf,” echoed Kheireddine. “It is wrong to stereotype Gulf Arabs. I have a lot of Gulf Arab friends who are as sophisticated in their taste for wine and French art as anyone else in the world.”

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Boutique Hotels under Development in Downtown Beirut:

• Bank Al-Mawarid project, in the Wadi Abou Jamil neighborhood; close to the new Banque Audi headquarters; $85 million
• Abchee Group project, through Serene Real Estate; next to Virgin Megastore; $70 million
• Solidere-owned project; “Le Grand Theatre” building, opposite upper entry to  Maarad Street; Solidere declined to divulge value
• Project owned by Moussa Bakri; traditional, salmon-colored building abutting Riad el-Solh car-park; tens of millions of dollars spent refurbishing and compensating former shareholders
• Unconfirmed: traditional building being refurbished on Uruguay Street; details unclear

Vehicle dealers RYMCO (Rasamny Younes Motor Company) employ nearly 180 people and rank at the top of Lebanon’s automotive sector. Number one in units sold last year and number two in 2004 to date, they are also the only firm to represent the automotive sector on the Beirut Stock Exchange. In 2003, RYMCO opened a new main showroom and overhauled their communications infrastructure, installing a new corporate website. But more changes are around the corner. Inquiring about RYMCO’s new moves in products and management, Executive talked to sales general manager Fayez Rasamny Jr. and to chief operating officer, Abdo Sweidan.

To start with, please outline the range of your makes and the models you sell.

Fayez Rasamny Jr.: We represent three makes, Nissan, GMC, and Infiniti. For Nissan, we have the Sunny, Pathfinder, the new Murano, 350Z, Micra, and many models to come. For GMC, we have two trucks, Envoy and Yukon. For Infiniti, our main topic is the new showroom, which will open by late October or early November in downtown Beirut; that is in the new residential area of luxury buildings on the seafront strip.

Does it pay off to invest into big new showrooms in Lebanon?

FR: If we want to invest into Infiniti, we have to open a new showroom. This is the branding strategy and we have done our homework. It is profitable, perhaps not over two or three years but to launch a luxury make you have either to invest or not bring it to market.

Would you tell us how much you are investing into the showroom and how much it will cost you to develop the Infiniti brand in Lebanon?

FR: It is an investment of $400,000 in tangible assets and $300,000 in intangibles.

Does the manufacturer give you special incentives supporting that brand introduction?

FR: To be honest, no. We took the initiative to open a new showroom and differentiate Infiniti before Nissan told us to do it. In the future, they will contribute to advertising but this startup investment is 100% RYMCO.

Is the image of Nissan, your main selling make, changing in Lebanon?

FR: Before Carlos Ghosn, Nissan was really a volume seller, except for the SUVs, but now the brand is moving up segment. The brand Nissan is changing, absolutely.

Does the fact that Nissan CEO Carlos Ghosn is of Lebanese descent give you an added advantage in the local market?

FR: Yes, in the upper segment. Mr. Ghosn’s reputation doesn’t really affect the customer who wants to buy a Sunny for a company car. But individuals, who stay on top of the news, have heard many things about the new developments at Nissan that Mr. Ghosn has created over the years.

Can you tell us something about the composition of your sales by customer groups and price range?

FR: Of all sales, 40% are fleet sales and 60% individual customers. In terms of price, 60% is below $16,000. In fleet sales, the margins are really very low. SUVs and upper segment cars have better margins but of course less volume. It makes a balance.

Who are the fleet customers in Lebanon?

FR: Most of them are rental cars.

How does that impact the image of your brand?

FR: That is an important question. One of the reasons why we are not really concentrating on being number one is that we are trying to build a certain brand. That is why, with the new models, we will not sell all of them to rental car companies.

Do you think that this sets you apart from the rest of the industry?

FR: Of course, no one thinks now like we do. I am quite sure of that. Everyone wants to sell cars. We want to set the benchmark. 

Do you consider yourself still as part family-driven or as fully institutional in terms of your corporate culture?

FR: As of this year, I consider our company to be fully institutional but we still have to see the results. The family used to have all the management positions in the company. Six months ago, the company hired a new COO [Sweidan] who was chosen for his capabilities and his experience. This COO can hire and fire according to the results and qualifications, even me, if I am not competitive enough and not doing my job. In any major decisions involved in contractual agreements for the company, he will refer to an executive committee or the board of directors. Our main focus is to see our shares appreciating and this company making more profits each year.

You are also the only automotive dealer in Lebanon to be a publicly traded company. Was this a good move?

FR: When you are a family business, you have a ceiling. Now, we don’t have a ceiling. We can grow much faster; we can take professional decisions, not taking into consideration the family. It is a big plus for this company.

Abdo Sweidan: The benefits of going public are immense, through first opening of capital; second appetite from our partners to participate in the buildup of the company as far as capital investment, audit and growth; and third, the ability of this company to be run by corporate interests. Taking all of these together, you find that the uniqueness of RYMCO in this position is its sustainable advantage today over other car dealers.

Aren’t some of these advantages, particularly in attracting capital, at this stage mostly theoretical?

AS: No, they are real. Going public is only a vehicle for us to prove that we can attract more capital and this year, we are attracting fresh capital not only in car trading but also in car financing and other related services.

Some car manufacturers make more money from financing than from manufacturing. Are you planning to introduce something new to the Lebanese market in this respect?

AS: I can tell you one thing: in three years, car dealers who are not financial dealers will not be able to cope. We have to become financial dealers that work with partners to develop products – finance, insurance – that we can add up to our cars for the rest of the dealers.  

How many car dealers do you see as surviving in this market three or four years from now?

AS: Seven

FR: I was going to say eight

What will decide which dealers will survival?

AS: It is a matter of putting up the capital today. When I say seven, I have in mind only the seven dealers that are willing to inject capital into their businesses – but not too many dealers are willing to do that. Trading alone is not sustaining the branding requirements of the manufacturers. All dealers are today under corporate identity guidelines. This is an expense.

Are you on a tight leash from the manufacturers?

AS: We are today more like partners than anything else. We share processes.

But Lebanon, even as it is a trend market, is very marginal in size. How much of a chance do you have to influence things such as product policies, service policies, or image campaigns?

AS: Here, our [small] size kills us. We don’t belong to a region. In Lebanon, the only thing that we can build upon is being a trendsetter.

FR: We have models that are not imported to Europe and models that are not imported to the GCC; that’s why we have a lot of models.

But each model has its associated cost base; you need trained technicians and so forth. How much does this situation push your overheads and weigh on your profitability?

AS: That is the $1 million question. I wish we had the answer.

FR: For example, even though we know that we will not sell a lot of them in Lebanon, we have to import models such as the Micra and 350 Z, to prove that Nissan is not only about Sunnys and Pathfinders. It is a question of branding and we are not really looking at the overheads.

But in the long run, you expect to reap returns on these investments because you see yourself as one of the dealers surviving in the market?

AS: It is a basic question that we have to ask ourselves every day. Narrow product lineup, i.e. cash cow, i.e. proper unit separation, i.e. very small market share, or, basket of products, i.e. investment into spare parts, technicians, training, product launch expenses. 

The funny thing about it is that there is no in-between solution. The most dangerous thing is to be dependent on one model. After long deliberations, we have started to invest in the future. The future is branding of RYMCO, branding of Nissan, spinning off of Infiniti as a separate brand.

Does the GMC make still figure in your future?

FR: We went to Dubai three months ago and sat with the GMC regional management there. We agreed on a target that is much more than 100% up on our sales from last year and we hired a new brand manager who is only responsible for the GMC sales. Also, like we did with Infiniti, we hired a new communications department only for GMC to study the market for the luxury SUV, which is not large. We are investing in GMC and think we can take a big portion of this segment, especially as we will target fleet sales with the GMC Envoy.

How much does dealership loyalty count versus brand loyalty?

AS: There is a major conflict on how to brand first. Car manufacturers would like to brand their product, of course, for mutual benefit. But we know that in underdeveloped countries the strength of the name of the dealer is what plays a role in the credibility. Especially when we are talking about capital goods, what matters is the continuity, reputation and the credibility of the dealer and his ability to service. And this is what we are trying to create.

How much did you invest in building RYMCO as a brand?

FR: We really invested a lot, in sweat and tears and dollar wise. Over the years, RYMCO was at times number one, then number two, then again number one. There are a lot of intruders. They lowered their prices, dumped cars in the market, then they become number one for a year or two, and then RYMCO comes again. We are going after steady growth.

How vulnerable are you to rumors such as regarding alleged disagreements among the members of the families that built RYMCO?

AS: We are vulnerable, yes, but the vulnerability is lessened because of the nature of shareholding. Had we been strictly family business, then we would have been as vulnerable as any family-owned business. But this company is owned by investors.

Is the distribution of shares today wide or narrow?

FR: It is not concentrated. We have many investors, including financial institutions. 48% of the shares are owned by investors, and out of the 48% more than 50% are held by people who own 1% or more, the rest are scattered.

Mr. Sweidan, do you see yourself as a troubleshooter, entering RYMCO in some parallel way to Carlos Ghosn coming to Nissan?

AS: It is the same analogy, of coming in to reform, restructure, and put the company on the right platform.

What are your expectations in terms of profits? Do you produce future earnings projections to provide to your shareholders?

AS: We have to submit quarterly results and we have a plan for 2004 and the next two years. This plan has three elements, one is margins, two is to reduce debt and three is to increase sales to cash customers.

FR: Our plan is 20-6-60: this means the company plans for 20% market share, 6% operating margin and 60% cash sales, meaning cash and banks. 

Despite legal action taken against importers and dealers, the trade in fake spare parts is flourishing in Lebanon, eating into as much as 30% of official dealership businesses. It also represents a serious threat to driver safety.

“When fake car parts first hit the Lebanese market a few years ago, we could see they were fake from miles away,” said Camille Aoun, parts manager of T. Gargour & Fils, DaimlerChrysler’s exclusive agent for Mercedes car and car parts in Lebanon. “However, with every consecutive shipment the quality improved. Today, even we have difficulty spotting the difference between fake and genuine, so imagine how hard it is for the consumer.”

Aoun demonstrated by showing a box, complete with the Mercedes hologram, which once contained a fake water pump. “The only way we can tell that this box is fake,” Aoun explained, “is because the font of the letters Q and G is slightly different, while the color of the hologram and the pump itself are slightly darker. That’s it.”

Quality, as always, has its price. At first, the retail price of fake car parts in Lebanon was a mere 10% to 20% of the price of the genuine product. Today it’s about 40% to 50%. The vast majority of fakes stems from China, Turkey and Syria. Not surprisingly in that order, as China is the world’s undisputed king of counterfeit products. From the latest Italian designer clothes and Real Madrid football shirts to medication and Rolex watches: you name it, they fake it. There used to be two factories in Lebanon, which mainly produced oil filters, but both were closed earlier this year.

Though fake parts for other brands are produced, Mercedes and BMW are especially targeted. “It is a simple law of economics,” said one mechanic in Dora. “They are popular but expensive brands, so the importer makes a good profit. The parts of Japanese or French brands are much cheaper, while the market for say Porsche parts is just not big enough.”

“Last year, some 50 containers with fake BMW parts entered the market,” said George Assaf, BMW parts manager at Bassoul Heneine, official agent of BMW, Renault and Alfa Romeo. He was not able, however, to estimate the effect on annual turnover. “Most people, especially when the car is over four years old, buy second hand spare parts, which cost about 10% to 20% the price of new ones. Secondly, many people buy alternative brands like Bosch, which generally are up to 25% cheaper. Only people with a relatively new car buy new and real parts, which represent perhaps 10% of our annual turnover.”

According to Aoun, the trade in fake parts cost Gargour an estimated 20% to 40% in sales of genuine parts in 2003, a year in which Lebanon and the Middle East were flooded with fake parts. “That’s without the cost of legal procedures and lawyers,” he added. Mercedes spare parts dealer Khoury Ets, estimated a loss of 20% in sales over 2003.

According to Aoun, counterfeiters mainly produce Mercedes brake pads, oil filters, air filters, water pumps, windscreens, electronic devices, and even engine oil and brake fluid. “Fake engine oil can be very damaging for the engine,” Aoun said, “while fake brake pads are extremely dangerous. We tested them in one of our employees’ cars and within a month, parts of it were burnt.”

To reduce the risk of buying fake spare parts, one should be better off buying directly from Gargour or one of its 15 official dealers in Lebanon. Yet that’s easier said than done, as dealers, in turn, sell to many smaller shops and mechanics. Currently, there are hundreds of points of sale in Lebanon, many of which illegally advertise with a (fake) Mercedes logo, and so in the end, the consumer does not know who is a legitimate dealer. The situation for BMW is similar.

It should be noted however, that many of the smaller shops are perfectly reliable, while there have been instances of official dealers selling fake parts. In fact, two years ago, one of the Mercedes dealers was caught selling fake parts and Gargour immediately stripped him of his license.

“He was a big dealer,” Aoun said, “and came in crying like a child, saying he would never do it again. But for us, there was just too much at stake. In the end, he damaged our name and reputation. So, we appointed a new agent almost next to him.”

The characteristics of the parallel market in fake products are remarkably similar to the “official” one: an importer places an order at the Chinese factory for fake Mercedes electronic devices or BMW brake parts, which arrive eight weeks later at Beirut port. If all goes well at the port, the importer will collect his goods (with the help of a little gift here and there) and send a representative to approach dealers and mechanics to sell the products.

At the end of last 2003, Gargour started a campaign among dealers, custom agents and consumers to inform them about the problem of fake spare parts, which ended, according to Aoun, with success. “We haven’t been able to stop the practice yet,” he said, “but the problem is clearly much smaller now. Last month, customs seized some 600 to 800 boxes at the port and we know of another shipment arriving.”

Not everyone is convinced, however, that the trade in fake parts is declining. Compare it to the trade in counterfeit computer programs and games, which amounts in Lebanon to a whopping 70% of the overall market. Despite annual tough talk from importers and producers, the black market has remained at a steady 70% for years.

The market in fake spare parts is not fully comparable to the one in fake software – spare parts are more difficult to copy and, unlike the market for computer programs, Lebanon is not a main producer. On the other hand, Turkey and Syria are big manufacturers and they are very close by. What’s more, the market in fake products has the same bottom line as any other market: where there’s demand, there will be supply.

According to The Economist, in the 1960s it was Japan, in the 1970s Hong Kong, followed by Taiwan in the 1980s, and now it’s China. Each reproduced imitation goods until they had built up an industry that needed protection itself. Sooner or later, China will follow their example. Or will it? “The Chinese are very ingenious at imitation,” said 17^th century Spanish priest Domingo Navarette. “They have imitated to perfection whatsoever they have seen brought out of Europe.” BOX
It’s not just Lebanon that has to deal with the problem of fake parts: as early as 1997, Al Habtoor Motors emphasized the issue of fake parts and safety in the UAE. Last year, AC Delco, the auto maintenance and accessories subsidiary of General Motors, announced that the overall fake parts market in the Middle East is worth an estimated $200 million. In Saudi Arabia, AC Delco filed no less than 2,000 complaints against dealers in fake car parts. While the World Health Organization estimates some 5% to 7% of all pharmaceuticals may be fake, The Economist concluded that “as hazardous to public health, is the trade in counterfeit car parts, which may account for as much as 10% of the spare parts sold in Europe. Even more worrying is the thriving trade in reconditioned aircraft components, passed off as genuine along with fake certificates of authentication.” The Counterfeiting Intelligence Bureau (CIB), part of the International Chamber of Commerce, estimates that no less than 7% to 9% of all world trad

The bi-annual multi-million dollar Motor Show is becoming a regular fixture on the Beirut exhibition calendar. Taking place from 12 to 22 November, it is gearing up to beat its previous attendance record of over 100,000 visitors with more brands and models exhibited over a longer period and a bigger space. In the face of a wintry economic climate and soaring fuel prices, organizers and car dealers appear confident in the show’s ability to sustain interest, boost sales and keep the Lebanese dreaming of newer, better cars.

The biggest show of all time

Held at Beirut International Exhibition and Leisure (BIEL) center for the second year in a row, the Lebanon Motor Show has grown to become the country’s biggest exhibition over the years. And the organizers want more. Expanding the exhibition space by over 60% from last year’s show, the 2004 salon will be a sprawling 25,000 square meter auto extravaganza, catering for every product tied to the industry, ranging from the cars themselves to accessories, insurances and bank credits.

“This year will be a really big show,” said Nabil Baz, the director of Promofair, who is organizing the event with the Lebanon Association of Car Importers (LACI) for the second time in a row. “The Lebanon Association of Car Importers announced that they wanted the show to be bigger, spread out over a larger area, so as to measure up to the major international car shows elsewhere in the world. We hesitated to increase the exhibition area by this much initially, especially taking into consideration the current economic situation, which is not one prone to investment, but in the end we chose to take that risk, because we really wanted to have a spectacular show.”

Encouraged by the high turnout of the 2002 exhibit, which was hailed by car dealers as providing a major boost to their sales, the organizers set their targets high: to bring in more car dealers and make the Lebanon Motor Show the biggest car show of the region.

“We have been alternating our show with the one held in Dubai, whilst doing our best to push for the participation of all the representatives of the major automobile producers, and I think we have succeeded,” saiad Georges Tabet, vice chairman of the Lebanese Motor Show Association and a member of the Motor Show 2004 committee. “We are becoming bigger than the Dubai show.”

You have to be there

Now regrouping all the car dealers in Lebanon, the Association was able to ensure the participation of each one of its 34 members, which together will exhibit 50 brands in total. The event has become a mandatory one for anyone involved in the Lebanese auto business. “Everybody is participating, without exception, which is a first in Lebanon,” boasted Baz. “Last year, 15 to 16 brands were missing.”

Thanks to the added exhibition area, all the agents were granted the space they requested.  This year’s car show is set to display between 300 to 400 cars, ranging from sport cars, to SUVs, economy cars to luxury vehicles.

“We attend the motor show because everybody attends it,” said Nathalie Khalife, marketing manager at Bassoul-Hneine & Co, which represents BMW, Mini, Renault, Dacia and Alfa. “We have to attend it, whether we like it or not. A motor show that goes on for 11 days is an event in this country. Everyone wants to come and see what other brands are displaying. It’s also an opportunity to make people more aware of our product, what kind of models we have, our prices etc.”

A testimony to the growing importance of the car show in the eyes of the automobile industry is the attention paid to the stands themselves by the car dealers. State of the art equipment is brought in to make the display as esthetically pleasing and eye-grabbing as possible. “Some car dealers set up beautiful stands,” noted Baz. “Many of them bring in ready-made stands from abroad, which can be worth as much as $200,000 to $300,000. Among the most impressive stands at the 2002 motor show was that of Volkswagen, which was entirely made out of wood and had a mezzanine. They had a whole team of German engineers that came in to set it up. It was really impressive to watch.”

A multi-million dollar concern

In its quest for improvement, the Lebanon Motor Show has grown into a multi-million dollar enterprise, launching a massive promotion campaign, investing in a third hall of 6,500 square meters, and juggling a bigger team of workers to cope with the myriad of additional rules, regulations and organizational requirements that came along with its growth. Reluctant to reveal the magnitude of the show’s budget, deemed to be somewhat inappropriate at a time of economic recession, Tabet admits simply to a project worth “several hundreds of millions of dollars.”

“Just to give you an idea of the scale of the expenses,” added Baz, “I can tell you that the 6,500 square meters we added this year to the exhibition area cost us $1.5 million. The budget for this is enormous.”

Yet the organizers remain confident that it will be worthwhile, arguing that both the location and the timing of the event is set to maximize the number of visitors. “BIEL presents a whole number of advantages: it has spacious parking areas, it’s located right in downtown Beirut, thereby being easily accessible,” Baz explained. “Furthermore, this year, the show will last 11 days, seven or eight of which are holidays – two week-ends, Ramadan and the national independence day. As we’re neither overlapping with the beach season nor the ski season, these additional days of holiday ought to bring in a lot of extra people.”

Set at a token LL5,000, the entry fee is intended to be low enough to enable anyone with an interest in cars to attend, whereas simultaneously deterring people to simply “stroll through on their Sunday walk,” as Baz put it.

Something old, something new

Bringing people to the show is merely winning half the battle, however. Ultimately, the name of the game is generating sales and building customer loyalty. Taking into consideration the economic depression, this is no small feat.

LACI is waging a battle against the growing tendency to purchase second-hand cars in the country and hopes that the show will help promote the benefits of buying new automobiles. For some dealers, this poses less of a challenge than to others. Khalife remains relatively unconcerned by the effect of the economic recession on the sales of BMW. “In all honesty, 17% of the population of Lebanon has all the money and these people are our clients,” she said. “They don’t care whether the fuel prices are going up or down, whether there is an economic recession or not. They just want to buy cars and be trendsetters.”

Others, however, are feeling the heat more, and are hoping the motor show will help boost sales. “The economic recession and the hike in fuel prices is affecting our company a lot because all our cars have big engines and this is a problem,” admitted Nada Sfeir, marketing manager for Faouzi Khoury and Sons Co. Sarl, which represents Chrysler, Dodge and Jeep. “So we are hoping the motor show will be an opportunity to increase sales.”

Tabet expects many dealers to be exhibiting more fuel efficient cars with smaller engines, in addition to safe and environmentally friendly vehicles. Yet conversely, a number of SUV’s are also expected to be on display, further promoting the global obsession with the gas guzzling vehicles. Not forgetting the Lebanese soft spot for all things luxurious, the exhibition will also include dream vehicles such as the Porsche Cayenne.

“There is a trend towards luxury SUVs,” said Fadi Kumbarji, purchasing manager of Rasamny Younes Motor Co sal. “Many are shifting, even Porsche now has an SUV – the Porsche Cayenne. They are all coming out with SUVs, and it is becoming very popular in Lebanon.”

With their taste for the new and the luxurious, the Lebanese do not seem ready to let the car industry down just yet. “The Lebanese dream of cars,” Tabet said. “The market for cars in Lebanon will keep on growing.”