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Hotel industry reeling with no letup in security incidents

  • File - Pierre Achkar, head of the Hotel Owners Association speaks during an interview with The Daily Star in Broummana, Sunday, July 28, 2013. (The Daily Star/Mahmoud Kheir)

BEIRUT: Beirut hotels have recorded a dismal occupancy rate of just 29.6 percent since the start of this year, and hopes for a better performance in the coming few months are non-existent, a leading hotelier said Thursday.

“We do not expect an improvement in hotel occupancy in the coming two to three months even if a government is formed because the unstable security and political situation is weighing heavily on the tourism sector,” Pierre Ashkar, head of the hotel owners association, told The Daily Star.

Ashkar explained that the situation was very bad because the occupancy rate was too low compared to the current average room rate of $97.5.

“In 2009 and 2010 we used to see an occupancy rate of 60 percent even with high average room prices ranging from $180 to $220,” he said.

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 of 2012, and 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.

But statistics provided by Ashkar for the year 2013 were even lower than the ones published by Ernst & Young. “The average occupancy rate in Beirut hotels in 2013 stood at around 42 percent,” he said.

“Some of the hotels in Mount Lebanon did not even open their doors during the past summer,” he added, citing the Sheraton Hotel in Bhamdoun as an example.

Moreover, around 97 percent of hotels are partially closed, he added. “Due to the low occupancy rates, most of the hotels shut down some of their floors in order to minimize their losses,” he said.

Tourism, mainly catering to visitors from the Gulf, has been hit as travel warnings over possible abductions and other security threats kept Arab tourists away in 2012. The United Arab Emirates and Kuwait issued similar advice again in 2013.

Gulf states warned their citizens not to visit Lebanon starting in May 2012, and this has deeply affected our business,” Ashkar said, adding that big hotels used to cater mainly to Arabs.

According to Ashkar, Lebanon’s involvement in the Syrian civil war was threatening Lebanon’s stability and that, in turn, was having a very negative impact on the hotel sector.

Lebanon has been rocked since last year by a series of bombings related to the ongoing conflict in neighboring Syria, which has contributed to a further deterioration of the sector.

“Gulf citizens are afraid to visit Lebanon for the time being,” he said adding that they can instead travel to other safe places. “ Lebanon must be very stable and quiet to attract tourists again,” Ashkar said.

He added that even Lebanese living outside the country were avoiding spending their vacations in Lebanon nowadays. “Why would tourists come and visit in such a bad situation?” he asked.

Moreover, a warning issued by the U.S. Embassy in Lebanon earlier this month calling on American citizens to avoid certain “Western-Style” establishments and hotels contributed to a further weakening of the industry. “If tourists are not encouraged to visit malls and hotels why would they visit Lebanon?” Ashkar asked.

The political and security instability not only impacted the number of tourists coming to Lebanon, but also halted the construction of some tourism projects, he said.

“The Grand Hyatt, for instance, stopped its construction work following the wave of bombs that plagued the country over the past year,” Ashkar said. “The Grand Hyatt was going to be the biggest hotel in Beirut followed by Phoenicia Intercontinental.”

When asked about the measures that must be taken to boost the tourism sector in 2014, Ashkar said: “We do have a lot of problems with the government including the [shortage] in water and electricity, but what we need mostly now is political and security stability.”

Ashkar said that the private sector also had a role to play.

“If the situation does not change then the only hope we have is to attract the business community to come and attend business events in Lebanon,” he said, adding that the business community was willing to take the risk.

“We should be creative enough to come up with business events in order to compensate for the loss of tourists,” he added.

Ashkar explained that hotels could not make better offers because the average price of rooms was already low.

“When you have an average room price of $97.5, this means you also have rooms priced at $40,” he said. “So what kind of offers would we be able to come up with in such a situation?”

 
A version of this article appeared in the print edition of The Daily Star on January 24, 2014, on page 8.
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Summary

Beirut hotels have recorded a dismal occupancy rate of just 29.6 percent since the start of this year, and hopes for a better performance in the coming few months are non-existent, a leading hotelier said Thursday.

Ashkar explained that the situation was very bad because the occupancy rate was too low compared to the current average room rate of $97.5 .

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 of 2012, and 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 .

According to Ashkar, Lebanon's involvement in the Syrian civil war was threatening Lebanon's stability and that, in turn, was having a very negative impact on the hotel sector.

Ashkar explained that hotels could not make better offers because the average price of rooms was already low.


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