Opinion Analysis by Zeina Dagher, Featured Writer

June 15th, 2021

Before the civil war started in 1975, Lebanon was one of the most popular destinations for tourists in the Middle East. A sweet, tempered weather, beautifully varied natural sights, high mountains, Mediterranean beaches, thriving nightlife, landmarks of culture, freedom, and a melting pot of thousands of years of history… Tourists would massively flock every year to this little country, so much that those in charge felt dispensed from creating and investing in a strong industrial sector that surely would’ve saved Lebanon from its crisis today. In fact, Lebanon’s tourism sector has always been credited with keeping the country’s economy afloat in the quasi-absence of a serious exporting activity. But in the midst of the worsening economic crisis Lebanon is going through, and after all the restrictions that the Covid-19 pandemic had imposed on Lebanese businesses and restaurants, there’s no doubt that this sector took a hard blow. However, seeing as the global pandemic is progressively receding, giving way for traveling and entertainment as we know it, can we say that Summer 2021’s tourist activity will bring these businesses – and the economy in general – some relief? On one hand, the Lebanese pound is at an all-time low, which is extremely attractive for foreigners. But on the other hand, there’s the risk of growing civil and political strife as shortages abound. Not to mention the recent violent outburst of israel and the overall unsteady regional situation that could easily dissuade tourists from spending their Summer here and strike one of Lebanon’s only chances of temporarily redressing its economy... So how much will Summer 2021 contribute in easing the crises on Lebanon?

A decade ago, Lebanon’s tourism industry fed up to 30% of the country’s GDP. According to World Travel & Tourism Council, the travel and tourism sector's contribution in 2016 amounted to $9.2 billion – figures the dollar-ridden country can only dream of now. First came the dwindling of the Lebanese pound’s rate that then became a full-on devaluation and had hundreds of businesses in Beirut and outside of the capital close since the end of 2019. Then came the Covid-19 crisis, with its lockdowns and restrictions that only added to the number of closing businesses. Restaurants’ delivery services could not nearly cover their increasing expenses, bars and clubs were indefinitely closed, and hotels were void of tourists because of all the travel restrictions. In fact, average hotel occupancy has been around 7%, a staggering drop from 80% prior to the pandemic. Beirut’s airport has been running at a reduced capacity of 40% ever since, and the number of tourists was slashed to 199,722 in the first half of 2020, compared to 923,820 tourists in the first half of 2019, according to the Ministry of Tourism. And all of these crises were trumped last Summer by the immense Beirut explosion of August that blew apart houses, hotels, restaurants and bars, including many in touristic neighborhoods like Mar Mkhayel, Ashrafieh, Hamra… Some 163 hotels and over 2,000 restaurants were severely damaged in the explosion, hotel union president Pierre Ashkar said at the time. In fact, some of Beirut’s most famous five-star hotels, including the InterContinental’s Phoenicia, the Four Seasons Hotel, and the Hilton Downtown, suffered enough destruction for the establishments to temporarily not reopen. Knowing that most of the Lebanese people work in the services sector, it comes as no surprise that all those calamities that forced business owners to let go of many of their employees increased the unemployment rates and worsened people’s living conditions. Thus, rehabilitating this sector through tourism and the dollars foreigners could spend would definitely be a chance for businesses to re-employ the workforce and expand, temporarily alleviating the effects of the crisis while we wait for political reforms.

If there is one single upside to an economic crisis, it’s that the country becomes a lot cheaper for foreigners. Say a pool used to charge 15,000 L.L. for entrance in 2018, or $10 at the 1500 L.L./dollar rate back then. Since the rate increased today, this pool’s management had to increase their prices to keep providing the service. If they wanted to follow the black market’s rate, which is 15,000 L.L./dollar, a $10 entrance fee would be 150,000 L.L., which would definitely not be attractive for local customers whose spending power has also significantly decreased. Therefore, comparing its prices to its competitors’, the pool would probably limit itself to a 50,000 L.L. entry, which is already a considerable increase for customers. And considering the black market’s rate, which is the rate tourists will be following, a 50,000 L.L. fee would be no more than $3.5, less than half the original $10 fee. Thus, for those with access to dollars, the increased spending power has raised the prospect of an inflow of tourists eager to take advantage of the pound’s crash on the black market.

But when did the Lebanese authorities ever allow a positive factor to stay as such? In fact, a new circular no. 7 was signed by the Minister of Tourism in May that makes it hard for tourists to enjoy their stay here. Fresh dollars are a pressing need for the Lebanese authorities to maintain the country’s economy at a relatively stable level, and in typical Lebanese fashion, they will find any way to obtain them. In this circular, it was decided that the hotel tariffs will be priced and paid in foreign currency for foreign tourists, and in Lebanese pounds for Lebanese citizens. Although it only includes hotels, restaurants and other places may start exploiting it to force the tourist to pay the bill in US dollars. Activists have shared a picture of a bill issued by a restaurant in Verdun-Beirut to a foreign journalist, of which the total is 146,000 L.L., equivalent to about $12 according to the black market rate, but the restaurant priced the bill at $97. Pricing fees in dollars requires a stable dollar rate, and with a fluctuating one, forcing tourists to pay in dollars means raising the cost of tourism in Lebanon for them. That may lead to a reluctance of tourists to vacation in Lebanon, preferring to search for other cheaper and better-quality options, such as Turkey, Egypt, or others, while the country is in dire need of them.

Not only are Lebanese authorities’ decisions deterring tourists from coming to Lebanon, but the overall unsafe situation could win against the cheap LBP. First off, the threat of another Covid-19 wave is still looming, because vaccination is still at its very first stages. Lebanon’s vaccination rollout is no more than 6.3% through the Ministry of Health’s program, in addition to the programs being carried out by the private sector at its own expense to vaccinate workers. These efforts raise the vaccination rollout to approximately 10% for the first dose and 3.5% for the second as of May, which are still very minimal numbers. Then, there’s the threat of political unrest within Lebanon, as living conditions keep on deteriorating – protests will certainly erupt, as they have in the past, and they won’t be the peaceful kind. The threat of political unrest isn’t only limited within Lebanon’s borders, but is also found at the borders and outside. In fact, israel’s violent crackdown on Palestinians last month awakened fears of another war in the Middle East, which does not paint the region well for foreigners who just want to enjoy some peace of mind. The ongoing Syrian war is also another border factor that has been decreasing Lebanon’s attractiveness for tourists: the first half of 2013 saw a drop of 6.5% compared to the arrivals in 2012, and July 2013 showed a huge drop of 27% in tourism arrivals. It’s essentially the western media and false Government warnings that have the biggest part to play in obstructing tourism from flourishing this Summer. For instance, the UK travel advice to Lebanon says that Tripoli is not safe. However, some tourists decided to go see for themselves, and reported a very safe, normal, even welcoming city. But these are a minority, as most people won’t take the risk and will simply respect the warnings. Moreover, since the guarantee of safety in Lebanon has been lost, so too has the demand for luxury, previously enjoyed by a steady flow of Arabs from Gulf states, as luxury is best enjoyed when things are stable. Not only that, but Lebanon’s attractiveness to these people in particular has been decreasing little by little: Lebanon makes little to no efforts to keep good diplomacy relations going with the Gulf states, not to mention the offensive remarks that former Lebanese foreign minister Charbel Wehbe made against them in May, eliciting anger and strong condemnations from officials.

Seeing as many factors could easily counter a weak Lebanese pound and dissuade tourists from spending their Summer here, many are relying on domestic tourism to help businesses survive another season. In fact, Lebanese people used to enjoy purchasing Middle East Airlines tickets with Lebanese pounds, but in light of the collapse, the company issued a decision that customers will have to pay only in fresh cash US dollars – a privilege in today's Lebanon. The decision, coming into effect from June 8th, just as the Summer holiday season starts, will further paralyze locals who, if they even had money in the first place, won’t be able to travel anymore unless they manage to withdraw their dollars in cash. Moreover, people have been in an on-and-off lockdown for a year and a half, so they are expected to want to go out this Summer more than ever. And local Instagram accounts, like Beirut City Guide, have done a great job at marketing these places for the local Lebanese. In fact, beach resorts and hotels are already reportedly being bagged by locals: a boutique guesthouse in Batroun, Blue Marlin, told The Daily Star that foreign tourists comprise just 15%, compared to 60% before October 2019.

Those who can enjoy these stays are mostly the upper-middle and wealthy classes of the country, as yet again, we see a widening gap between social groups and the middle class disappearing. The exceptional rules imposed by banks motivated these people to spend their money: they limited cash withdrawals but not purchases made with bank cards, meaning people can use their lollars (US dollars frozen in Lebanese accounts) on local fun, knowing that they might never be able to withdraw them, instead of letting them rot in official bankruptcy proceedings. But even the upper classes couldn’t pay the full prices and were lured by discounts: it appears that businesses, in order to survive the crisis, whether they price in dollars or LBP, are forced to slash their prices to stay attractive to locals, as foreign tourists may be scarce this year too.

But in the end, what businesses and the economy need to get back on foot and thrive isn’t lollars or LBP cash, it’s fresh dollars that only foreigners can bring. And even then, these dollars could never be enough to save Lebanon from its crisis as they represent but a small percentage of the country’s GDP. These measures could only help businesses and people survive another day, and not end Lebanon’s economic crisis. For that to happen, again and again, we need serious political reforms.