Sector expansion spurs construction

Contributing some 14% to GDP, Jordan’s tourism sector is a powerhouse of the national economy, and employs roughly 6% of the country’s total workforce. In order to boost the industry, the Ministry of Tourism and Antiquities (MoTA), along with several private organisations, such as the Jordan Tourism Board (JTB), are seeking to attract investment, both local and foreign, into the kingdom’s hospitality infrastructure. In the realm of luxury hotels and the development of large tourism projects in the Gulf of Aqaba and the Dead Sea, the year 2013 saw a number of encouraging developments.

New Investment

Capital investment stood at JD403.7m ($570.27m) in 2013, a rise of 0.7% from 2012 according to regional business publication Alif Arabiya. This figure is likely to increase further with the success of several hotel projects and announcement of new developments in the pipeline.

InterContinental Hotel Group’s Crowne Plaza Jordan Dead Sea Resort and Spa, with its 420 rooms and suites, celebrated its first year in operation and proved itself a strong player in the increasingly competitive Dead Sea market. “The resort is only a year old, but it has achieved a lot during this year,” Firas Irsheidat, general manager of the Crown Plaza, told Hotelier Middle East. “The resort has become popular among residents of Jordan and incoming tourists as well.”

Building Up

In Amman, Starwood Hotels is working on two new luxury properties that will compete with the InterContinental and Four Seasons for the up-and-coming luxury travel market in the city. Starwood will be taking charge of at least four properties in the near future, underlying the company’s commitment to the Jordanian market. Two hotels are scheduled for Amman: the St Regis is expected to be in operation in 2016 with 270 rooms, and the W Hotel Amman is expected to come on-line in 2016 with 280 rooms. Starwood also has two properties in Aqaba, both expected to be operational in 2016 – the Westin Aqaba Harbour Resort & Spa with 300 rooms and the Al Manara Hotel that will feature 200 luxury rooms. According to Starwood’s Middle East regional director, the four hotels will bring 18,000 jobs to the Jordanian economy.

Aside from the luxury offerings in Amman, other centres of hospitality infrastructure development are the Dead Sea and the Gulf of Aqaba. The Dead Sea development zone stretches 40 km and provides many benefits for the hotel industry. Created in 2008 under the auspice of King Abdullah II, the Development and Free Zones Commission (DFZC) offers a flat 5% corporate income tax rate, 100% foreign ownership and exemptions from Customs duties, sales tax and social services payments. Given the high cost of energy and water in Jordan, the DFZC helps attract international luxury hotel projects like Germany’s Kempinski, Switzerland’s Movenpick to the Dead Sea and InterContinental Hotels Group’s Crowne Plaza Jordan Dead Sea Resort and Spa, which opened in October 2012. “The climate is 100% better because confidence has been restored politically,” Nasser Al Khaldi, CEO of Samarah Dead Sea Resort, told OBG. “Our sales on the real estate side for the first quarter of 2014 have already surpassed all of the sales of 2013. We have also seen a surge in international bookings for the King Hussein Bin Talal Convention Centre.”

Seaside Luxury

Egypt-based Amer Group is working on one of its biggest ventures in the region with the Porto Dead Sea project. Located on 800,000 sq metres of coastline on the Dead Sea, the project, dubbed “the Pulse of the Dead Sea”, will include four luxury hotels, three malls and nearly 11,000 apartments. Jordanian Prime Minister Abdullah Ensour was on hand to lay the cornerstone of the project in April 2014. The implementation phase for the project is estimated to cost $1.1bn along with JD60m ($84.8m) for the initial development phase. The project will include an on-site medical facility aimed at taking advantage of the purported healing properties of the mineral-rich Dead Sea. Additional considerations will include special offerings for conservative visitors such as women-only swimming pools. The project will increase total hotel capacity in Jordan by nearly 25% when completed in 2016.

However, the pace of investment does not stop there. Ayla Oasis, a mixed-use real estate and tourism project in the Gulf of Aqaba, is working on a 300-room Hyatt Regency along with an 80-100 room boutique hotel that is planned to come on-line by the end of 2016 in the Red Sea port city. “Aqaba is witnessing a boom but more foreign labour is needed to sustain growth,” Sahl Dudin, CEO of Ayla Oasis, told OBG.

Greener Build

To combat the high cost of energy and possibly setting a precedent for the industry, Ayla Oasis is working on several sustainable energy projects, including the use of desalinated water from the Red Sea to maintain the project’s Greg Normandesigned 18-hole golf course, the first such course in the kingdom. Part of the Ayla Oasis $1bn development project is earmarked for the development of long-term infrastructure in Aqaba. Ayla Oasis will create 17 km of new waterfront area and build the Ayla Marina, which will extend the existing marina’s capacity to 200 yachts.

Signalling regional investment in Aqaba, Dubai-based Arabtec Construction won a $1.55bn contract to build a resort overlooking the Gulf of Aqaba. The resort will be located in the Aqaba Special Economic Zone, home to a host of private firms and shipping outlets with direct access to the Red Sea. With construction expected to create 4000 jobs and begin in late 2014, the project is due for completion in 2017.

Down The Road

The pace of investment in Jordan’s tourism sector provides evidence of the rebound in the industry, yet challenges remain. While the opening of luxury properties in Amman is a welcome boost to the tourism economy, high energy costs and continued tax increases on the hotel industry remain obstacles in the market. The shift in focus among hotel groups away from Amman to the Gulf of Aqaba and the Dead Sea highlights the potential Jordan has to emerge as a major holiday destination in the Middle East. By forgoing the mass-market appeal that typifies some other locations in the region for luxury and quality, Jordan has the ability to carve out a special niche for itself in the competitive Middle Eastern market.

With numbers of tourists on the rise in 2014, greater communication between the government and private sector is crucial. The groundwork is already established through a network of public-private partnerships such as the JTB, which markets and brands the country’s tourism sector throughout the international community. Further initiatives specifically aimed at marketing new projects in the Dead Sea and Gulf of Aqaba would go far in raising the developments in the tourism sector and attracting foreign investment. Current investors in Jordan’s hospitality infrastructure have come to understand that profitability in the tourism sector requires a developed energy strategy. Additional efforts by the Jordan Hotel Association to establish energy independence for the hospitality sector will ensure increased local and foreign investment, which will ultimately help to lift Jordan to a premier Middle East holiday destination.