Global Investment House – Kuwait– Lebanon Economic and Strategic Outlook – Economic Report – Lebanon has always been known for being one of the idealistic places for tourism. However in early 2000 and onwards things started to shape up in Lebanon and tourism started to boom. Located in a ideal place with a coast line of 225km along the Mediterranean Sea, connecting the East to the West, its circumference includes Asia, Africa and Europe. Finally it has the archeological sites that range from the Stone age to Roman Temples and from Crusaders Castles to Mukluks mosques. Furthermore is the idealistic climate which permits two season, winter in the mountains and summer on the beach.
In the first 8 months of 2008 has outperformed the corresponding number of visitors in 2007. Tourism was hit a lot in 2004 after the political unrest. This in turn affected occupancy rates in hotels, which ranked the lowest among MENA touristic countries, posting an average occupancy rate of 39%. Still, the Doha Agreement increases confidence of lasting peace thus increasing tourism. In Lebanon, there are 9 proposed hotels for construction in Beirut, hinting at an increase in number of tourists for Lebanon in the coming years. Lebanon is believed to have reached the dip of its “V” recovery and by year end tourists should increase over the number of 2007 tourists.
Hotel occupancy, which should indicate how strong tourism is in the country is measured at 40% in the first half of 2008, from 36% in the same period in 2007. Occupancy was measured around 90% in mid 2006 before the geopolitical concerns. Occupancy rates are growing in the region, but small internal conflicts keep on limiting high growth until the Doha Agreement in June 2008, which helped reconcile members of the opposed party and the government. Since then hotel occupancy rates increased to 61% in June. During August 2008, the hotel occupancy rate decreased to 39%.
Revenue Per Available Room (RevPAR) is an indicator of the profitability of the hotel industry. It’s the occupancy rate multiplied by the average rent per room. Compared with other MENA countries, Lebanese hospitality sector is not profitable. It was on the verge of bursting and becoming a very profitable sector in 2003 when the RevPAR was US$91. It increased to US$119 at the end of 2004, an increase of 30% over 2003. However after 2004, which is considered the beginning of the slide for tourism sector, profitability decreased to US$61 in 2005 and to an all time low of US$30 in 2007. It is worth noting that RevPAR has declined at a CAGR of 13.8% as opposed to the neighboring countries including Egypt which grew 15% and Jordan which grew 26% respectively. Also comparing it with GCC countries, Jordan and Egypt, Lebanon is the only country that posted declining RevPARs.
People from all over the world reach Lebanon. The number of visitors from every continent has been increasing. Africa posted the highest CAGR of 22% during 2001-2007. In 2007, most tourists came from the Arab countries and made up 39% of total tourism in Lebanon. This was followed by Europeans which made up 27% of total tourists and finally the Asian tourists with 14%. The total number of Arab tourists visiting Lebanon in 2007 was 400,082, but to look at the past years, the number decreased from an all time high of 545,150 in 2004.
By August 2008, the number of entering tourists reached 885,729 increasing 33.6% from the same period in 2007. As per our estimates, the number of tourists is likely to increase by the year end to reach 1,328,593, an all time high in the number of tourists in the new millennium. The Doha Agreement is the catalyst that helped decrease political instability and major holidays could facilitate an increase in the number of tourists.
Lebanon had reached the dip of its “V” recovery. After 2004 the major turnaround affected the whole sector, but new political agreements are hinting of a new Lebanon.
2009 could be the year of growth and prosperity in the tourism sector, due to peace prevalence. More hotels and rooms are planned or are constructed.