Dec 19 2011
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Sun goes down on a destination
Regional unrest and local instability put an end to Lebanon's touristic resurgence
Put bluntly, it was "the worst year in 20 years for the Lebanese tourism industry," according to Paul Ariss, president of the Syndicate of Owners of Restaurants, Cafes, Night Clubs and Pastries in Lebanon.
Following three years of consecutive growth, the number of foreign arrivals dropped by 24 percent in the first nine months of 2011, while across the board, room occupancy rates plummeted by 15 percent.
That cold spring wind
According to the Ministry of Tourism (MoT), 1,276,100 foreign visitors entered the country in the first nine months of 2011, compared to nearly 1.7 million during the same period in 2010. In 2010, Lebanon set an all-time high of nearly 2.2 million tourist arrivals, contributing an estimated $8 billion to Lebanon's gross domestic product.
The fairy tale was not to be repeated in 2011. Even if the last three months of the year were to attract the exact same number of arrivals as in 2010, the total number of tourists would not exceed 1.7 million, a decrease of 22 percent. In reality, the end-of-year result is likely to be worse, as until October every single month of 2011 recorded a decline.
Traffic in July was particularly affected, with a decrease of no less than 39.3 percent on 2010's figures; summer months are traditionally Lebanon's high season.
As in 2010, most tourists in 2011 came from the Arab world, followed by visitors from Europe and Asia. According to the MoT, some 430,000 Arabs flocked to Lebanon during the first nine months of 2011, compared to 710,000 during the same period in 2010, down 39.4 percent.
Around 374,000 Europeans arrived by October, a smaller relative decrease of just 10 percent. By October, 206,000 people from non-Arab parts of Asia had entered Lebanon, a decrease of some 28 percent.
Industry professionals agree on the causes of the downturn. "The Arab crisis, especially in Syria, reflected badly on the Lebanese tourism sector," said Pierre Achkar, head of the Association of Hotel Owners in Lebanon (AHOL). "A lot of Arab tourists, especially Jordanians and Arab families from the Gulf, come by car. With the political situation in Syria, that was virtually impossible."
A closer look at tourist arrivals reveals that only 99,000 Jordanians entered Lebanon in the first nine months of 2011, compared to 217,000 by October 2010, a decrease of over 50 percent. During the same period, some 84,300 Saudis, 46,000 Kuwaitis and 22,600 Emiratis visited the country, a decline of 46 percent, 41 percent and 37 percent, respectively.
The vast majority of Asians visiting Lebanon in 2010, some 65 percent, were Iranians. By October 2011 only 119,000 had entered the country, a decline of 37 percent. This too was largely due to the regional situation, as many Iranians visit Lebanon by bus following a pilgrimage along the many Shia religious sites in neighboring Syria. Interestingly, the number of Iraqis and Turks visiting Lebanon remained more or less the same, while African visitors were the sole group to show an increase, up 16 percent to some 44,100 by October 1.
Ariss of the restaraunt owners' syndicate also pointed to regional turmoil for the decline, yet blamed domestic factors too. "The absence of a government during the first four months of the year and the accusation issued by the Special Tribunal for Lebanon also played a role. What's more, we had Ramadan in August and people generally travel less during Ramadan," he said.
As a consequence of the drop in tourist arrivals, Ariss said the overall turnover of Lebanese restaurants in 2011 will decline by some 30 to 40 percent. While there are no reliable figures available, he estimated there are more than 6,000 restaurants of all types in Lebanon, 70 percent of which operate all year round. They employ more than 50,000 persons on a permanent basis and up to 70,000 at peak times. Ninety percent of employees, Ariss claimed, are Lebanese.
The Association of Car Importers in Lebanon estimated that car rentals in 2011 were some 40 percent down. Many retailers, particularly in the heart of Beirut, had a rough year as well. "We cannot complain," said Frank Luca, owner of souvenir and artisan store Orient 499. "Of course we had a reduction in sales, but I have many friends in retail, and they had a year much worse than me. Overall, we still had a good year, with fewer visitors buying more. Some 50 percent of our clientele are foreigners, half of whom are Arabs, while the other half are Lebanese."
"The whole market has been affected by the regional situation and the Beirut Souks are no exception," said Joseph Asseily, chairman of the Beirut Hospitality Company (BHC), a Solidere subsidiary founded in 2010 with the aim of bringing Downtown Beirut to life by establishing restaurants, cafes and hotels. So far it has opened Momo, Café M, Relais Foch and STAY, while L'Atelier is set to open next year. "What 2012 will bring is anyone's guess, but we are determined to make Beirut the food capital of the Middle East."
"Ramadan cut the 2011 summer in half, but that was calculated," said Suzan Bou Dargham director of public relations at the Four Seasons Hotel in Beirut. "We expected 2011 to be at least as good as 2010, but with the political situation in the region constantly changing, we had to have a plan B." She declined to give specific figures regarding turnover or occupancy rates.
AHOL's Achkar estimated that, as a result of lower occupancy rates, hotel revenues in 2011 have declined by some 38 percent. According to the MoT, the average room occupancy rate for five-star hotels in Beirut during the first six months of 2011 amounted to 48 percent, compared to 63 percent in 2010, while the average bed occupancy rate was 52 percent, down from 74 percent.
The average room occupancy rate for four-star hotels in Beirut decreased from 62 to 50 percent. Outside the capital, average occupancy rates across the board hovered between 20 and 40 percent.
In its most recent survey of the Middle East hotel sector, Ernst & Young concluded that despite a decrease of 15 percent year-on-year, the average room rate at Beirut hotels amounted to $222 in the first 9 months of 2011, which made the capital's hotels the seventh most expensive in the region. The regional average amounted to $183.30.
According to Achkar, there are some 400 hotels with a total of 21,000 rooms in Lebanon, employing some 18,000 people, with another 3,000 rooms under construction.
"In 1975, Lebanon had around 475 hotels, yet the average size in those days was much smaller. For example, here in Broumana alone there were 36 hotels, yet most had an average size of only 14 to 18 rooms. Today there are 7 hotels. Over the years, the trend has been to grow bigger and bigger, and today a hotel with 300 rooms is no exception."
Among the more noteworthy planned newcomers on Lebanon's hotel scene is the Grand Hyatt, Beirut. Scheduled to include 351 rooms, it is expected to be the biggest hotel on Lebanese soil after the Phoenicia InterContinental.
The Kempinski chain also has plans for two five-star outlets in Lebanon. Set to open in 2012, the Kempinski Hotel Beirut is a resort hotel located at what once was the famous Summerland Hotel. The hotel is in the final stages of construction and will have 151 rooms and 56 luxury apartments, as well as a marina with up to 60 berths. Between Aley and Bhamdoun, the German hotel chain is currently constructing Al Abadiyah Hills, which is set to open in 2013 featuring 74 rooms, 12 villas and 181 apartments.
Ending up, but slopes ahead
Tourism in Lebanon picked up slightly toward the end of 2011. The Eid Al Adha holiday in early November saw hotels and restaurants fill up across Beirut, while according to Achkar, meetings, incentives, conferences and exhibitions (MICE) tourism showed an increase. "It sounds ironic, but Lebanon in 2011 was one of the most stable countries in the region," he said. "Beirut and Dubai proved popular destinations for business meetings and conferences. Let's hope that trend will continue next year."
That said, "The political turmoil in the region prevented many Arabs from choosing Lebanon as their final destination," said the restaraunt owners' syndicate's Ariss. "2012 is going to be worse, as the causes of the crisis prevail and Syria will remain politically instable. In addition, the raise in wages, not only the minimum ones, will have disastrous consequences on the tourism industry. Companies have started lay-offs. Expansion plans have been halted. New investments are being postponed. Many restaurants in 2012 will shut down or change owners."
"Political stability in the region, and especially Syria, will be essential for a full recovery of the Lebanese tourism sector in 2012," said Achkar. "In addition, it does not help that Lebanon is still haunted by the negative image created by the international media, which seems to only report on negative events. This does not really affect Arab tourists and Lebanese expats, but it does make potential Western visitors think twice."
With the aim of countering Lebanon's negative image abroad and attracting more western tourists, the cash-strapped Ministry of Tourism in 2010 proposed to introduce a LL 5,000 airport tax to be used exclusively for promotional activities, yet the proposal never made it through parliament.
"If I look at the stands of neighboring countries, such as Syria, Jordan and Egypt, I honestly feel ashamed to participate at tourism fairs," said Lebanon's Minister of Tourism Fadi Abboud. "At such events we look like the poor cousin. Tourism represents 22 percent of our GDP and we should invest in it. Yet you cannot create an industry if you do not promote it."
More visitors from Europe would surely help diminish Lebanon's over-dependency on Arab tourism. "It would be great if Lebanon in the near future could attract more tourists from the US and Europe," said Bou Dargham of the Four Seasons. "But how do you do that in the short term? Today, when you type in Beirut or Lebanon, Trip Advisor shows you in red letters: 'Travel Alert: Safety and Security Concerns.'"
Following the kidnapping of seven Lithuanian cyclists in the Bekaa Valley and attacks on United Nations Interim Force in Lebanon (UNIFIL) troops, the British and French embassies warned their citizens to avoid or be cautious when traveling to the south or east of the country. Following alleged incursions by the Syrian army into Lebanon, the British embassy in October advised against "all but essential travel to within 5 kilometers of the Syrian border," while it "continued to advise against all travel to Palestinian refugee camps and against all but essential travel to the Bekaa Valley and south of the Litani [River]."
The French Embassy furthermore warned against the danger of kidnapping in the Bekaa Valley, potential attacks of French UNIFIL troops in Saida and further south and called on travelers to avoid certain suburbs of Beirut and Tripoli. Seeing the events which occurred in Lebanon in 2011, such specific and carefully worded warnings do not seem unreasonable.
The same cannot be said about the travel advisory issued by the US State Department, as it urges "all US citizens to avoid all travel to Lebanon due to current safety and security concerns." The statement edges on the hysterical, warning, among other things, that "public demonstrations occur frequently with little warning and have the potential to become violent" and "family or neighborhood disputes often escalate quickly and can lead to gunfire or other violence with little or no warning."
This is almost ironic coming from a country enamored with firearms and that boasts an annual homicide rate twice as high as that of Lebanon. Issued on April 4, 2011, following the fall of the pro-American Hariri government and with negotiations over a new cabinet in full swing, some people claim the travel ban to be politically motivated. The US travel warning is particularly harmful, as the red alert on the popular site TripAdviser is directly linked to it.
"In 2011, we had hoped to attract an increasing number of Western expats living in the Gulf, yet the opposite happened," said Achkar, who despite everything remained positive about things to come. "We've seen much worse. We've had the 2006 war, an 18-month blockade of downtown Beirut and months without a government or president. But we've always overcome. And we will overcome again."
© Executive 2011
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