The political events of the last 18 months that spurred violent unrest across the Middle East and North Africa (Mena) have done little to promote the region as a safe place to visit.
As a result, key economies that rely heavily on tertiary sectors such as travel and tourism have been hardest hit by the Arab Uprisings and their aftershocks, particularly the mounting tensions in the Levant, with Syria at its epicentre.
Jordan is one of the biggest casualties. Its inbound travel industry accounts for about 20 per cent of its annual gross domestic product, according to the World Travel and Tourism Council (WTTC). The sector directly supported about 130,000 jobs, or 7.3 per cent of employment in 2011. It is expected to rise at a compound annual growth rate of 2.3 per cent to 163,000 jobs, or 7.2 per cent of the total, by 2021.
But as Amman once again finds itself in the middle of a turbulent region, coupled with mounting internal tensions driven by anti-monarchist sentiment, the sector’s vital economic contribution could rapidly diminish. Effective measures need to be implemented to counteract negative perceptions about Jordan as a viable tourism destination.
The light at the end of the tunnel is the possibility of developing niches such as medical and cultural tourism
Nadejda Popova, Euromonitor International
The Jordan Tourism Board (JTB) will unveil its 2013 strategy in November. Recent events highlight just how significant the challenge facing its growth plans is. On 21 October, the country’s General Intelligence Department announced it had foiled an Al-Qaeda plot to bomb multiple tourist and civilian sites in the capital, Amman, including shopping centres, hotels and Western embassies.
The plot, which was said to have been in preparation since June, involved 11 Jordanian nationals who had smuggled in weapons from neighbouring Syria and had been assisted in manufacturing home-made explosives by Al-Qaeda operatives in Iraq.
Unsurprisingly, the JTB has attempted to play down the significance of the incident. “Jordan remains safe and stable as always and terrorist plots can affect any country in the world, including nations such as the US and UK,” says Sara Noor, a spokesperson for JTB. “The important thing to focus on is that the terrorists were caught and no attacks occurred. Most importantly, no one was hurt and safety remains a priority to Jordan.”
Regardless of whether or not the attacks took place, Jordan’s geographic location, which buttresses historically volatile states such as Syria, Israel and Iraq, have done its tourism industry little good.
In 2011, the sector lost $1bn on the back of uprisings across the region. Central Bank of Jordan figures revealed tourism revenues fell 16 per cent to JD1.2m ($1.7m) compared to the 2010 figure of JD1.4m. The total number of visitors dropped 20 per cent year-on-year to 6.5 million, compared to 8 million in 2010.
The JTB anticipated a recovery in 2012 as unrest receded, and for the first eight months of the year a 19.2 per cent year-on-year upswing in tourism revenues to $2.4bn was reported by the central bank. In August alone, revenues rose 38.5 per cent year-on-year, with the increase attributed to a surge in the number of tourists from Libya, Iraq, the US and Saudi Arabia.
Hotel occupancy rates have also recovered this year, says Chiheb Ben Mahmoud, executive vice-president of hotel advisory for the Mena region at the US’ Jones Lang LaSalle. “By the end of 2012, Amman hotels, for example, are expected to report an average occupancy rate of 65 per cent, with an average daily rate (ADR) of $150 [based on figures from the UK’s STR Global],” he says. “This corresponds to 2009-10 ADR and occupancy rate results.”
But recent events could plunge Jordan’s tourism industry back into the doldrums. Syria’s escalating civil war is not only impacting the Levant region’s stability in general, but Jordan’s in particular. The country’s support for the overthrow of the Al-Assad government has made it a target for the Syrian regime.
According to recent documents aired by the Dubai-based Al-Arabiya news channel, Syrian agents are agitating for social unrest in Jordan in an attempt to destabilise the monarchy. The subsequent deployment of more than 1,000 US troops to northern Jordan confirms the seriousness of the situation and the threat posed by an expansion of the Syrian conflict beyond its borders.
The country has also battled for more than a year with scattered protests from citizens demanding political and economic reforms.
The unrest in Jordan is generating “negative perceptions” of the country as a holiday destination in key source markets such as Europe and the US, says Nadejda Popova, travel and tourism research analyst at the UK’s Euromonitor International.
“In recent months, many of Jordan’s travel retailers have ceased operations,” she says. “Moreover, Jordanians have stopped travelling in the region, which is a sure sign of unease; there was a 50 per cent decline in Jordanians travelling to Lebanon in the first half of 2012.”
Some inbound tour operators remain positive despite the odds. Fadi Sayess, managing director of local operator Discovery, says business has picked up by 15 per cent year-on-year, compared with a 55 per cent drop in 2011. He argues that reports of internal strife have been overplayed by international media outlets.
“Protests and peaceful marches have mainly addressed the price hikes in food, fuel, taxes and other daily necessities, as well as unemployment and public and private sector corruption. It is no different from demonstrations staged in the civilised world,” he says.
“What most people don’t realise is that such protests and peaceful marches have always existed in Jordan, long before the onset of the Arab unrest, but the international media had little interest then.”
Jordan’s economic diversification strategy
The JTB’s 2013 plan is likely to feature a continuation of the key principles contained in Jordan’s National Tourism Strategy (NTS), which was last updated in 2011.
The NTS outlined a plan to build hotels and resorts in key areas of the country while sharpening the focus on niche markets such as healthcare, adventure and eco-friendly tourism, as well as the meetings, incentives, conferences and exhibitions business.
Jordan’s accommodation classification system was also overhauled, and the JTB began targeting emerging markets such as the BRIC countries (Brazil, Russia, India and China).
Since the Arab uprisings, the board has also ramped up promotional activity in the GCC, leading to a 26 per cent rise in the number of visitors from the region in the first eight months of 2011, compared with the same period in 2010, according to the Tourism Ministry. Saudis accounted for 86 per cent of the total figure, or 718,000 visitors, marking a 45 per cent increase year-on-year.
“The GCC market remained robust as Jordan is considered safe and its close proximity and moderate weather make it the optimal Middle East destination during the summer,” says Giuseppe Ressa, general manager at Le Meridien Amman. He says medical tourism has helped fill the void left by long-haul tourists, who were avoiding regional tours covering Syria, Jordan, Egypt and Lebanon.
Jordan’s medical tourism was ranked first in the region and fifth in the world by the World Bank in 2008, and the country has earned a reputation as a world-class health and wellness destination due to the high-end Dead Sea resorts that have been built over the past decade. Organ transplants, orthopaedic surgery and dental treatments are other lauded areas of Jordan’s healthcare sector.
The Dead Sea region is the focus of major tourism investments, with several new mixed-use hospitality projects under development. These include the $160m Dead Sea Lagoon and a new Hilton property set to open in time for the World Economic Forum meeting in May 2013, which will be held at the Hilton-managed King Hussein bin Talal Convention Centre. In 2013, a JW Marriott hotel will open in Aqaba, while a $1.5bn Star Trek-themed resort is also planned in the area.
Additional mixed-use developments with a tourism element that have been given the green light in Aqaba include the $50m Cordoba Project, the $80m Seascape Project and the $70m Raya Seaside Residence – all holiday and residential villa complexes in Yamaneya Heights – as well as the $3m Berenice Beach Club on the south coast of Aqaba.
Jordan Investments Company in October unveiled ambitious plans to develop a large-scale, multi-purpose tourism development to the south of Amman in Kan Zaman. Called ‘Mirage’, the development, which is set to open in mid-2013, will span 4,000 square metres and feature 21 retail, hospitality and entertainment outlets.
The expansion of Amman’s airport, Queen Alia International, is also on track, with a new $750m terminal opening in mid-2014 that can handle 9 million passengers a year, up from the current 3.5 million. However, with Jordan’s national airline struggling to survive in the face of adversity, it is unlikely the airport will need to cater to a capacity boost any time soon.
“Royal Jordanian is in a very difficult situation,” says Popova. “Fewer people are flying to Jordan and fuel prices have soared. Since 2011, the airline has cancelled about 2,000 flights, reduced frequencies and stopped operating to several European destinations as a result of the Arab protests.
“It is now trying to reduce capital expenditure by downgrading and reducing its fleet size, although it still has 11 Boeing 787 Dreamliners on order.”
Royal Jordanian posted losses in 2011 as a result of a 20 per cent hike in operational costs when fuel prices hit JD115 a barrel, pushing the airline’s fuel bill to JD293m. Revenues increased by just 6 per cent as demand dwindled, particularly from unrest-affected destinations such as Tripoli, Benghazi, Damascus, Sanaa, Aden, Bahrain, Cairo, Alexandria and Sharm el-Sheikh.
Royal Jordanian told MEED it would not be appropriate to comment on its current business strategy, but Popova says the airline is focusing on robust short-haul destinations and medium-haul locations in Africa and Asia.
The short-term outlook for Jordan’s tourism industry hinges on political stability in the region and whether the situation in Syria deteriorates further, she says.
Developing economic niches
“The light at the end of the tunnel is the possibility of developing and promoting niches such as medical and cultural tourism while continuing to target the Gulf market,” she adds.
“Given the situation in Syria and the instability in Lebanon, pan-Levant tour activity, including Jordan, which originates from international and Western European markets, will continue to be negatively impacted,” says Mahmoud.
“However, Jordan’s tourism industry is complex, with very active regional segments such as VFR [visiting friends and relatives] and medical tourism playing a substantial role in boosting incoming visitor figures.
“While instability and security concerns represent challenges, there is a relative upside because of the services provided by Jordan that are valued by visitors from neighbouring countries.
“Besides the official refugees monitored by the UN, there might be a number of unofficial refugees among the Syrian as well as the Libyan travellers, which will impact the final tourism figures for 2012,” he says.
$1bn: Loss made by Jordan’s tourism industry in 2011 following the Arab uprisings
1st: Rank held by Jordan’s medical tourism sector in a World Bank rating of the region
Sources: World Bank; MEED