The Syrian War and Lebanon's crumbling hotels sector
A leading hotelier warned Thursday of grave consequences to Lebanon’s hotel industry if the crisis in Syria persists. “If the situation in Syria remains the same, the hotel industry will be in real danger because many hotels witnessed a sharp drop in their business this year, [with] many of them indebted to banks,” co-owner of the Phoenicia Intercontinental Hotel Marwan Salha told The Daily Star in an interview.
Salha said banks might be able to support hotels in the near future but he doubted they’d be able to do it for too long. He argued that although the Central Bank gave subsidized loans, these were too small relative to the investments made by hotels. “For instance, a $10 million loan for a hotel such as Phoenicia is nothing,” he said.
Salha noted that hotel owners had to constantly invest in their establishments in order to maintain their five- or six-star ratings.
“They cannot stay behind. Otherwise they would have to drop their ratings to three or four stars and they wouldn’t be able to afford this, especially if they sit on an expensive property,” he said.
Ever since the civil war erupted in Syria, Lebanon’s hotels have seen a sharp decline in tourists.
Ernst & Young’s benchmark survey of the Middle East hotel sector indicated that the average occupancy rate at hotels in Beirut was 52 percent in the first nine months of 2013, down from 58 percent in the same period last year, far below a rate of 62.5 percent in 16 Arab markets.
The occupancy rate at Beirut hotels was the third lowest in the region in the covered period, and the fifth lowest in the first nine months of 2012.
Tourism, mainly catering to visitors from the Gulf, has also been hit as travel warnings over abduction threats and a wave of demonstrations kept Arab tourists away last year. The United Arab Emirates and Kuwait issued similar advice again this year.
“Gulf states warned their citizens not to visit Lebanon starting May 2012 and this has deeply affected our business,” Salha said, adding that five-star hotels relied mainly on Arabs. “Gulf citizens are afraid to visit Lebanon for the time being because they do not have a safe exit if the situation deteriorates further.”
“They used to run away through Syria but this option is not available anymore,” he added.
Salha complained that visitors from the Gulf decreased by 90 percent. “Usually, 75 percent of our business comes from the Gulf region but unfortunately our hotel lost 90 percent of these visitors this year.”
“We tried to minimize our costs during this year by laying off some employees because we could not afford paying all of our expenses,” Salha said. He explained that his hotel usually first removed part-time employees and then started cutting back on fixed employees. “But if the situation deteriorates further we start giving people their days off,” or even ask them to work overtime for free, he added.
The dangerous security situation prevailing in Lebanon is also weighing heavily on the flow of investments to build new hotels in areas outside Beirut.
“Building hotels in areas other than the capital would provide tourists with lower-cost accommodations because land in those areas is less expensive,” he said. “This would attract more tourists because Lebanon is well known in general for mainly targeting high-income tourists.”
Salha insisted on the need to build hotels outside the capital but was not optimistic such hotels would be successful. “With the shortage of water and electricity the running costs of these hotels will definitely go up, so I am not sure they will be able to afford staying in business,” he said.
Asked about the government’s role in encouraging the tourism sector in Lebanon, Salha highlighted the importance of forming a government in order to give a sense of stability in the country.
He also called upon security forces to apply more seriously the laws imposed by the government such as the smoking ban. “This law is not applied everywhere, unfortunately,” he said. “If you go to many restaurants you realize this law is not being applied, while international hotels are abiding by it.”
Salha said he was not against the smoking ban but wanted it to be applied everywhere, “otherwise we will be very much affected.”
He also emphasized the need to facilitate visa procedures to Lebanon. “The procedure of taking a visa to Lebanon must be facilitated because there are many other destinations that are capable of competing with us and attracting more tourists with their easier visa procedures.”
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