BEIRUT: Several businesses will face bankruptcy by the end of next month, officials in the tourism industry warned Tuesday, urging the Central Bank to reschedule existing loans and offer new ones at subsidized interest rates to shore up the sector.
“By the end of September, multiple bankruptcies will face the sector and institutions will be closed down voluntarily by owners without [banks] needing to file lawsuits,” Rabih Khayat, a member of the Union of Tourism Associations, said after meeting Central Bank Governor Riad Salameh.
The delegation presented a paper to Salameh calling on the Central Bank to authorize additional subsidized loans for tourism businesses.
It also demands the rescheduling of payments on subsidized loans by up to three years and a prolongation of the grace period.
“These demands will be the focus of our attention and will be under study. We consider these demands a priority currently because [the Central Bank] feels the agony of the tourism sector amid these conditions,” Salameh said following the meeting.
While rescheduling subsidized loan payments will be looked into, Salameh said a decision to prolong the grace period falls to the Finance Ministry.
The paper calls for slashing taxes on fuel oil used by tourism businesses to generate electricity. It urged the government to put an end to power cuts in the capital, where the majority of hotels and restaurants are located.
The delegation also called to cut fares at Lebanon’s national carrier Middle East Airlines in a bid to encourage additional tourists from Iraq and Jordan. The Central Bank is the majority shareholder in MEA.
Lebanon continues to see double-digit declines in tourist numbers this year, with the latest figures putting the decrease at 13.5 percent in the first seven months of the year compared to last year. The decline now stands at more than 24.2 percent compared to the first seven months of 2011.
Among the chief reasons for the decline in tourists were travel warnings issued by several Gulf Cooperation Council countries. Kuwait last week urged its citizens to leave Lebanon in the wake of two explosions that rocked Tripoli, killing and injuring hundreds of people.
Beirut’s hotel occupancy also dropped 7 percentage points in June to 58 percent down from 65 percent a year earlier, according to a report last week by Ernst & Young.
But revenue per room available and the average daily rate, two key indicators for hotel income, shed 30 and 21 percent respectively, among the sharpest falls in the region, according to the report.
The report covers only premium hotels in the capital and estimates by the Hotel Owners Association put overall occupancy rates much lower.
The tourism sector’s contribution to Lebanon’s GDP could decline from more than $8 billion in 2009 and 2010 to less than $4 billion this year if security conditions continue to decline, the Tourism Association has warned.