OPPORTUNITY KNOCKS
The redevelopment of Beirut’s downtown area has been led by Lebanese development and investment company Solidere. The company is the driving force behind the Beirut Central District, which contains its own designated hotel district and the Beirut Waterfront Development, which will transform the city’s waterfront into a vibrant boulevard lined with a variety of cafes, restaurants and night spots.
Meanwhile, the Lebanese government is making investing in Lebanon an increasingly attractive option.
The Investment Development Authority of Lebanon (IDAL) is taking huge steps to encourage foreign direct investment (FDI) in Beirut, with an incentives scheme aimed at various industries, including tourism. IDAL’s ‘Package Deal Contract’ allows investors to benefit from tax exemptions, reductions on permits for foreign labour and construction permits, and a number of other exemptions, provided they meet certain criteria (see box below).
MIND THE GAP
It’s easy to see why investors and hotel management companies have been eager to get a slice of the upmarket action, but there remains a huge opportunity in the mid-range and limited service sectors.
”As the country continues to stabilise and mature, government investment coupled with that of key Middle East based airlines and the emergence of regional low cost carriers, will make travel more accessible and affordable and will drive visitor numbers up,” says Rani Gharbie, director of development, Middle East and Africa, IHG.
“With these strong trends set to continue, Lebanon can look at providing more affordable accommodation for a diversified demand base.”
Wyndham Hotel Group vice president development, Middle East and Africa, Bani Haddad, is confident in opportunities available for operators looking at different market sectors.
“Upscale hotels dominate the current inventory, especially in Beirut, and the limited service hotels are all unbranded properties,” he states.
“This creates a big opportunity for hotel chains to introduce their limited service and economy brands.”
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But developers with ambitions outside of Beirut still face challenges. The lack of tourism infrastructure outside the capital makes travelling around the country difficult and a lack of services means that visitors, Arab nationals in particular, are more likely to stay in Beirut, argues HVS Dubai managing director Hala Matar Choufany.
“Predominantly inbound travel today comes from Arab countries and the Arabs don’t really travel outside of Beirut and a few areas outside of Beirut,” she explains.
The InterContinental Mzaar Resort is currently the only internationally-branded hotel in Lebanon’s ski resort area Faraya. According to IHG’s Gharbie, managing a property outside of Beirut has pros and cons: “The destination allows people to disconnect from the hustle and bustle of a busy city like Beirut and attracts weekenders, honeymooners, business meetings and leisure groups,” he explains.
But operators eager to move into secondary locations outside of Beirut might be jumping the gun.
According to the latest report from HVS’s Dubai office, Beirut and Beyond – An Unparalleled Insight, the number of branded hotel rooms in the greater Beirut area remains woefully inadequate for the huge demand increases that are anticipated.
“As operators show keenness to develop hotels in Lebanon, investors and developers should be aware that there are an array of brands being considered for the market,” the report advises.
“Companies typically establish a base in the market with their core brand in Beirut, before considering their other brands and different locations around the country. Nevertheless, due to the appeal of the Lebanese market, operators are now being more flexible.”
OUTLOOK
Investment decisions in Lebanon are fundamentally dictated by political stability, or lack thereof, but taken in the context of the recent global recession, it is not surprising that many investors are more cautious about launching new projects.
But Deloitte’s O’Hanlon is bullish about Lebanon’s future prospects: “The shortage of credit availability globally will impact any investment decision and Lebanon is not immune to that, but as credit markets open up, we will see that nothing breeds success like success,” he argues.
“I think Lebanon has demonstrated that it has a combination of scenery, friendliness , quality of food and quality of service that are attractive to visitors. So long as those fundamentals remain in place it represents a good opportunity in the tourism sector.”
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