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Post-conflict blues for hotels in Lebanon

31 August 2006

As the fragile ceasefire between Lebanon and Israel enters its third week, Tom Bill investigates how badly Lebanon's hotel economy has been hit

Diplomats, journalists and aid workers have done their bit to fill Lebanon's emptying hotels since the conflict with Israel ignited on 12 July. But, despite the current ceasefire, the country's ravaged infrastructure and the damage to visitor confidence mean it may be some time before bedrooms are again occupied by tourists.

John Podoras, operations director at the Middle East office of hospitality consultancy TRI, says that Lebanese capital Beirut's nascent tourist economy is now on hold. "The ceasefire means nothing for hotels," he says. "There are major problems with fuel supplies, power shortages and difficulties actually getting into the country."

With the airport shut, occupancy figures in August have been "a disaster" according to Podoras. He estimates it to be about 10% this year, compared with rates of 80% and 90% in previous summers.

Although no hotels have been physically damaged in the conflict, there have been knock-on effects for operators such as Hilton. After postponing its entrance to the Beirut market when the war with Israel broke out in 1975, this time round it has had to delay its plan for a 250-bedroom waterfront hotel and send staff home months before its opening.

InterContinental Hotel Group, which has five properties in Lebanon and 10 in Israel, has been publicly bullish. Chief executive Andrew Cosslett says that its properties are holding up well and cited 50% occupancy levels at its Phoenicia hotel in Beirut.

But, as Podoras points out, the Phoenicia is the first port of call for journalists and diplomats and doesn't reflect the broader picture.

Nevertheless, there is a wider sense of optimism about the Lebanese market, reflected by the confidence of Gordon Campbell Gray, founder of the One Aldwych hotel in London. Although he has delayed his plans for an 80-bedroom boutique hotel in Beirut, Campbell Gray still aims to open at the end of 2007.

And property investors are still thinking long-term in Lebanon, hopeful that the ceasefire will hold and that developments will come on line in several years' time, once the infrastructure has returned to normal.

The upbeat mood is buoyed by strong regional goodwill and cash from neighbour states such as Saudi Arabia

"People are more savvy about the Middle East now," says Podoras, pointing to the fact that visitor numbers to the wider region fell after 9/11 and the Iraq war. "That hasn't happened this time round. People are naturally staying away at the moment, but the market is now much better at bouncing back."

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