A sleeping giant tries to stir

Lebanon is struggling to emerge from years of political turmoil. Ongoing instability continues to beleaguer hoteliers and suppliers alike, but there is now hope on the horizon, says Laura Warne.

With its rich history, vibrant night life, beautiful scenery and quality hotels, Lebanon has the makings of the perfect tourist destination.

However, the country, including its capital Beirut — the ‘Paris of the Middle East’ — has been crippled by civil war and political instability.

Although the Lebanese Civil War ended in 1990, clashes in 2006 and 2007 sent the country back to square one. The lack of a solid government has since put development plans on hold for many hoteliers. The news is not all bad, however. Lebanon is one of the few countries in the world that has not been severely affected by the global credit crunch.

In 2008, Beirut achieved the fastest revPAR growth in the world — up 102.2% to US $95, according to a report by Deloitte. It presents the city as an “illustration of how tourism is damaged by political conflicts”. However, the report acknowledges that Beirut saw “strong growth over the past year as it recovered from security clashes of 2006 and 2007”.

While the majority of world markets are slowing and unable to escape the pressure of the financial downturn, Lebanon has been largely untouched by global economic issues. Business tourism in particular has remained strong, especially when compared to other destinations.

For hoteliers, there is a chance to capitalise on this strong inbound business tourism market. After all, Monroe Hotel Beirut general manager Ghassan Naaman says that business travellers dominate the Lebanese market for 10 months of the year.

Fast Forward
As Mövenpick Hotel and Resort Beirut general manager Alain Chatel puts it, “the Lebanese market has been sleeping for the last three years and is now waking up very quickly”.

However, he explains that the country is still in a state of uncertainty and is subject to many internal challenges that affect hoteliers.

“Parliamentary elections are scheduled for June 2009; the outcome remains ambiguous and the political stability pre-, during- and post-elections remains unclear,” says Chatel.

“This makes it very difficult to predict business flow and to plan  investment in the second quarter of 2009.”
Naaman agrees that developing a thorough business or marketing plan is “impossible” in the current climate. He adds that competition and a lack of infrastructure also hinder growth.

“The roads are overloaded with cars and traffic problems that prevent the sales team from delivering 100% productivity,” says Naaman.

“The market is strong and growing. Nevertheless, competition between hotels is unethical as they are fighting amongst each other to get business by cutting rates to unacceptable levels.”

Naaman says new properties such as the Hilton, Four Seasons and Hyatt Regency are being developed at a slow pace, with owners waiting for a more stable time to launch.

Staffing Woes
The country’s instability has taken its toll on the hotel industry, with staffing one of the hardest-hit facets of business.

“We have to replace the workforce that left Lebanon during the last three years of political crisis and retrain the entire team to match up to the standards expected from a five-star hotel,” says Chatel.

Naaman agrees: “The most important factor that hinders development is manpower,” he says.

“It is very difficult to find professionals at this time; during the past few years, most have been expatriates from other countries.”

Expatriates and locals alike left Lebanon in droves between 2006 and 2007 and the industry is now struggling to build itself up with only a skeleton staff.

“The comeback of Lebanon has been so quick, that we are trying to keep up with the pace of this growth with our workforce,” says Chatel.

“We expect to continue this growth, pending the outcome of the parliamentary elections.” Chatel says there are also some concerns that the global economic downturn may eventually impact the market, which has been relatively unscathed until now.

Market Trends
Mövenpick has always catered to a combination of business and leisure travellers, with the Middle East and GCC markets dominating bookings, says Chatel. However, compared to other Beirut hotels, Mövenpick also welcomes a large number of European business visitors, he says.

“Being the only city centre hotel with resort facilities, our guests can combine both business and leisure during their trip to Beirut. The hotel comprises all the requirements of a business traveller.

“As for our resort facilities, our guests can enjoy the most magnificent view in Beirut, directly overlooking the Mediterranean Sea.”

Naaman says the Monroe Hotel is also favoured by European travellers and even neighbouring countries such as Jordan, Syria and Iraq are out-booking the Gulf states.

Uncertain Future
Major developments may have been put on hold in Lebanon, but Chatel is using the current period of uncertainty to pursue a soft refurbishment of all rooms and suites at the Mövenpick. He has also flagged an upgrade for the hotel’s popular outlet, Hemingway’s Bar and Cigar Lounge and Terrace.

Chatel says co-operation between the industry and the government will help improve the market. “The Lebanese Ministry of Tourism is highly supportive of hotels, especially during exhibitions and trade shows,” he says. “We need to work together to aggressively market Lebanon as the number one tourist destination.” Naaman sings a different tune, however: “There are absolutely no government initiatives to help hoteliers,” he says.

“In the worst times of the country they never helped in any way and apparently have no plans to do so. Hotel owners should count on themselves,” warns Naaman.

Bouncing back Emirates Holidays VP commercial operations Dina Al Herais says Lebanon is “one of the most resilient destinations” in the world.

“What we are seeing is that in the past six months the booking numbers to Lebanon have doubled, compared to the same time the year before.

“The minute it cools down [politically], the traffic just starts going back immediately,” says Al Herais. She says hotel rates dropped significantly over the past year to around US $150 per night, but are now back at healthy levels as hotels witness an upturn in consumer demand.

The country is a perennial favourite with the Arab market, despite its troubles, adds Al Herais. “Tourists from the GCC love the destination and know all about it; they will tell you which hotel they want to stay in, which streets they want to be close to, which restaurants they want to eat in and all the sights they want to see,” she says.

“We are also seeing a healthy number of requests from ex-pats for winter skiing holidays. “Emirates flies twice daily to Beirut and we are seeing a generally healthy comeback in the number of people on those flights.”

Al Herais says the country’s unstable political situation is the only thing holding Lebanon back — she explains that all the other elements are in place to make it an ideal tourist destination.

For this reason, she says that even if the June elections “slow things down a bit”, Lebanon is still strong enough to pick itself up again.

In addition, the liberalisation of the skies in Lebanon can only help the country’s travel, tourism and trade, according to International Air Transport Association (IATA) regional vice president MENA Dr Majdi Sabri

“Open sky policies are already delivering economic benefits in Lebanon, Kuwait, Bahrain and the UAE,” he says.
So while there is some debate on the factors hindering the development of Lebanon’s hotel industry to-date, with the level of government support brought into question, those in the know seem convinced of a bright future. The research from Deloitte  is testament to this trend.

Hoteliers need to be aware of the issues, such as the strength of business tourism, and ensure they make the most of every opportunity.