RIYADH: Lebanon’s tourism sector is placing its hopes on international and Gulf visitors to help steer the country through a financial crisis that has gripped the nation since 2019.

As Beirut’s clubs and restaurants increasingly operate in US dollars, the city’s tourism and nightlife have emerged as fragile yet essential pillars of the economy, largely propped up by private investment.

The ongoing financial collapse — now in its sixth year — has created an $80 billion gap in the banking sector, with debt restructuring stalled amid persistent political gridlock.

Since 2019, the Lebanese pound has lost more than 90 percent of its value, while the country’s gross domestic product has contracted by nearly 40 percent.

The 2024 Hezbollah-Israel conflict further devastated the economy, inflicting widespread damage on tourist regions. In response, the World Bank approved a $250 million loan in June as part of a broader $1 billion recovery program, estimating the total cost of the conflict at $7.2 billion, with reconstruction needs reaching $11 billion.

A defiant party amid the ruins

In early June, fireworks lit up the sky above Beirut’s iconic St. Georges Hotel during a retro-themed event hosted by the Tourism Ministry, reviving memories of Lebanon’s golden age in the 1970s — a time when Gulf tourists filled its beaches, mountain resorts, and vibrant nightlife.

Today, that nostalgia is being reimagined for a new generation of affluent travelers. With the UAE and Kuwait lifting travel bans — and Saudi Arabia possibly following — high-end venues are pinning their hopes on a luxury tourism resurgence.

But renewed tensions in the region have cast a shadow over those ambitions. 

Lebanon’s tourism sector has seen “some cancellations in hotels, (flight) tickets, and car rentals,” Laura Lahoud, Lebanon’s tourism minister, told Arab News in an interview, acknowledging the impact of regional tensions.

“We are surely affected by the current situation in the Middle East, same as all the region. But if Lebanon remains neutral and does not take sides — as the president and prime minister are insisting — we can save the season,” Lahoud added.

Her optimism hinges on a fragile ceasefire between Iran and Israel. “Hopefully, it will go back to normal,” she said, while emphasizing that festivals and events remain untouched, except for the Beiteddine Festival, where “performers are from the US.”

The dollar hustle 

While Lebanon’s currency has collapsed, poverty has tripled, and the banking sector remains frozen, a parallel economy is flourishing in Beirut’s upscale neighborhoods like Gemmayzeh and Mar Mikhael.

Security is part of the appeal. Army patrols have become more visible in tourist areas, and Hezbollah banners along the airport road have quietly given way to billboards promoting “A New Era for Lebanon.”

But the real driver is privatization. With the state largely incapacitated, private investors — mostly dealing in US dollars — are fueling a boom in luxury tourism, pouring money into beach clubs, rooftop lounges, and curated VIP experiences that operate outside the formal economy.

“The private sector has always been a main driver,” said Lahoud, defending the government’s role as a facilitator rather than a funder. “Our role is to guide, organize, and direct investment into new sectors, new regions, and new ideas.”

Yet, some argue this model is unsustainable.

“The dollarized tourism economy has a negative impact on domestic tourism,” warned Jassem Ajaka, an economist and professor at the Lebanese University. 

“Prices become high for residents, especially if pricing is applied equally to tourists and locals. This is unsustainable because the dollar is not the country’s official currency,” he explained in an interview with Arab News.

Geopolitical gambles

The stakes could not be higher. Lebanon’s agricultural and industrial sectors lie in ruins.

Once accounting for 20 percent of GDP, tourism has emerged as the fastest route toward restoring ties with Gulf countries and reviving the economy.

President Joseph Aoun has made outreach to the Gulf a top priority, traveling to Saudi Arabia, Qatar, and the UAE to present Lebanon as “open for business.”

Lahoud emphasized that rebuilding tourist confidence in Lebanon “is the main objective.” 

She outlined plans to achieve this through comprehensive government reforms, coordinated airport improvements, streamlined visa processes for GCC families, shorter checkpoint delays, and the promotion of year-round tourism across all sectors.

“Before some Gulf countries removed the travel ban, Arab tourists were limited to Egyptians, Iraqis, and Jordanians,” said Jean Abboud, president of the Association of Travel and Tourist Agents in Lebanon.

“Demands from Gulf countries were growing steadily, especially from the Emirates, Kuwait, and Qatar. But due to the current conflict between Iran and Israel, everything has changed,” he told Arab News.

The fallout is immediate. “We, as tour operators nowadays, avoid including the south in our programs due to the unexpected problems,” Abboud added.

Lahoud stated that the ministry is collaborating closely with all industry groups to create unique visitor experiences in Lebanon. She added they plan to develop long-term policies and digital tools to support both city and countryside activities, and encourage vital small and medium investments across all regions.

Risky bet

“Over the past couple of years, I’ve noticed a shift toward a younger crowd — but interestingly, they’re spending more,” says Marco Khadra, ambassador at Factory People, a Beirut-based group organizing many of the country’s major music festivals.

“There’s a clear appetite for nightlife, even among younger demographics,” Khadra told Arab News.

But security concerns loom large. “Some people, including international acts, have felt Beirut isn’t safe, and that affects bookings and attendance,” Khadra admitted, adding: “Perception plays a big role in this industry.”

For bartenders like Lynn Abi Ghanem, who left Beirut for the Gulf, the sustainability of this boom is questionable. “Not in the long run,” she said of the shift toward Gulf tourists. “Tourists come for a short time, but it’s the locals who keep bars running all year. Without them, things feel off and won’t hold up.”

The staffing crisis is another weak link. “There are a lot of talented workers who aren’t paid what they deserve,” Abi Ghanem added. “If things don’t change, many will keep leaving.”

A mirage of recovery? 

Hotels have reported occupancy rates of 80 percent ahead of the summer season, while flights are operating at near capacity with expatriates and Gulf tourists. Yet Lebanon’s recovery remains precarious.

“Even though tourism’s contribution to the gross domestic product increased after the crisis to about 30 percent, this was due to the economic contraction,” explained Ajaka.

“We cannot say the sector has recovered because recovery depends on political stability and investment inflows.”

For now, the party continues, sustained by Gulf investment and the relentless drive of Beirut’s nightlife entrepreneurs.

But as Ajjaka conceded: “The biggest enemy of tourism is any security obstacle.” And in a country where crisis is the only constant, the stakes have never been higher.