Optimism has cult status among Lebanese tourism professionals. Having suffered blow after blow over decades, the sector’s seasoned practitioners today display a measure of immunity to bad news and business downturns. But you look at the numbers and wonder if quiet weeping or the occasional liberating scream of frustration might not be justified.
According to the statistics published by the ministry of tourism, the numbers of arriving visitors in the first five months of the year registered at 301,446, a 19% drop from 372,689 in the same period last year. The month of May showed no difference from the overall downward trend, as it saw arrivals fall by 21% over May 2004, from 85,133 to 67,026 incoming tourists.
This immediate picture is not set to improve for June, according to managers at international hotels. Although events such as the Arab Economic Forum, the Operation and Maintenance Conference, and hospitality show Horeca brought in coveted business travelers and boosted occupancy rates for their durations at some properties to above 75%, on some other days in June, a 5-star hotel might have had to get by on 25% occupancy.
Extrapolating the performance of the tourism sector for the first six months of 2005, it seems wholly improbable that the half-year visitor count would climb above 400,000 arrivals. These underwhelming figures turn gloomier by another shade if they are gauged against predictions.
A year ago, when the summer was shaping into a record season among the post-conflict years, the ministry of tourism had formulated great expectations: Lebanon could anticipate visitor numbers to grow by 20 percent on annual basis until 2010, was declared by both then minister of tourism Ali Abdullah and the ministry’s director general, Nada Sardouk.
The hopes were higher than the predictions of the World Tourism Organization (WTO), which several years ago had issued a 9% annual growth projection for Lebanon’s inbound tourism until the year 2010. But whether one draws upon the ministry’s predictions or those of the WTO, the discrepancy between what 12 months ago was a reasonable expectation of 550,000 to 600,000 tourists for the first half of 2005 (based on the half million visitors in the same period last year), and what can be realistically expected today, comes out as a gap of 150,000 to 200,000 visitors who otherwise would have enjoyed Lebanon and spent very respectable amounts of cash.
This translates into a staggering combined damage of direct losses and unrealized revenue for everyone, the fiscal authorities (losing millions from VAT that didn’t happen and visa that didn’t get issued), hospitality enterprises, retailers, transportation and other services providers, and the economy at large.
In addition to these difficulties, the political storms of the first half year impeded the ministry of tourism’s maneuvering capability just as much as other ministries and perhaps even more than some. In what should have been the game of pitching for Lebanon as 2005 destination, a new tourism minister had to step up to the plate every couple of weeks, while the ministry’s bases for promoting the country were anything but loaded.
Already perennially under-budgeted, the ministry’s financial shortage apparently became so acute during this year’s political turmoil period that funds for all but the most elementary activities dried up. Thus there was no way that the ministry could have launched a rapid initiative to save the main tourism season and reassure the country’s clientele of Gulf Arabs that it was safe to come to Beirut and remind them of the things they cherish about vacationing in Lebanon.
In this context, it becomes easily explicable that a gathering of private sector companies took it upon themselves to create an ad-hoc campaign last month in a concerted effort to entice Gulf tourists to return to Lebanon for the summer. The “Sayf Lubnan” campaign was launched in mid-June by fashion retailers Aishti, confectionary specialist Patchi, retailers ABC mall, Bank Audi-Saradar Group, Groupe Mediterranee, the InterContinental Phoenicia Hotel, and national carrier, Middle East Airlines.
Implemented between June 14 and June 30, the Sayf Lubnan campaign focused entirely on promotion of Lebanon in the Gulf markets and Jordan, aiming “to gain back the destination as summer resort to Arab people who may be scared to come,” said Carol Hanna, group account director at the advertising agency HC Leo Burnett, who handled the campaign. Using a mix of print, outdoor, radio and television ads on LBC Sat and Future Sat, Sayf Lubnan communicated messages of partying on the beach, enjoying the mountains, relishing good food, and nightlife.
The concerted efforts of the seven firms behind the campaigns were driven by the realization that a well-timed advertising push might swing decisions of Arab holiday makers in the last minute towards spending the summer in Lebanon, explained Maya Maatalani, marketing manager at Aishti. That’s why conducting the campaign before the end of June was crucial, she said, “in July it could be too late.”
While planning to provide additional incentives in further promotion of the summer season, participating companies had not decided on the exact nature of their offerings by the time the campaign started, added Maatalani who emphasized that Aishti and other firms contributing to the campaign has been affected by the downturn in tourism over the past few months, but not in a threatening way.
All seven companies put money into a joint basked for financing of the campaign; and additional in-kind contribution of television airtime reportedly came from the Choueiri Group and through the support of Saad Hariri. Singer Guy Manoukian donated the tune representing the campaign on the radio, “summer is back in Lebanon.”
Given the predilection of regional vacationers to take their holiday decisions in the last minute, the results of the Sayf Lubnan campaign will only become visible between mid July and the end of August. In looking into the second half of 2005, and beyond, executives at some of Lebanon’s top hotels voiced a mixture of temperate expectations and very substantial long-term optimism.
“2004/2005 was perfect for us until February 14. Compared to some colleagues who faced much stronger problems, we didn’t lose money this year, but this summer will not be the same [as last year],” said Michel Perret, general manager of the Beirut Mövenpick Hotel & Resort in Raouche.
Standing at 50%, the hotel’s reservations for July were 30% less than at the same time in 2004, and “a little less for August” but with a positive outlook, Perret said when talking to Executive in mid-June. “I forecast 90% occupancy for August at almost the same room rates,” he specified, “assuming that two weeks post the elections nothing bad happens. The diaspora and the flat owners will all check in.”
The strength of the Mövenpick in weathering the crisis was based in part on its location, away from the direct 2/14 damage zone, and on having the advantage of having been repositioned under Perret’s leadership as city hotel with strong conference and banqueting activities besides its resort facilities and marina. But the operation also benefited from succeeding in immediate crisis response following the Hariri assassination, through implementing a Profit Protection Plan (PPP).
At the LeVendome InterContinental, one of the hotels hit very hard in February, management and staff by last month had advanced the recovery of business to a comparable situation. “What we have on the books today in reservations amounts to 60% of what we had in the same period last year, but we are expecting a heavier last-minute booking pace,” general manager Josef Coubat told Executive. The hotel, which had suffered operating losses for four months, was returning into the black figures in June.
In Coubat’s estimation, the summer will be moderate. For bringing results really up, “we count a lot on the year-end,” he said, referring to the holiday season in the last quarter of 2005 and the start of 2006. Commencing in early October with the fasting month of Ramadan, the season’s well-spaced chain of religious and social highlights this year has its first peak with Eid al Fitr in early November, followed on the foot by the Christmas season, the New Year, and topped off by Eid Al Adha around January 10, 2006.
Addressing the extended future, both managers were emphatic about Lebanon’s potential as destination. Lebanon could use “its European style of life in an Arab country as unique selling point” in attracting visitors. It’s a perfect niche destination,” said Perret.
“The Lebanese love to go out and are hospitable to foreigners, that is what makes this country different,” said Coubat, “it has a big potential market and we are still trying to make it happen.”
How much could tourism contribute to the Lebanese economy? Another international sector expert made it clear. “It is still not yet recognized how important tourism is for the Lebanese economy. The government treats tourism as a sideshow, while the economy really is tourism,” said Jim Billings, Lebanon director for international consultants SRI. With funding from USAID, his team carries out programs in support of economic development in Lebanon, specifically in the realms of tourism, agriculture and information technology.
It is a curious thing that foreigners living in Lebanon, as well as Lebanese returnees to the country with international experience, often seem to sense the country’s tourism charms with intensity and positive infatuation, expressing this in ways that sometimes exceed the insights of life-long native Lebanon dwellers into the country’s huge economic tourism potential.
But luckily, there are those, Lebanese and non-Lebanese, who can see the country for what it could be and, more importantly, put their money where their heart is. These include investors and proprietors of tourism ventures, large, medium and small. It is reassuring for the hospitality future that the rate of business failures in the sector over the last four months apparently did not increase dramatically and remained within the expectable parameters of bankruptcies.
At the Kafalat corporation, which guarantees loans to small and medium enterprises, chairman and general manager Khater Abi Habib observed only one request from a company in the tourism industry to have its loan rescheduled in light of the recent crisis. Both smaller hotels and restaurants working with Kafalat-guaranteed loans would have suffered from the crisis but might depend more on the internal economy than on inflows of foreign visitors and find time to recover from now on. “I anticipate that the ones with losses of revenue will be offered a period of four to six months where we will reduce their payments by one quarter to one third, to get their finances back in order,” he said.
Highly encouraging for the tourism prospects of Lebanon are various further news of the continued professionalization and growth of tourism operations. New investments have been implemented during the past quarter, from the doubling of capacities at the Edde Sands resort to the completion of the Habtoor Grand Hotel, Convention Center and Spa, where notwithstanding several concept adjustments such as changing its name away from the original Metropolitian City Center, construction pushed ahead at full speed this spring and operations are scheduled to be fully on stream within this month. And as hitherto largest tourism-related project to apply for and be granted package deal support through the Investment Development Authority of Lebanon (IDAL), the Landmark project in the downtown has been provided with this contract at the end of May.
Moreover, IDAL chairman and general manager Nabil Itani disclosed to Executive that beyond tourism projects that have already received contracts or applied for them with IDAL, several significant seaside projects are in preliminary stages of planning, including resorts in Jiyyeh and Damour to the south of Beirut and a $90 million project for a 1.3 kilometer spanning beach resort with marina in Tabarja north of the capital, and a major resort projects in the Bcharri Cedars region is pending with investors based in France who envision to build there a resort that allows for summer skiing and includes four 5-star hotels.
But as it is self-explanatory that a new development project is automatically a great and beneficial project, the hotel executives investing their careers into the country also were not shy to point out that from the perspective of its attractiveness in tourism, Lebanon today is a very mixed bag of good and bad, with a tremendous need for change.
“As public and private sector, we didn’t understand that the heritage is every single building that we can preserve and make shine within this city. The last 30 years were a disaster [and] I don’t see anyone today fighting for this, which is our competitive edge,” said Coubat. He leaned back. “The beauty of the city is our guarantee for the future. We have a beautiful country but no preservation, and the ugliest coast ever. I am frustrated,” he sighed. “We need something to sell.”
Lambasting the same problems of pollution and degradation of Lebanon, Perret exclaimed, “It is not acceptable! The politicians should agree to clean up this country.” He further cautioned that Lebanon should not try selling itself down-market, saying, “Lebanon will not be a mass destination. We should not go the way of competing with Egypt as mass destination.”
Managers of several of Lebanon’s international hotels actually have recently started to explore possibilities of forming a new NGO in support of developing tourism in Lebanon. As the head of an informal club of managers at top hotels, Jean Baptiste Pigeon, general manager of the Crowne Plaza Hotel in Hamra is spearheading the initiative. “Our approach is that based on the strength of our companies, we want to be an added support to whatever public initiative can take place,” he told Executive.
At the same time as currently inquiring with lawyers about the establishment of an NGO under Lebanese law, the group has started working on a tender document seeking offers from international marketing companies for one, three and five year concepts in marketing the destination Lebanon. If the NGO plan turns reality, the organization would aim for a wider membership of hotels and seek to collect funds from annual membership fees and contributions.
“There is no point to ask the government for money,” Pigeon said, giving as reason for the initiative, “Lebanon has so much to offer, a lot of potential. It is a waste to see that this has not been exploited.”
