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French Version

Hospitality sector reels in aftermath of war, seeks financing to help recovery

Restaurants stagger under Mountains of debt, mass exodus of tourists

Patrons and restaurant proprietors alike began cautiously trickling back to Downtown Beirut last week after the 34-day conflict forced the closure of the city center at the height of Lebanon's tourist season.

Though businesses Downtown were spared direct damage, the sector is struggling to regain its footing amid a crippling air and sea blockade, mountains of debt, and the mass exodus of the Gulf tourists who traditionally account for more than half their traditional customer base.

"Before the war every day it was like rush hour here, especially during the World Cup," said Naim Aziz, manager of the Lebanese restaurant Karamna.

Aziz said things were picking up "step-by-step" since the restaurant reopened on August 15 and businessmen started to return for lunch, but the bombardment has wiped out the prospects of what was supposed to be a buoyant summer.

"Now things are not so good, but maybe it will be better next week. Don't forget the airport is still closed," Aziz said.

Karamna cleared $500,000 in July and August of 2005 following the assassination of former Premier Rafik Hariri - a year the Tourism Ministry did not even refer to as a benchmark in June since the hospitality sector had performed so dismally. Karamna has made just over $1,000 in the less than two-weeks of August it has operated.

According to Kafalat, the financial institution that gives loans to small- and medium-sized businesses, 408 restaurants have accumulated a total of LL51,159 billion in debt.

Paul Ariss, the president of the Association of Lebanese Restaurant, Cafe, Pastry Shop and Nightclub Owners, asked the government to exempt the sector from paying VAT and municipal taxes for mid-2006 and 2007.

He also asked that $50 million of the aid from Arab and international donors be channeled to Kafalat to finance long-term, low-interest loans to restaurants.

Those lowest in the chain of command have been the first to suffer from the losses.

All the businesses The Daily Star talked to reported having laid off employees or reducing their hours. Waiters also said tips have gotten smaller.

Starbucks had to lay off the extra workers it hires every summer. The new Downtown branch was entirely empty Sunday afternoon, despite the light traffic at surrounding restaurants. Shift manager Mohammad Abdeen blames the departure of tourists for lack of business, not the conglomerate's American origin.

"We heard rumors that the owner of the company was supporting Israel, but it's not true," said Abdeen, handing over a white strip of paper that Starbucks has been giving patrons as proof.

It reads: "We reassure you, this rumor is false. Starbucks does not fund or support the

Israeli Army. Starbucks is a non-political organization and does not support individual political causes."

Abdeen was optimistic that business would pick up, even though he had only made a few coffees that day.

The manager of Al-Balad restaurant next door is less sure, even though it is full of clients on a Sunday. The restaurant resumed serving lunch a week ago, but will not go back to regular operating hours until things are more certain. They have taken at least 10 dishes off the menu due to lack of supplies, and continue to make acquisitions of food on a day-to-day basis.

Beirut 28-08-2006
Lysandra Ohrstrom
The Daily Star

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