Syrian Tourism Industry: From Boom to Bust
Author: Jihad Yazigi Posted January 24, 2012
Syrian tourism, which grew nearly 40 percent in 2010 (one of the highest rates in the world for that year) has totally collapsed two years later.
The political crisis that has gripped Syria since March 2011 has devastated this vital sector and the many hopes that were pinned on it.
The new, “Syrian oil” tourism was expected to generate billions of dollars of foreign exchange earnings and thousands of jobs countrywide over the next decade. The tourism sector was projected to attract investments, especially from the Gulf, and to develop economic potential largely neglected until now.
The past few years were very promising, as the efforts [of the government to bring tourists into the country] finally seemed to bear fruit. The number of visitors increased, as did investments in the hospitality industry. Hotels saw impressive occupancy rates, though these rates were certainly due in part to limited capacity. Dozens of small hotels, restaurants and beach resorts sprang up across the country.
Syria possesses many tourist attractions. Its unrivaled archaeological sites date back to antiquity (the Ebla, Mari and Ugarit sites); the Roman era (Palmyra and Apamea); the Crusades (the Krak des chevaliers, Saladin Castle, and the Theater of Bosra); and the Muslim period (the old cities of Damascus and Aleppo as well as the Azem palace). This is not even to mention its Christian and Islamic sites [across the Syrian territory]. Moreover, Syria enjoys a sunny climate and proximity to Europe, Turkey and the Gulf countries—three major markets and tourist destinations.
However, given the dearth of quality hotels or infrastructure, these assets remain insufficient. When it comes to high-end tourism, Syria lags far behind its regional competitors (Lebanon, Jordan and, of course, Egypt). The Syrian tourism sector is controlled to a large extent by regime barons who believed they could effortlessly generate quick returns on their capital. Hotel capacity is low in Syria, and there is a preponderance of “luxury” establishments whose prices are too high for the quality of services provided.
Dozens of investment permits were granted to foreign companies, including Gulf companies who entered into business with Syrian partners. Very few projects were completed and many investors withdrew their money due to bureaucratic problems and disputes with their Syrian partners. However, some of the projects succeeded, including the Four Seasons Hotel in Damascus, built by Saudi Prince Al-Walid Bin Talal, and small, charming hotels set up in renovated Arab houses in Aleppo’s historic sections.
Only two international hotel brands, the Sheraton and the Four Seasons, operate in Damascus, in contrast to the dozens operating in Beirut or Amman. Some regional chains have certainly entered the market, such as Rotana Dubai and the Turkish hotel chain Dedeman, but they have so far been able to attract only about three million guests.
Many other hotel projects underway in the country [have also been disrupted]. Movenpick, InterContinental, Crowne Plaza, Sofitel and Kempinski were all getting ready to settle in the Syrian capital. The Qatari Diar real estate company had begun construction on a large tourist resort, Ras Ibn-Han, in Latakia. However, the construction, which was already far behind schedule, was brought to a halt by the revolts.
The Gulf projects are likely to remain on hold as long as President Bashar al-Assad is in power. Thus, the announcement that the tourism sector is forecasted to provide thousands of jobs is unrealistic. Such optimistic prospects would only be possible through a complete change in the policies of the regime, both internally and externally. Despite efforts in this regard, the geopolitical hazards of the region put the success of the tourism sector in doubt.
Assad’s speeches have offered hope to unemployed young Syrians, and have raised hopes for billions of dollars in investments from Qatar and Kuwait, from which the regime’s barons have managed to take generous commissions.
The crisis gripping the country seems to have hit the tourism sector hardest. Fortunately for the regime, tourism is a secondary economic consideration. The Western and Arab economic sanctions otherwise might have had a greater impact.
Revenues Gone up in Smoke
The outbreak of protests on March 15, 2011, in Daraa in Southern Syria dashed all hopes for the industry. As the first victims fell to the regime’s repression, hotels faced mass cancellations.
Although the unrest in Egypt and Tunisia had raised concerns, many held out hope that Syria would be different. Yet things have gone from bad to worse: Many establishments have gone bankrupt, others open their doors only on weekends, and layoffs and redundancies have become increasingly frequent.
In late May 2011, when the crisis was still in its infancy, the Federation of Syrian Chambers of Tourism estimated a 15 percent hotel occupancy rate countrywide and virtually no occupancy in Aleppo.
High tensions in the country’s central region, between Homs and Hama, have cut off the only route for tourists heading to Aleppo from Damascus. Aleppo has been hit hard not only by these high tensions but also by deteriorating ties with Turkey, its main market.
The collapse of tourism makes matters worse for the government. Tourism has accounted for an increasing share of foreign exchange earnings since oil production and exportation began to plummet in the late 1990s. Billions of dollars have vanished with the departure of tourists.
The economic outlook for 2012 does not look any brighter. The political crisis is unlikely to fade away, and this will lead many actors to question their businesses’ sustainability.
A 100 Percent Loss of Business
Unlike during previous crises, all industries in the Syrian tourism sector have felt the effects of the current unrest. Certain individuals expect a recovery in the fall of 2012. The following is an interview with Maya Sayegh, managing director of Najm Travel & Tourism in Damascus.
Le Commerce How has the recent crisis affected your business?
Sayegh In terms of foreign visitors, we have seen an almost 100 percent loss of business. Ever since revolts erupted in Daraa, cancellations have been recurrent. Syria has three tourism seasons: spring and summer for the Europeans, and summer for the Gulf tourists. None were spared.
Le Commerce What about domestic tourism?
Sayegh Unlike other regional crises—during which it was mainly European tourists who were missing—the current unrest has affected domestic tourism as well. Syrians have stopped traveling inland because they are afraid. They have also stopped traveling abroad because they feel the need to save money, not to mention increases in the price of the dollar have increased the cost of travel outside the country. Syrians trips abroad have fallen by over 50 percent.
Le Commerce Has the government adopted any supportive measures [for the tourism industry]?
Sayegh Yes. For example, it allows airline tickets to be purchased at the official rate of exchange, while the discount in the black market is at almost 15 percent. It has also allowed tourist establishments to break up payments of their debts to the government. However, while the general political situation is unstable, [it is unlikely] that the government will take further steps.
Le Commerce How does a company like yours react to such a crisis?
Sayegh There is no magic solution. We have reduced our costs as much as possible, and we pray that the market will take off again as early as possible. Our hopes are now pinned on the fall of 2012.
Read More: http://www.al-monitor.com/pulse/business/2012/01/boom-to-crash.html
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