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Sun 1 Apr 2007 06:13 PM

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United we stand

Ongoing political upheaval is holding up the recovery of Beirut's hotel industry.

The tourism industry is often one of the first to be affected by political tension, or indeed an all out war with another country, but the fact that it can also be one of the first to bounce back is not so well publicised.

While the market focus may have shifted somewhat, and many international visitors tend to only come to Lebanon on pressing business trips, a new domestic tourism market has kept hotel occupancy rates at respectable levels throughout the trials of the past few years.

There are plenty of heart-warming tales of how hoteliers in Beirut have pulled together to prevent the industry from collapsing around them, but with varied reports from different hoteliers it's hard to gauge the full impact of the July 2006 war and the subsequent fallout that has lingered over the city's hotel industry ever since.

While some properties claim to be running at high occupancy and reaping in the rewards of creative marketing campaigns, whispers of salary cuts and staff cutbacks are rife, and the occupancy statistics speak for themselves.

In the tourism high of 2004, more than 1.2 million international visitors came to the country. Average occupancy hit 71%, average rates reached US $168, and RevPAR increased accordingly to $119, a 31% increase on the previous year's figures.

By contrast, the UNWTO reports that average room rates fell to $136 in 2006, a fall of 19% compared to 2004. Overall occupancy was recorded as being 48.6%, while RevPAR dropped 44.5% compared with 2004 to just $66 in 2006.

The outbreak of war might have driven all of the international visitors out of Lebanon, with the exception of a handful of journalists and United Nations delegates, but it also sent many wealthy families from the outskirts of Beirut into the centre to look for a safe haven for their families and possessions.

Likewise, when the conflict came to an end, it was the domestic tourists that found their way back to Beirut, paving the way for the gradual return of regional visitors from the GCC and then a small number of international business groups.

Smart hoteliers acknowledged that they would have to rethink their marketing strategy as soon as the bombs started falling and Rafic Hariri International Airport was closed. Sales and marketing teams throughout the city immediately considered alternative source markets for guests.

"What is particularly curious is that the Lebanese - who usually can't wait to get out of the country and to travel and see the world abroad - have now started to support the industry," says Mira Hawa, director of sales and marketing, Mövenpick Hotel and Resort Beirut.

"Now that they are not travelling, they are starting to say, ‘Why don't we take off for a weekend to a mountain hotel or a Beirut hotel?'."

The hotel reports that it was around 20% down in terms of occupancy during Q1 2007 compared to the same period in 2006, but Hawa attributes the hotel's continued buoyancy to the fact that it is situated in a popular location and is "one of the top three hotels in Beirut".

At the outbreak of the war, Hawa and her team immediately formed a contingency pricing committee to discuss the best way to remain profitable during what would clearly be hard times ahead, and get people back into the hotel.

The team agreed not to drop prices, which would have a knock-on effect on service levels, but launched a national marketing campaign to draw Lebanese visitors into the hotel.

"Some hotels thought they only had a short time to make money so they increased their prices, but we exercised total price integrity," says Hawa.

"The Beirut market panicked overall, but those hotels in the mountains were able to increase their rates because everyone wanted to get out of the city."

The Mövenpick was declared the UN hub and safe house for all the NGOs and governmental and humanitarian organisations at the beginning of the war, but the sales and marketing team continued to look for ways to attract genuine guests.

Special packages designed in the shape of a boarding pass were distributed to Lebanese families outside of Beirut, addressed to ‘Mr and Mrs Lebanese citizen', with the catch line "You feel like getting away?".

"That was a very successful initiative - that alone generated around $12,000 in less than a month and a half," Hawa explains. "We also decided that Valentine's day didn't really fall on the right day, since February 14 now has the historical significance of the assassination of Hariri, so we sent out messages encouraging people to celebrate all through February and March."

Other strategies included giving members of staff extra training in telesales and face-to-face sales, which Hawa claims generated around $60-70,000 in revenue "in a very short space of time".

Other properties say that every time the market shows signs of recovery, something else happens to knock it back down.

The Radisson SAS reports that the budget has been met in terms of rates and occupancy levels, mainly thanks to the leisure tourism sector, which showed signs of recovery towards the build up to New Year and Adha.

"But just after the murder of the minister Pierre Amine Gemayel [in November 2006] and the demonstration in downtown Beirut, requests stopped and cancellations started coming in," says Rita Abi Saad, operations manager, Radisson SAS Martinez Hotel.

"Business people are coming to Beirut and leaving as soon as they get their job done."

Relocating

An attractive address is crucial for any hotel, but in Beirut, the location of different properties has made a big difference to the rate at which business has recovered since it fell to almost zero when the war began.

Rotana currently has two hotels in the capital, with two more in various stages of construction. The company's flagship property in Lebanon, the Gefinor Rotana Hotel, which is located in the centre of the downtown area, has witnessed a slight recovery in occupancy levels.

"The Gefinor is surprisingly still doing very well for Lebanon," says Rotana's corporate vice president of sales and marketing, Middle East, Daniel Hajjar.

"It was running at around 70% occupancy throughout the war, and we have just confirmed a group of 65 rooms for three days, so the situation is not as desperate as it looks."

"If you have a conference of 40 rooms for three days, the occupancy automatically shoots up."

According to Hajjar, many families chose to move all their belongings out of their homes into some of the city hotels, including the Gefinor, when the aerial bombardment began, bringing occupancy levels back up to healthy levels.

The retention of staff enabled the hotel to continue to operate at the same standards as it had done prior to the crisis, and the general atmosphere within the hotel was one of solidarity.

"The key issue was that the whole staff had bonded so well, with each other and the guests - it was like a family trying to make the best out of the sad and noisy days that we had during those 33 days of the summer," he says.

But the situation was very different for Rotana's other Beirut property, the four-star Hazmieh Rotana Hotel, which is situated very close to an area that was heavily bombarded.

"We closed down the hotel within a couple of days after the war started," Hajjar explains.

"The property was doing well until [a few weeks ago], but we still have about 60 rooms occupied. It has done well in some areas because there must have been some business coming to the area, but we're still doing about 40-45%."

Even before the outset of the war, the political situation in Lebanon was keeping many international visitors away, and the high of 2004 was already long forgotten by the beginning of 2006.

The assassination of ex-Prime Minister Rafic Hariri on February 14, 2005 sparked off a chain of politically motivated violence and assassinations throughout the city, which led many international companies to put their business travel to Lebanon on hold.

"We had assassinations every month," Hajjar explains.

"When we didn't have an assassination for a couple of weeks then the situation improved, but obviously 2006 was challenging and when the war came, everything was down."

Logistically, hotels in the city had to deal with issues such as the shortage of fuel and fresh water. The former had an impact not only on the guests trying to reach the hotel, but also on the staff, who did not necessarily live near the property.

"Some of the suppliers got a bit naughty and decided to increase their prices because they thought they had a short time to make money," Mövenpick's Hawa explains.

"But we didn't run out of supplies and you wouldn't have felt a compromise in service at all. We had all our staff there and we allocated about 30 rooms in the hotel to them. We rerouted our food and supplies in different areas in case something happened in one area. Supplies were not a problem at all."

Staffing issues

Many Lebanese people speak of the "brain-drain" taking place in Beirut; the phenomena where all the educated and skilled young Lebanese are leaving the country in search of better opportunities elsewhere.

"All the people between the age of 25 and 55 are leaving the country, and as an industry that's a major thing for us because they are seeking jobs in the GCC," explains Hawa.

Around 99% of the workforce in the Mövenpick is Lebanese, and many of them speak three languages, an invaluable asset to any hotel, according to Hawa.

"It is a shame that we need to lose them to Dubai or Jordan when we actually need them on the ground here," she says.

"So this is a major logistical factor within our sector - hotels, tour operators and so on - we need the expertise to be able to overcome the challenging period that we are facing."

Rotana's Hajjar concurs, but says that finding new people is "not as dramatic as you think".

Contrary to the image of staff fleeing the country to escape the problems in Beirut, he tells of the bond that was created between the members of staff that remained with the hotel throughout the bombardment, and the owners' insistence that no staff were "let go" against their will.

"We are probably one of the only hotels in Lebanon that has not cut salaries and not asked anyone to leave," he claims.

"The owners are probably paying some of their own money to cover the salaries, but when you have a team that has been loyal to you in tough days, you are not going to turn your back on them and say ‘sorry, guys'."

Away from the city centre, where tensions remain high, hotels situated up in the mountains have reported steady occupancy rates throughout the crisis, particularly during the busy ski season, when scores of local Lebanese flee the city and head for the hills.

The InterContinental Mzaar Lebanon Mountain Resort and Spa published a number of special packages and rates to ensure high occupancy throughout the winter season, and plans to host a number of special events to lure visitors as the season comes to an end, including an annual Lingerie Fashion Show, a health and fitness day, and a 4x4 event.

According to Lina Matraji, marketing and communication manager at the hotel, occupancy will have "a downturn" at the beginning of April, when the season comes to an end, but outdoor pursuit enthusiasts will still be welcome to enjoy a range of activities, keeping occupancy up throughout the year.

"During the war, the InterContinental Mzaar was a great escape from fear and tension for all the local people," she says.

"For the time being, the hotel occupancy is around 70%, which is a bit lower than last year, but our expectations for the coming period are better than last year since we are investing more in our sales and marketing activities."

The MICE market has proved to be a key source of business in the months following the war, and Matraji says that the hotel plans to evolve this market with attractive itineraries for meetings and incentives visitors throughout 2007.

Life goes on

While existing hotels were forced to take control of their own destinies, several properties that were under construction or in the planning stages when the war broke out have suffered serious setbacks thanks to supply issues and major delays in the construction process that were beyond their control.

At present some 3000 hotel rooms are under construction in the capital, as well as "hundreds of serviced apartments" according a recent survey conducted by Horeca. At least 19 hotels are scheduled to open in Lebanon by the end of 2008, and five "mega hotels" will come online by 2009.

International chains set to move into Beirut include Kempinski, Hyatt, Hilton and Four Seasons. The outside cladding is now being applied to the latter property, which is scheduled to open in late 2008.

Rotana has two additional properties in the pipeline: the Rotana Raouche Suites, which is scheduled to open this summer, and the Solidere Rotana Suites, which is still in the design development stage.

According to Maha Saad, regional director of PR, Middle East, for Starwood Hotels and Resorts Worldwide, while the crisis in Lebanon has had a major impact on the tourism industry as a whole, the hotel group has by no means given up on the county.

"We have some plans in the pipeline, including some new brands, but I think everything is on hold at the moment until the situation is back to normal," she told
Hotelier Middle East

in an exclusive interview during Starwood's annual Middle Eastern road show.

InterContinental has three other hotels in Lebanon as well as the Mzaar - the InterContinental Phoenicia, the InterContinental Le Vendome, and the Crowne Plaza Beirut.

The company's vice president for the Middle East and Africa, Tom Rowntree promises that some "exciting marketing and consumer initiatives are planned for 2007, across both the business and leisure sectors", but details of the campaigns are still being finalised and will be launched "over coming months".

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