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Lebanese expats give a boost to car rental companies

Car rental office in Beirut, Friday, Aug. 8, 2014. (The Daily Star/Mahmoud Kheir)

BEIRUT: Lebanese expatriates have once again proven to be the real soldiers of the economy, saving many car rental companies from going out of business this summer season.

“There is absolutely no demand for our cars from [foreign] tourists, but reservations are being made by Lebanese expatriates for this summer season,” said a representative of SIXT Car Rental Company.

“Foreigners do not dare to come to Lebanon for the time being because they have no way to escape if the security situation deteriorates suddenly,” he said. “If it wasn’t for the Lebanese expats, we would have incurred heavy losses.”

Lebanese expatriates have long demonstrated their ability to support the economy; remittances reached $7.6 billion in 2013, enabling the country to overcome its financial difficulties.

Besides supporting the banking sector with their continuous flow of deposits into the country, they have on many occasions increased the activity in hotels and restaurants, in addition to giving a boost to companies offering other tourism services, such as car rental companies.

Most of the car rental companies interviewed by The Daily Star reported full bookings on their vehicles, with 90 percent of demand coming from Lebanese expatriates, and only 10 percent from foreigners.

“We witnessed an overbooking of 120 percent starting Eid al-Fitr and it is still ongoing until the end of this month,” said Habib El Hashem, manager at Formula Rent A Car.

Hashem said that 90 percent of demand for vehicles at Formula came from Lebanese expats, and despite a small number of cancellations that took place following the clashes in Arsal, demand was high.

“We expected cancellations to take place, but we are still overbooked,” he said.

Likewise, Bahaa Na’amani at City Car said that only two or three families had canceled their reservations. “We are still overbooked for the coming month and 90 percent of our vehicles are claimed by Lebanese expats,” he said.

Similarly, a representative for Avis said that demand was mostly coming from Lebanese expats. “We used to witness a great demand by Arabs and Europeans in the past. But Lebanese expats nowadays are contributing to most of our business activity,” she said.

Car rental companies, like any other tourism services provided in the country, usually rely on the summer season to cover their expenses and make up for the low business activity in winter.

But the deterioration in the security situation during the past few years has unfortunately resulted in the summer season being shortened for these companies.

“We usually rely on the summer season to cover our expenses and we used to have around five to six months of high season in Lebanon,” Hashem said.

“But this trend has changed in the past couple of years, due to the unstable security situation.

“We can cover this month and the next one for the time being, but for the rest of the year we resort to cutting our costs to be able to stay in business,” he added.

Hashem said that his company had even sold some of its big cars when business went down, in order to be able to make repayments on the loans it has taken from banks for its cars.

The SIXT car representative told The Daily Star that high season for his company used to start from mid-June and last until mid-September. “But this is not the case anymore.

“We have worked well 10 days ahead of Eid al-Fitr and we will still witness some activity for the coming few days, but then we expect the demand to drop again by the end of this month,” he said.

He added that his company now relied mainly on demand by television production companies that were shooting their programs, in addition to Lebanese expatriates. “We rely mainly on corporate demand when tourism activity is slow,” he said.

Manager of Halal Rent A Car Nazih Younes said that his company probably would not have been able to cover its expenses throughout the year had it not resorted to selling some of its cars at the beginning of 2014 in order to be able to cut its expenses.

“We also postponed our insurance payments until the activity picks up, so as to be able to cover our expenses and stay in business,” he said.

Younes said that most of the demand witnessed nowadays at Halal came from Lebanese expats, but he added that following Arsal clashes, his company had witnessed a 40 percent drop in business.

 
A version of this article appeared in the print edition of The Daily Star on August 09, 2014, on page 4.

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Summary

Lebanese expatriates have once again proven to be the real soldiers of the economy, saving many car rental companies from going out of business this summer season.

Most of the car rental companies interviewed by The Daily Star reported full bookings on their vehicles, with 90 percent of demand coming from Lebanese expatriates, and only 10 percent from foreigners.

Hashem said that 90 percent of demand for vehicles at Formula came from Lebanese expats, and despite a small number of cancellations that took place following the clashes in Arsal, demand was high.

Similarly, a representative for Avis said that demand was mostly coming from Lebanese expats.

The deterioration in the security situation during the past few years has unfortunately resulted in the summer season being shortened for these companies.

Younes said that most of the demand witnessed nowadays at Halal came from Lebanese expats, but he added that following Arsal clashes, his company had witnessed a 40 percent drop in business.


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