Le­banon: ral­ly­ing against the odds

Le­banon’s tourism and F&B in­dus­tries re­bounded in 2017 to de­liver sur­pris­ingly solid per­for­mances, shak­ing off chal­lenges, such as travel re­stric­tions and re­gional in­sta­bil­ity, in the process. Tarek Ham­moud, off­shore team man­ager and con­sul­tant at Hodema

Hospitality News Middle East - - IN THIS ISSUE - hodema.net

On a na­tional level, increases in rents, soar­ing prices of goods, a cheaper Syr­ian work­force and the bal­loon­ing pub­lic debt last year, which led to a re­duc­tion in avail­able cap­i­tal for in­vest­ment and in­creased risk fac­tors, con­tin­ued to present chal­lenges for the hos­pi­tal­ity sec­tor. Last but not least, the sur­prise res­ig­na­tion of Prime Min­is­ter Saad Hariri last Novem­ber, which was later with­drawn, raised ques­tions about its po­ten­tial ad­verse im­pact. With marked re­silience and against a chal­leng­ing back­drop, the tourism and hos­pi­tal­ity sec­tors not only held their own in 2017, but pro­duced highly im­pres­sive per­for­mances. Avedis Guida­nian, the min­is­ter of tourism, de­scribed the year 2017 as Le­banon’s sec­ond best for tourism since 1951, not­ing that a to­tal of 2 mil­lion pas­sen­gers passed through Beirut Rafic Hariri In­ter­na­tional Air­port in the 12-month pe­riod and ho­tel oc­cu­pancy rates reached 65 per­cent dur­ing the hol­i­days. Ac­cord­ing to the World Travel & Tourism Coun­cil (WTTC), the sec­tor’s to­tal con­tri­bu­tion to the econ­omy reached USD 9.3 bil­lion or 18.4 per­cent of GDP, with this figure ex­pected to rise by 5.2 per­cent in 2018.

Spend­ing by visi­tors gen­er­ated USD 6.9 bil­lion, rep­re­sent­ing 48.5 per­cent of to­tal ex­pen­di­ture in 2017. Fig­ures suggest that spend­ing could grow by an es­ti­mated 7.8 per­cent in 2018, on the back of an an­tic­i­pated rise in in­ter­na­tional vis­i­tor num­bers, which are ex­pected to reach 1.95 mil­lion. Beirut’s ho­tel oc­cu­pancy rate rose 4 per­cent in 2017 year-on-year (y-o-y) to reach 64 per­cent, ac­cord­ing to EY'S Ho­tel Bench­mark Sur­vey. The av­er­age room

The air­port is cur­rently strug­gling to cope with traf­fic vol­umes, hav­ing reg­is­tered a record 8.3 mil­lion pas­sen­gers in 2017

rate and the rev­enue per room in­creased by 7 per­cent and 15 per­cent y-o-y to reach USD 151 and USD 96 re­spec­tively. The only dip took place in Novem­ber, when Prime Min­is­ter Hariri an­nounced his res­ig­na­tion, with the re­sult that ho­tel oc­cu­pancy rates slipped to 54 per­cent, down by 9 per­cent­age points on the same pe­riod in 2016.

The F&B sec­tor also recorded a good year, with restau­rant open­ings in Beirut up by 5.28 per­cent in 2017 com­pared to 2016. Mid-level cap­i­tal costs and ac­cept­able re­turns have been at­tract­ing in­vestors, while also boost­ing the cap­i­tal city’s per­for­mance on the in­ter­na­tional stage. Travel and Leisure Mag­a­zine named Beirut ‘Best In­ter­na­tional City for Food’ in 2017, with Forbes Mag­a­zine de­scrib­ing it as “the great­est food and wine coun­try you’ve never vis­ited.” The out­look could brighten fur­ther this year, if and when Gulf coun­tries lift their travel re­stric­tions, which would have an im­me­di­ate im­pact on vis­i­tor num­bers and spend­ing. The author­i­ties also have ma­jor plans in the pipe­line to sup­port the in­dus­try, in­clud­ing sig­nif­i­cantly in­creas­ing ca­pac­ity at the air­port. Prime Min­is­ter Hariri an­nounced re­cently that the fa­cil­ity’s ex­pan­sion would al­low it to ac­com­mo­date an ad­di­tional 5 mil­lion pas­sen­gers an­nu­ally, up from its cur­rent ca­pac­ity lev­els of around 6 mil­lion. The air­port is cur­rently strug­gling to cope with traf­fic vol­umes, hav­ing reg­is­tered a record 8.3 mil­lion pas­sen­gers in 2017.

On the po­lit­i­cal side, all eyes were on the gen­eral elec­tions in May, with the busi­ness com­mu­nity ea­gerly await­ing the out­come and its im­pli­ca­tions. News that Le­banon had re­ceived pledges worth bil­lions at the Paris con­fer­ence of in­ter­na­tional donors in April to sup­port its ail­ing econ­omy will pro­vide some re­as­sur­ance for busi­ness lead­ers. The coun­try has a lengthy track record for show­ing re­silience amid re­cur­ring po­lit­i­cal and eco­nomic woes; a char­ac­ter­is­tic that hasn’t gone un­no­ticed by the WTTC, which ex­pects the in­dus­try’s con­tri­bu­tion to GDP to reach 23.7 per­cent by 2028.

Mid-level cap­i­tal costs and ac­cept­able re­turns have been at­tract­ing in­vestors, while also boost­ing the cap­i­tal city’s per­for­mance on the in­ter­na­tional stage

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