Beirut's Central District facing an uphill struggle
Retailers in Lebanon have faced a tough year
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Following a year marked by a sharp decline in tourism and an acute economic slowdown, Beirut’s Central District, known for its high-end stores and numerous restaurants, looks set to shed more of its outlets as businesses prepare to close their doors.“Downtown is becoming a ghost town. Come back on Jan. 15 and see for yourself,” says shop-owner Youssef Darwish, who plans to pull the plug on his Maarad jewelery business early next month.
Several local businesses confirmed to The Daily Star that at least eight restaurants and several shops will not be renewing their yearly rental contracts next year.
Buddha Bar, Masaya, Hookah, Costa Coffee, Friday’s, Steakhouse, and Class are among businesses that already shut down in 2012.
Closed shops and restaurants in the once-posh streets of the BCD have become a familiar site, and those that are still open hardly make ends meet.
Business has been particularly bad in 2012, all interviewed proprietors said.
“We have been on our last leg for the last eight months after business [slumped] in mid-2011. The street is in [crisis] now, and things keep going from bad to worse,” Darwish says.
A stone’s throw away, the manager of Beirut’s famous Place De L’Etoile cafe Hussein Rizk stands on the pavement of the Nijmeh Square overlooking Parliament.
“What can I tell you? I am feeding pigeons instead of tourists,” he comments as he tosses pieces of bread to the birds.
Politics is also seen as another reason behind the decline in business in BCD due to the countless rallies and sit-ins staged in Martyrs Square and Riad al-Solh Square by both the March 8 and March 14 camps since the assassination of former Prime Minister Rafik Hariri in February 2005.
Labor unions and school teachers have also turned out in big numbers in the area in order to demand higher wages and more benefits.
“The whole area has fallen out of favor. Politicians have made it look like a militarized zone instead of a prime touristic area,” Rizk says.
“A strike one day and a demonstration [the next], one road closed here and a pathway blocked there. How can you attract tourists and locals under such conditions?” he wonders.
In addition to competition from more recent Downtown ventures, including Zaitunay Bay and Beirut Souks, newer dining hotspots in Ashrafieh and Hamra are also behind the sharp fall in business, Rizk argues.
Ali Abdul-Wahad, a restaurant manager at Karamna, a Lebanese chain, tells The Daily Star that the only reason they are able to stay alive is due to funds being injected into the business by its Saudi investors.
The restaurant has been incurring losses for months, Abdul-Wahad says, explaining that at this level of business it is impossible for the restaurant to cover annual expenses of over $500,000, more than half of which goes to rent.
Darwish, burdened by $55,000 in rent a year, says high rental fees are a major setback for local businesses, particularly during politically unstable times. He adds that sales in his small shops plummeted to less than $2,000 a month, leaving him, and many of his neighbors, with little option but to shut down.
Admitting that he cut employees’ wages by 30 percent, Darwish says even such severe measures have failed to bring the business back to profitability.
He recalls record sales when tourists flocked to the area. “I used to have a turnover of over $100,000 in good months,” he says. “We’ve been only dreaming of a fraction of such a number this year.”
Downtown’s restaurants, says Rizk, relied on Gulf tourists for up to 80 percent of their business.
Restaurants now receive a small fraction of their former Arab regulars, he adds, after travel warnings were issued by Gulf countries during the summer.
The number of tourists entering Lebanon declined by 15.8 percent in the first 10 months of 2012 compared to 2011 and by more than 36 percent, compared to 2010.
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