Lebanon and on and on

Joe Mortimer reports why Lebanon is fast becoming an attractive option

Campbell Gray Hotels' Le Gray opened in 2009 and was the first major injection of new luxury product in the Beirut market for several years.
Campbell Gray Hotels' Le Gray opened in 2009 and was the first major injection of new luxury product in the Beirut market for several years.
Rob O'Hanlon, partner at Deloitte and Touche.
Rob O'Hanlon, partner at Deloitte and Touche.
Rani Gharbie, director of development at IHG.
Rani Gharbie, director of development at IHG.
Visitors to Le Gray in Beirut can soak up the sun and enjoy views of the increasingly popular destination.
Visitors to Le Gray in Beirut can soak up the sun and enjoy views of the increasingly popular destination.
The Four Seasons Hotel, Beirut opened in January of this year,  following 10 years of construction.
The Four Seasons Hotel, Beirut opened in January of this year, following 10 years of construction.
HVS Dubai's Choufany identifies travel trends.
HVS Dubai's Choufany identifies travel trends.

Government incentives, the recent political stability and a wealth of natural resources have made Lebanon an increasingly attractive option for hotel investors and operators, reports Joe Mortimer

The recent opening of two luxury hotels in downtown Beirut represents the beginning of a new era for Lebanon’s hospitality industry, which has already risen like a phoenix from the flames of its troubled past.

After the staggering performance figures reported by Beirut’s existing properties in 2008/9, a line-up of new hotels providing some 2000 additional rooms are set to open their doors over the next four years and government incentives are poised to bring new investment pouring into the country.

The signing of the Doha accord on May 21, 2008 marked a turning point for Lebanese stability and, in turn, the tourism industry. Since then, Lebanon’s hospitality industry has easily outperformed regional competitors and indeed every other country on the planet, in terms of year-on-year growth.

Lebanon’s Ministry of Tourism declared 2009 the best year ever for tourist arrivals, with visitor numbers approaching 1.9 million. Official figures show that almost 50% of visitors used hotels and serviced apartments during their stay, which equated to 770,000 hotel stays.

The peace and stability of the country were undoubtedly the catalysts that allowed Lebanon to achieve a large year-on-year occupancy growth of 27.6% in 2009 and a RevPAR increase of 61.6% in the same period, but such substantial growth would never have been possible if it weren’t for the “pent-up demand” for Lebanon as a tourist destination, argues Deloitte and Touche tourism, hospitality and leisure partner Rob O’Hanlon.

“What we saw in 2008 is what we commonly describe as the ‘peace dividend’. As soon as there was tangible evidence of a settlement around the government of Lebanon and stability on the political front, the pent-up demand for visitors to Lebanon was able to commence,” he explains.

“The second factor which is also really important is that from a general Middle East perspective and the Gulf countries in particular, Lebanon was traditionally a favourite destination. The return of peace and stability meant that those folk who would have liked to be able to spend more time in Lebanon were suddenly able to do so again.”

For operators on the ground, the effects of Lebanon’s newfound peace and stability are tangible. According to Rotana president and CEO Selim El Zyr, Rotana’s two existing properties in Beirut — Gefinor Rotana and Hazmieh Rotana — had an average RevPAR growth of 82.9% in 2009.

“The impact [of peace and stability] has had a direct effect on our occupancy and ADR, which increased significantly,” says El Zyr.

“Bookings came in the form of weekend getaways, business meetings, investors seeking local opportunities (especially with the success of the Lebanese banking sector after the worldwide financial crisis), in addition to the boost of the local exhibitions attracting visitors from many countries, which were emerging markets for Lebanon.”

The much anticipated opening of Campbell Gray Hotels’ Le Gray in late 2009, marked the first major injection of new luxury product into the Beirut market for several years and the subsequent opening of the Four Seasons Hotel Beirut in January this year marked the end of a decade-long construction process that was continuously disrupted by a variety of political turmoil, civil unrest and the short but destructive war with Israel during 2006.

“The overall positive atmosphere in Lebanon has given many investors the green light to go ahead with their projects and one of those was the Four Seasons Hotel Beirut,” says general manager Stefan Simkovics.

“We are in the right city at the right time. There is high demand on the city from both the leisure and business travellers, which is great to see.”

The momentum looks set to continue; other hotels under construction in the vicinity of the Four Seasons include the Grand Hyatt Beirut and the Hilton Beirut; Kempinski is set to open two new properties by 2013, one in Beirut and one on Mount Lebanon; Rotana is set to open the Soldiere Arjaan by Rotana in 2012; and InterContinental Hotels Group (IHG) recently signed an agreement to run a 121-room Staybridge Suites property in Beirut’s Verdun Street.

A handful of, as yet, unbranded properties are also in the pipeline, including the Grand Theatre Boutique Hotel, Boutique Hotel Mina el Hosn, Jiyeh Marina Resort, in the city of Jiyeh, a Royal Hotels & Resorts property, and a hotel in The Landmark; a towering mixed-use development in the heart of Beirut.

Meanwhile, IHG’s Le Vendome is poised for an expansion that will see 34 rooms added by 2012, while boutique hotel The Albergo will receive 22 more rooms by the same year.

Rafik Hariri International Airport also has major expansion plans, increasing its annual capacity from six million passengers to 16 million, catering to growing demand from the Middle East and Europe.


The redevelopment of Beirut’s downtown area has been led by Lebanese development and investment company Solidere. The company is the driving force behind the Beirut Central District, which contains its own designated hotel district and the Beirut Waterfront Development, which will transform the city’s waterfront into a vibrant boulevard lined with a variety of cafes, restaurants and night spots.

Meanwhile, the Lebanese government is making investing in Lebanon an increasingly attractive option.

The Investment Development Authority of Lebanon (IDAL) is taking huge steps to encourage foreign direct investment (FDI) in Beirut, with an incentives scheme aimed at various industries, including tourism. IDAL’s ‘Package Deal Contract’ allows investors to benefit from tax exemptions, reductions on permits for foreign labour and construction permits, and a number of other exemptions, provided they meet certain criteria (see box below).


It’s easy to see why investors and hotel management companies have been eager to get a slice of the upmarket action, but there remains a huge opportunity in the mid-range and limited service sectors.

”As the country continues to stabilise and mature, government investment coupled with that of key Middle East based airlines and the emergence of regional low cost carriers, will make travel more accessible and affordable and will drive visitor numbers up,” says Rani Gharbie, director of development, Middle East and Africa, IHG.

“With these strong trends set to continue, Lebanon can look at providing more affordable accommodation for  a diversified demand base.”

Wyndham Hotel Group vice president development, Middle East and Africa, Bani Haddad, is confident in opportunities available for operators looking at different market sectors.

“Upscale hotels dominate the current inventory, especially in Beirut, and the limited service hotels are all unbranded properties,” he states.

“This creates a big opportunity for hotel chains to introduce their limited service and economy brands.”

But developers with ambitions outside of Beirut still face challenges. The lack of tourism infrastructure outside the capital makes travelling around the country difficult and a lack of services means that visitors, Arab nationals in particular, are more likely to stay in Beirut, argues HVS Dubai managing director Hala Matar Choufany.

“Predominantly inbound travel today comes from Arab countries and the Arabs don’t really travel outside of Beirut and a few areas outside of Beirut,” she explains.

The InterContinental Mzaar Resort is currently the only internationally-branded hotel in Lebanon’s ski resort area Faraya. According to IHG’s Gharbie, managing a property outside of Beirut has pros and cons: “The destination allows people to disconnect from the hustle and bustle of a busy city like Beirut and attracts weekenders, honeymooners, business meetings and leisure groups,” he explains.

But operators eager to move into secondary locations outside of Beirut might be jumping the gun.

According to the latest report from HVS’s Dubai office, Beirut and Beyond – An Unparalleled Insight, the number of branded hotel rooms in the greater Beirut area remains woefully inadequate for the huge demand increases that are anticipated.

“As operators show keenness to develop hotels in Lebanon, investors and developers should be aware that there are an array of brands being considered for the market,” the report advises.

“Companies typically establish a base in the market with their core brand in Beirut, before considering their other brands and different locations around the country. Nevertheless, due to the appeal of the Lebanese market, operators are now being more flexible.”


Investment decisions in Lebanon are fundamentally dictated by political stability, or lack thereof, but taken in the context of the recent global recession, it is not surprising that many investors are more cautious about launching new projects.

But Deloitte’s O’Hanlon is bullish about Lebanon’s future prospects: “The shortage of credit availability globally will impact any investment decision and Lebanon is not immune to that, but as credit markets open up, we will see that nothing breeds success like success,” he argues.

“I think Lebanon has demonstrated that it has a combination of scenery, friendliness , quality of food and quality of service that are attractive to visitors. So long as those fundamentals remain in place it represents a good opportunity in the tourism sector.”

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