Journal of Commerce / May 31, 2000
By Larry Luxner
BEIRUT -- This year marks the 25th anniversary of the start of Lebanon's 15-year civil war, a brutal conflict that claimed more than 100,000 lives and destroyed the economy of what was once one of the Arab world's most vibrant nations.
In recent years, however, some of that prosperity has begun coming back. While it's hard not to notice the shells of bombed-out buildings literally everywhere, a quick drive around Beirut reveals lavish new shopping malls, wealthy residential suburbs and, most importanly, lots of new luxury hotels.
In late May, Israel completely withdrew its troops from southern Lebanon, adding to the prospect that regional peace may at last be around the corner -- and with it, the promise of tourism and investment dollars for this long-suffering country.
Already, global hotel chains such as Marriott, Holiday Inn, Sheraton, Inter-Continental and Meridien have built hotels here, with more on the way. For example, the Al-Karafi Group of the United Arab Emirates is building a $60 million Metropole Hotel in downtown Beirut, while a $100 million Movenpick resort is being financed by Saudi Prince Walid Bin-Talal near Byblos, a historic port city on the Mediterranean.
"What we are seeing now is the influx of international chains to the Lebanese market," said Nizar M. Alouf, general manager of the Hotel Riviera and a board member of the Lebanese Hotel Owners Association. "That is all being done with the prospect of a better time in the Middle East. All of us know that as soon as there's peace, the whole area will enjoy a tourist boom. Everyone will profit from peace. This is the ABC of the tourism industry."
Yet Ramsey Mankarious, executive vice-president of Kingdom Holding Co. in Riyadh, Saudi Arabia, is far less optimistic.
"Things are quite difficult at the moment. There is no tourist boom in Lebanon," said the Egyptian-born executive, whose company -- which is controlled by Prince Bin-Talal -- owns 25% of the Four Seasons chain and 30% of the Movenpick chain. "All these hotels were started years ago, when the economy was stronger than it is today, and they're just now coming online."
Adding to Lebanon's problems is that, during the war years, Dubai, Bahrain and other Persian Gulf destinations gradually replaced Beirut as playground of the Middle East, particularly among wealthy Arab tourists.
"In the long term, Lebanon is a very good market, with a lot of good potential," he said. "But as an investor -- unless you have a specific market -- it's not the best time to be starting a new hotel project."
Mankarious says Lebanon's biggest group of tourists are Lebanese living overseas. For about the last year and a half, U.S. citizens have been free not only to travel to Lebanon, but also invest there. In 1999, some 84,000 Americans -- mainly those of Lebanese descent -- came to this country, up from 68,000 the year before. Lebanon is also getting large numbers of tourists from Saudi Arabia, France, Jordan and Kuwait.
All these people need places to stay, and Beirut now has approximately 5,000 rooms in first-class hotels. According to Alouf, more than $500 million has been spent in hotel reconstruction alone since the end of Lebanon's civil war in 1990.
"Tourism used to bring in 22-25% of all foreign exchange," said Arthur Nazarian, Lebanon's minister of tourism. "Today, it's only 4-5% of gross domestic product, but I'm sure this will now increase."
In order to help that process along, the Lebanese government recently approved a tax exemption on equipment imported for use in the hotel sector. More recently, the government has received a 30-million euro loan from the European Investment Bank, to restore war-damaged hotels outside the Beirut area.
Viviane Sarkis, public relations manager at the Bristol Hotel in Beirut, says her property is in the midst of a $15 million, 18-month renovation.
"The Bristol was the only hotel that did not close its doors during the civil war, even though the turmoil was just outside, on the street. We had a reputation for hosting VIPs and politicians. That's how we made our name.
"Today, all the little hotels are now being taken over by big international chains," she said, adding that the Bristol itself was purchased last year by Starwood Hotels & Resorts, owner of the Sheraton brand name.
Beirut's biggest hotel project to date is being headed up by Solidere, developers of the Beirut Central District project. According to Solidere spokesman Mounir Douaidy, the project encompasses eight hotels, including a five-star, 250-room Four Seasons, and a five-star Ritz Carlton. The Farha Group will demolish an existing Hilton and rebuild it completely, while a Forum Inter-Continental and a 112-room Army Officers Club hotel are also planned.
Also on the drawing board are properties owned by local investors Bechara Nammour and Salim Kheidirine, though Lebanon's economic difficulties have slowed things down considerably.
"There has been a pause, but not a stop," says Douaidy. "We still have investors and are concluding contracts, but not at the same rhythm as the past two years, due to the whole economic situation. Now that the Israelis have withdrawn, we hope the situation will improve."
Alouf says 65% of the guests at the Riviera are business travelers, and the remaining 35% are leisure tourists.
"A lot of Americans of Lebanese origin are coming, as well as individual American tourists, although not yet in groups," he said. "Their image of Lebanon is no longer black, but not yet white. It is hazy. We really need to market the country to overcome the 'Beirut Syndrome,' and we're not doing enough of that."
"Everyone wants to be ready when peace comes. And if peace doesn't come, it'll be a matter of survival between competing hotels," he said.
Says Tourism Minister Nazarian: "Our problem is image. Israel bombed the power station at the end of June 1999, ruining the tourist season. It wasn't done just to hit back at Hizbollah, but to destroy the Lebanese economy."
The hatred between Lebanon and Israel runs so deep that Nazarian is prohibited from speaking with his Israeli colleages, even unofficially, at trade fairs and other international events.
"I cannot meet with my Israeli counterparts," he said. "Israel is our enemy." Nevertheless, Nazarian said he'd welcome Israeli tourists to Lebanon someday.
"If there's a peace settlement, why not? All over the world, wars are ending. Why should this area be any different?"
Sarkis, of the Bristol Hotel, agrees.
"As soon as Israel and Syria sign a peace treaty, that's it. We're all waiting for that signature." Sarkis said she has Jewish friends coming to Lebanon all the time using European passports that don't bear any Israeli entry or exit stamp.
"People are curious. They want to see how Lebanon looks after the war," she said. "People will even take package tours of Syria, Jordan and Israel. We had 20 years of war, which killed our economy. We're starting from scratch."
Despite all the obstacles, Alouf -- who was born in a hotel room in Baalbek and has spent his entire life in the hotel industry -- appears to be optimistic about the future.
"It will take some time to heal the wounds between Lebanon and Israel," he said. "But if there's a peace agreement, you'll even be able to cross from Israel by car. It'll be a completely different situation than today. I think things are moving in that direction."