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Tourism Sector in Lebanon Policy Recommendations

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Tourism Sector in Lebanon Policy Recommendations Technical Assistance to the Administrative Simplification in selected ministries in Lebanon (Ministries of Social Affairs, Tourism, Public Health and Industry) TOURISM SECTOR IN LEBANON POLICY RECOMMENDATIONS Author: PANAGIOTIS VLACHOS Financed by: EU General Budget Service Contract ENPI 2014/348-279 JULY 2018 CONTENTS 1. Tourism in Lebanon a. Overview b. Opportunities and Challenges c. Policy Initiatives 2. Ministry of Tourism & Administrative Environment a. Administrative Environment b. Control vs. Problem Solving 3. Policy Recommendations. Promoting Tourism in Lebanon a. Preconditions b. Organization c. Set Supply & Demand Criteria d. Intelligence e. Portfolio of Tourist Products f. Engage, Debate & Market g. Directions & Good Practices 4. Epilogue. Creating a Paradigm for Sustainable Tourism 5. References 2 Summary This analysis provides recommendations for Lebanon’s tourism policy in the context of the technical assistance to administrative simplification in the Ministry of Tourism (MOT). In Chapter 1 we provide data on Lebanon’s performance in tourism and we pose a series of challenges for the future. In Chapter 2, we focus on the administrative side, in an effort to identify the problematic administrative procedures in the Ministry of Tourism that become burdensome for citizens and businesses and to create a more efficient regulatory, decision-making and service delivery environment. Chapter 3 is dedicated to a a series of policy recommendations and initiatives that can promote national and local tourism in a competitive global market. Finally, we refer to a number of methods that can assist the country to drafting a more efficient and outward looking national plan for sustainable tourism. We conclude that an integrated, targeted and inclusive tourism policy in Lebanon is feasible given a more efficient, simplified and strategic administrative structure. In order to play a decisive role in the shaping of the country’s sustainable tourism model, the Ministry needs to stop dedicating all its energy on everyday operational activities as licencing and circulating documents, to save time, money and human resources, deconcentrate its self-consuming functions and focus on its main mission/core business: design, regulate and execute policies in a more open, transparent, efficient and sustainable policy framework. 3 1. Tourism in Lebanon a. Overview Security and political challenges continue to be Lebanon’s primary concern. Additionally, unsustainable debt ratios and sizable twin deficits demonstrate a frail macrofinancial framework that exposes the country to significant foreign exchange and refinancing risks, according to the World Bank1. International organizations and experts encourage Lebanon to proceed with bold administrative reforms in order to address acute social problems and modernise its business environment. However, tourism has been a rapidly growing source of foreign income and a strong pillar of the national economy, following a period of relative political stability and security. Its direct contribution to the national and local economy includes visitor exports, domestic expenditures, internal tourism consumption, and purchases by tourism providers, whereas its indirect contribution includes domestic supply chain, capital investment, government collective spending on tourism, and imported goods for indirect spending. In 2017 tourism continued to follow an upward trend, reaching 19% of GDP. The Ministry of Tourism reports that, in 2017, tourist arrivals hit their highest level since 2011 with 1.85 million tourists visiting the country, revealing a 10% yearly increase2. By 2028, international tourist arrivals are forecast to total 2,995,000, generating expenditure of LBP20,357.3bn, an increase of 6.0%3. According to World Bank and national authorities’ estimations4, over the first 11 months of 2017, hotel occupancy rates averaged 64.4% with the latter registering an increase of 6.9% over 2016 and the highest rate since 2010. With its labour - intensity characteristic, tourism contributed 338,600 related jobs in 2017, almost 15% of national employment. 1 World Bank - Lebanon’s Economic Outlook, April 2018, found at: ​ ​ http://documents.worldbank.org/curated/en/189231523637982157/pdf/125256-MEM-April2018-Lebanon- EN.pdf 2 Bloominvest Bank - Lebanese Tourism Sector: 2017 in review ​ 3 World Travel & Tourism Council - Travel & Tourism, Economic Impact 2018, Lebanon, found at: ​ ​ https://www.wttc.org/-/media/files/reports/economic-impact-research/countries-2018/lebanon2018.pdf 4 World Bank - Lebanon’s Economic Outlook, April 2018 ​ ​ 4 Lebanon has won the title of the “champion of the MENA Region”. According to the World Travel and Tourism Council5, Lebanon ranked in 64th position out of 185 countries in 2016 with an absolute contribution of USD 9.2 billion. It came ahead of Jordan (69th), Tunisia (76th), and Cyprus (89th). Moreover, real growth forecasts of 2.8% for the year 2017 positioned Lebanon in 140th place ahead of Italy (149th), Tunisia (160th), Egypt (166th), and Turkey (171st) (see below). European tourists grasp the lion’s share of tourist arrivals, constituting 34.45% of the total. In details, French tourists, constituting the largest share of European tourists at 27%, went up by a yearly 13.31% to 169,787 visitors. The number of incomers from Germany, the United Kingdom and Sweden also saw respective yearly improvements of 12.99%, 12.96% and 15.14% to 70,045, 98,914 and 39,864 in 2017. On the other hand, the number of Arab tourists, constituting 30.23% of the total, displayed a yearly increase of 7.33%, to stand at 561,273 tourists by December 2017, mainly attracted from Saudi Arabia, Iraq and Kuwait. According to the data availaible, internal tourism has been on the rise specifically in the years following the political turmoil in Lebanon’s neighboring countries, like Syria. 5 World Travel and Tourism Council - Travel & Tourism, Economic Impact 2018, Lebanon ​ 5 Source: Bloominvest, Lebanese Tourism Sector in Review Another aspect of tourism in Lebanon is its Beirut-centered activity. Almost 80% of visitors’ expenditure has been registered in Beirut and 19% at Mount Lebanon, as the capital with its infamous nightlife, shopping malls, medical services and cultural events attracts the majority of travelers and it has positioned itself as a top destination for many international and Arab visitors. Leisure spending attracts the lion’s share against business spending (95% to 5%), based mostly on foreign spending (86.2%) against domestic spending (13.8%). Tourism is depended on hotels, shopping and luxury products (watches, jewelry, clothes), food and beverage establishments, although there has been an effort to diversify to rural tourism and other forms of alternative travelers’ experience. Moreover, Beirut ranked in 5th place in the top 10 destination cities by international overnight visitors reaching 1.69 million international overnight visitors in 2016, growing by a yearly 11%. Moreover, Beirut came ahead of Cairo with a total of 1.55 million visitors followed by Tehran (1.52 million), Cape Town (1.37 million), and Casablanca (1.05 million), according to the World Travel & Tourism Council. The other side of Lebanon’s tourism policy attracts visitors for the rural areas, in the context of the 5-year Rural Tourism Strategy. According to the paper6, “the strategy was developed through consultations with rural tourism stakeholders between January and July 2014 and its goal is to enhance economic opportunities in Lebanese rural areas through improving the competitiveness of specific value chains, including rural tourism and another set of agriculture sectors and food products.” 6 Ministry of Tourism - Lebanon Rural Tourism Strategy, 2015, found at: ​ ​ http://www.mot.gov.lb/Content/uploads/Publication/150225013030192~Rural%20Tourism%20Strategy_E nglish.pdf 6 b. Opportunities and Challenges Overall, the prospects of the tourism industry in Lebanon are promising (see below), although the industry remains sensitive to geopolitical, political and security fluctuations. As a significant resource of foreign exchange and with its independence from state control, it offers an alternative to decaying exports in raw materials and agricultural products as well as it adds to the competitiveness and the transformation of the business environment in the country, towards a more service-oriented economy. Source: World Travel & Tourism Council, Economic Impact 2018, Lebanon Tourism can also become a driver for investment in infrastructure works, a more sustainable approach towards natural resources as well as a more decentralized development model that can benefit the regions and the municipalities with more income and jobs. In order to avoid a painful disruption, similar with that of 2006, Lebanon needs to reform its public institutions and its resilience towards external shocks, given the country’s frail fiscal condition. Tourism can prove a sustainable path for the Lebanese economy if policy makers and legislators incorporate it in a more strategic approach about the future of the country and the role of public administration in the shaping of a more stable, efficient and open economic governance model. Lebanon will need to set clear national goals and invest time and resources towards a more open and sustainable tourist sector, that will disseminate its benefits across municipalities and the regions of the country, while it will have the capacity to address contemporary challenges in the fields of climate change,
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