View of the Four Seasons Hotel between two yachts parked in Zaitunay Bay. (Credit: Mohammad Yassine)
Four Seasons, Le Gray, Vendôme, and Voco — these are all hotels closed since the 2020 Beirut port explosion, coupled with the deepening economic crisis since 2019.
Despite their plans for reopening, recent events have thrown a wrench into their schedules. The eruption of war in Gaza on Oct. 7, 2023, followed by escalating tensions in southern Lebanon, indefinitely postponed the official reopening of these establishments.
“Following a satisfactory level of activity in 2023 and a rather successful summer, some of Beirut’s major hotels had initiated construction projects to reopen during 2024,” explained Pierre Achkar, President of the hoteliers’ union.
However, these plans were disrupted by the repercussions of regional events, leading some establishments to postpone their reopening dates.
“This type of construction work is costly and cannot be halted abruptly once commenced,” said Nada Alameddine, co-manager and partner of tourism and hotel consultancy Hodema. “The current option for hoteliers is to proceed with the renovations, even if it means temporarily keeping their establishments closed.”
Work underway
“Le Gray initiated its renovation work almost a year ago, with the recent removal of metal plates from the exterior to begin the complete overhaul of the façade,” said Joumana Aoun, Managing Director of Serene Real Estate, the company predominantly owned by the Abchee family which owns the hotel.
“This might give some passers-by the impression that we’re just starting,” she added. “We’re completely revamping the hotel and introducing new dining options.”
She said,” We’ve maintained our work pace despite the country’s security situation and aim to be ready for the summer.”
Regarding the hotel’s reopening, Aoun said, “We can’t provide a definitive timeline at the moment. Our focus is on being prepared to open as soon as possible.”
Four Seasons is predominantly owned by Saudi businessman Ali Dayekh and is less than two kilometers away, directly across from Zaitunay Bay. It is also undergoing extensive renovations. Dayekh’s company also holds a majority stake in Mövenpick in Beirut..
According to L’Orient-Le Jour sources, work began in May 2023 but was impeded by the outbreak of war.
The same holds for Vendôme, which was acquired in June 2020 for $35 million by Qatari investors with ties to the royal family.
“Given the current level of uncertainty, it’s challenging for hotels like these, embarking on multimillion-dollar renovations, to open amidst this climate,” Achkar said.
Voco Hotel — situated on the former site of the Monroe — aims to challenge this trend. It is gearing up to open its doors in June 2024. This new establishment began construction at the end of 2022 and accelerated its pace following the outbreak of war in Gaza.
“If we wait for the situation to stabilize before investing, we’ll be the last ones ready once it does,” said Roy Gharios, General Manager of Voco in Lebanon and of the Dia company, which operates this chain under the international IHG group.
“Right from the start, we anticipate being fully operational, offering all 127 rooms, six conference rooms, two restaurants, a banqueting hall, a rooftop and a theater,” he added.
Partially reopened
Phoenicia Hotel stands as the sole establishment in the capital to have resumed welcoming visitors.
Partially reopened since July 2022, it has progressively expanded its capacity.
Initially, only the building housing the residences was operational. By October of the same year, the second of the three buildings on the site, along with all available banqueting rooms, three restaurants and the sports complex, were opened.
Despite the completion of refurbishment work on the third building, which was already underway at the time, it has yet to be made accessible to customers.
“It’s a means of cutting down on our operational expenses,” said a source within the hotel management.
“Our average occupancy rate in February hovered around 25 percent, excluding the building that remains closed to the public,” they said. “If we consider our total capacity, this rate drops to nearly 10 percent.”
“Hospitality venues in the capital presently witness occupancy rates ranging between five percent and 12 percent,” Achkar explained, arguing that there is no logic in maintaining establishments at full capacity. “To manage this, some operational establishments are shutting down entire floors, with some even reducing their capacity by 80 to 90 percent.”
“The eruption of war in Gaza has had dire consequences on our operations. Overnight, our occupancy rate plummeted from 98 percent to 10 percent,” said the owner of another hotel in Beirut, who preferred not to be named. “This downturn comes at a time when the hotel industry is experiencing an upturn.”
While the average occupancy rate of Beirut’s four and five-star hotels still lags far behind pre-crisis levels (which stood at 68 percent in 2019, according to Ernst & Young), there were signs of improvement starting from 2021.
Following a challenging 2020 marked by the economic crisis and the COVID-19 pandemic, the subsequent two years witnessed notably better occupancy rates: 42.3 percent in 2021 and 48.7 percent in 2022.
This upward trajectory was disrupted by the events of Oct. 7, 2023, which swiftly impacted business. According to the same firm, 2023 registered an occupancy rate of 41.4 percent, particularly affected by a bleak end to the year.
In November 2023, occupancy levels in Beirut hotels plummeted to 12.5 percent, compared to 39.3 percent in the same month the previous year. Similarly, December 2023 saw occupancy drop to 21.4 percent, down from 42.2 percent in December 2022.
Out-of-pocket costs
“Despite the bad patch that has lasted for several years, our belief remains steadfast,” Aoun said. “If we didn’t have faith in it, we wouldn’t have embarked on this extensive project.”
Such a commitment carries significant weight, considering the substantial investment at stake.
“The projects initiated by Beirut’s leading hotels entail investments of tens of millions of dollars each,” said Achkar.
None of the managers disclosed the exact sums invested by their establishments, opting instead to characterize them as “substantial,” reflective of the losses incurred following the 2020 Beirut port explosion.
To undertake these renovations, hoteliers find themselves with no alternative but to finance them out of their own pockets.
While some have received partial compensation, others are still awaiting any reimbursement from their insurance providers, three and a half years after the blast.
“These companies are awaiting the conclusion of the official investigation, which is expected to determine the root causes of the dual explosion,” said a hotel source, who refrained from speaking publicly due to lack of authorization. “Based on these findings, insurers will determine the compensation to be disbursed.”
However, “with such significant delays, hoteliers have been left with little choice. Some have negotiated to receive between 10 percent and 40 percent of the damage value from their insurers, covering the remainder themselves,” according to Achkar. “Meanwhile, others have opted to foot the entire bill and await the investigation results,” he added.
This article was originally published in L'Orient-Le Jour. Translated by Sahar Ghoussoub.