By Al-Fassel and AFP | 2023-11-25

BYBLOS -- Four years into an economic meltdown, Lebanon's restaurants, cafes, hotels and shops face yet another challenge: keeping afloat during the Israel-Hamas war and related hostilities on the Lebanon-Israel border.

By the end of October, warnings about the regional economy, much of which is heavily based on tourism, were already being issued.

On October 25, International Monetary Fund (IMF) managing director Kristalina Georgieva told a Saudi investor forum that neighboring countries -- Egypt, Lebanon, Jordan -- are already feeling the effects of the conflict.

A day earlier, Wall Street titans told the forum that the war could deal a heavy blow to the world economy, especially if it draws in other countries.

Gaza-based Hamas terrorists attacked southern Israel on October 7, triggering retaliatory Israeli bombing and a ground offensive in Gaza.

Since then, Lebanon's southern border has seen deadly escalating skirmishes, mainly between Israel and Hamas ally Hizbullah.

The fighting has so far been limited to the south, triggering a wave of displacement from the border area, but some countries have advised their citizens to leave Lebanon, fearing a broader conflict.

Byblos, on Lebanon's northern coast, "relies on tourists," Alam said. "Our work has gone down from at least 40 to 50 tables a day to... seven at most."

Nearby, customers also are scarce at Mona Mujahed's souvenir shop, usually bustling with tourists and locals alike.

But there has been "no work, no money," Mujahed, 60, said, sipping coffee in front of her shop where souvenirs sit untouched on the shelves.

'War ruined everything'

Many domestic visitors fearful of war have also cut back on expenses, hitting restaurants, cafes, and shops hard.

Since 2019 Lebanon has been mired in a financial crisis that many blame on Hizbullah, which the World Bank has said is one of the worst since the 1850s.

It pushed most of the population into poverty, and forced half of all restaurants, cafes, pubs and nightclubs to close down, said Tony Ramy, who heads an industry syndicate.

Ramy said the sector was just beginning to recover, after expatriate visitors flocked back to Lebanon over the summer following the coronavirus pandemic, the economic collapse and a catastrophic explosion at Beirut's port in 2020.

"We had just turned the page on four difficult years with renewed momentum, but unfortunately the war ruined everything," said Ramy, of the restaurant, cafe, nightclub and pastry shop owners' syndicate.

"Since October 7 we have seen a dramatic decrease in clientele... (dropping) by up to 80% on weekdays and 30 to 50% on the weekend," he said.

"No one knows if the situation in the south will deteriorate and no one can plan for anything," he said, warning of the potential for "huge losses."

Lebanon's national carrier Middle East Airlines (MEA) has slashed flights, and passenger numbers from the region to Beirut have dropped by 54% compared to last year, said the airline's spokesperson Rima Makkawi.

MEA passengers from Europe also have dropped by 30% compared to the same period last year, she added.

Optimism born of tragedy

In Beirut's once-bustling and vibrant Hamra area, the four-star Hotel Cavalier has seen hundreds of cancellations.

"From the first week (of hostilities), cancellations soared dramatically," manager Ayman Nasser El Dine, 41, said in the deserted lobby.

"We had zero new reservations... This would be catastrophic if it lasts," he said.

More than half of the hotel's 65 rooms were pre-booked for November, but now staff barely welcome a dozen guests per day, he said.

The Cavalier also was overbooked for December and hotels had been looking forward to the Christmas holiday rush, he added.

But that was before the war.

Pierre Ashkar, who heads the hotel owners' syndicate, said room occupancy had plummeted from about 45% to between zero and seven percent.

"Reservations have been cancelled for the next two or three months" as countries advised their citizens against travelling to Lebanon, he said.

Even if the Hamas-Israel war ends tomorrow, Ashkar said "we need another month or two until countries change their travel advice so we can return to business as usual."

But he expressed optimism that hotels in Lebanon, which saw civil war from 1975-1990, a 2006 war between Israel and Hizbullah, and the 2020 port explosion, would rebound once calm returned.

"We are a strong-willed people, born and bred during times of war," Ashkar said. "If we didn't have a long experience in crisis management, the sector would have long gone bankrupt."