Hotels planning to lure guests, defer debt. Occupancy and room rates are down - Lebanon

Hotels planning to
lure guests, defer debt
Occupancy and room rates are down
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The hotel sector is not expected to improve its rates of occupancy this year, according to the Syndicate of Hotel Owners. Hotel occupancy was 40 percent, on average, in the first quarter of the year, compared to 45 percent for the same period last year.

Ihab Kanawati, General Manager of the Staybridge Suites Beirut, said: “Tenants are not booking beforehand and prefer to book on a daily basis because they are afraid of the current situation.” He said that most of the visitors are coming to attend meetings for a specific occasion, not for tourism and leisure.

"Tourists from the Gulf represent less than five percent of our tenants. Some of the guests are from the United Nations or ESCWA staff," he said. Occupancy at the Staybridge Suites is currently at 50 percent. Room rates do not exceed $150 per night. “We have pessimistic expectations for the performance of the hotel in the next three months. We expect around a 15 percent drop in occupancy compared to last year,” said Kanawati.

Occupancy at Le Gray Hotel is at 50 percent. Rita Saad, Public Relations Manager, said that booking for business reasons is done day-by-day. Guests tend to be European, North American, and Gulf nationals. “Booking for May, which is the beginning of the tourist season looks promising.” said Saad.

The country has lost a lot of Arab tourists, mainly from Jordan, Iran, and Iraq, due to the closure of the cross land borders. Wadih Kenaan, Secretary General of the Syndicate said: “An effort must be made to recover the tourists that used to visit through the land borders.”

Tourists reached 1.5 million last year, increasing from 1.3 million in 2014, according to the Ministry of Tourism. Europeans topped the list, reaching 500,000, a 13 percent increase compared to 2014. They were followed by Arabs, accounting for 480,000. But according to the Syndicate, the tourists’ nights in hotels decreased by 60 percent and the room rates were reduced by 40 percent.

The Syndicate has set a plan to bring back the 290,000 Jordanian tourists who used to visit two years ago. Around 70,000 Jordanians are still visiting the country through the airport. The country lost around 220,000 Jordanians due to the closure of land cross borders. “We can retrieve these tourists if air travel is reduced by $100,” said Kenaan. He said that this reduction will be offset if VAT refunds are cancelled.

The Syndicate is also working to reduce the operating costs of hotels to ensure their survival. It was able to reach a settlement last year with the National Social Security Fund (NSSF) to pay the hotels’ dues in installments over three to seven years. “We will submit a program to the Ministry of Tourism to be able to extend the period of payments to 20 years, to reduce the hotels’ burdens,” said Kenaan.

Most of the hotels borrowed in previous years at subsidized rates, but are facing difficulties repaying. The Syndicate is planning to negotiate with the Central Bank to reschedule debts with a two-year grace period. “Due to the crisis several hotels have defaulted, such as the Century Park Hotel, the Acropolis Hotel, and the Beverly Hills Hotel and were repossessed by banks,” he said.
Reported by Rania Ghanem
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Date Posted: Mar 24, 2016