Jordan's tourism sector focusing on high-end and niche offerings

Home to some of the world’s finest natural and man-made wonders, Jordan has a well-developed tourism industry that remains one of the most significant private sector pillars of its economy. The country has enjoyed decades of peace and political stability, but the conflicts and tensions afflicting neighbouring countries have impacted Jordan’s appeal as a holiday destination. Faced with falling visitor numbers over the last five years, those responsible for marketing the country’s tourism offering are strategising to overcome problems of perception, while hoteliers, restaurateurs and tour operators are working to improve all aspects of the experience they offer to visitors and customers.

Performance Indicators

According to data compiled by the World Tourism and Travel Council (WTTC), the travel and tourism sector in Jordan directly contributed JD1.45bn ($2bn) to GDP in 2015, and a further 2.1% rise is expected in 2016. In terms of employment, the WTTC found that the sector directly employs 72,000 people, representing 4.5% of total employment. Meanwhile, visitor exports were estimated at JD3.6bn ($5.1bn), or 35.5% of all Jordanian exports in 2015. In a comparison of travel and tourism’s contribution to GDP across 184 countries, Jordan was ranked 68th by the WTTC, but came in 121st when GDP contribution was measured by sector growth. According to data released by the Jordan Tourism Board (JTB), income from tourism constituted 12% of GDP in 2015 and 17% of the Jordanian government’s current account.

Visitor Numbers

Overall, arrivals fell by nearly 10% in 2015, with 4.8m people entering Jordan during that year compared to 5.33m in 2014, according to the Ministry of Tourism and Antiquities (MoTA). The number of travellers spending a night in Jordan fell by 5.7% to 3.76m, but there was a substantial 21.6% drop in people making day trips to Jordan, with just 1.05m recorded compared to 1.34m the year before. The sector’s decline is even more marked when tourist numbers in 2015 are compared to 2010, the year before the Arab Spring and the start of the civil war in neighbouring Syria. In 2010 Jordan welcomed 8.08m arrivals, including 4.21m people who stayed in the country overnight and 3.87m day trippers. By 2015 overall arrivals had fallen by 40%, overnight stays by 21.2% and visits by same-day travellers had declined by 72%.

Revenues

The decline in numbers also had an impact on revenues, which fell in 2015 for the first time in recent years. Tourism earnings stood at JD2.89bn ($4.1bn), down 7.1% on 2014 when revenues hit JD3.11bn ($4.4bn), and lower than the JD2.92bn ($4.1bn) recorded in 2013. The fall in income was most pronounced in the second quarter of 2015, when takings were down 18.9% year-on-year (y-o-y), following an 11.9% decline in the first quarter. Revenues rallied in the third quarter, at levels 9.7% higher than in the same period of 2014, but the final quarter saw receipts sliding once again – by 6.9% compared to the same period a year before. In 2016 tourism receipts for the first quarter amounted to JD612m ($860.7m), down 4.6% y-o-y. When MoTA statistics categorising visitors by nationality are considered, the data indicates a significant fall in travel to Jordan by citizens of all of its neighbours bar one, the Palestinian Territories. In 2015, 136,479 Palestinians visited Jordan on day trips, 27% more than in the previous year. This pattern continued in the first quarter of 2016 with a 24.4% increase in day trips from Palestinian Territories.

Visa Changes

The fall in the number of day trips by citizens of neighbouring countries may also reflect changes to Jordanian government policies on visa requirements. In an effort to support the country’s hotels, the government waives tourist entry visa fees for those who stay in Jordan for two consecutive nights, and this may have affected the number of Israelis visiting for a single day. In January 2016 Jordan stopped issuing visas at the Wadi Araba border crossing between Aqaba and Eilat, in Israel, but stipulated that tour operators could apply for visas for groups of visitors two days in advance, while visas to cross at the King Hussein Bridge must also be obtained in advance. The Jordan Inbound Tour Operators Association (JITOA) said the new rules have had an impact on hotel occupancy in some areas. “The idea is that people will spend more in Jordan’s economy if they stay overnight rather than visiting for the day, and this policy led to an 87% increase in overnight visitor stays in Aqaba,” Lina Al Khaled, executive director of JITOA, told OBG.

Iraqi travellers cannot obtain a visa on arrival at border crossings, and the number entering Jordan for same-day visits in 2015 fell by more than 1000 to 2212, representing a decrease of 35%. In the first quarter of 2016 that number fell even further to 378 visitors, down by 42.5% on the same period a year before. Syrians arriving for a same-day visit fell from 285,132 to 109,973 in 2015, a drop of 61.4%, with another similar decrease occurring in the first quarter of 2016. Between 2014 and 2015, the numbers of Iraqis and Syrians staying in Jordan longer than a day declined by 29.5% and 38.3%, respectively, y-o-y, and by 26.8% and 36.9% when the first quarters of 2015 and 2016 are compared.

Saudi Visitors

However, it is the travel and spending habits of Jordan’s biggest neighbour, Saudi Arabia, that had the most profound effect on its tourist industry. In 2014 a total of 1.1m Saudis visited Jordan on single-day or overnight trips, but this number fell to 883,884 the following year, with over 99,000 fewer day trippers and almost 75,000 fewer overnight stays. Jordan saw an increase in visitor numbers from two dozen countries around the world in 2015, resulting in a total of almost 107,000 extra tourists from those nations, but at the same time the number of Saudis visiting the kingdom fell by almost 175,000, a situation that worsened in 2016 when, in the first quarter, there was a 21% drop in same-day and overnight visitors from Saudi Arabia compared to the same period in 2015.

The loss of trade with Jordan’s southern neighbour had a significant impact on tourism revenues. Data collected by the Tourism Information and Research Centre at Saudi Arabia’s Commission for Tourism and National Heritage revealed that an estimated 3.7m of Saudi Arabia’s citizens had spent the equivalent of JD11.2bn ($15.8bn) on holidays in 2015. According to the data, 60% of Saudis took holidays in other GCC countries, while just 19% visited destinations in other Arab countries. More worryingly, Basma Humaidi, a tourism expert cited in a Saudi press report on the figures, suggested there had been a 50% decline in bookings by Saudis for holidays in Jordan and Egypt for 2016, while bookings for Europe had increased by 60%. However, speaking in June 2016, Siham Gammoh, director of research at the JTB, remained optimistic that targeted advertising on popular Saudi television stations and in the country’s major shopping malls would lead to an increase in visitors later in the year. “The most important months in terms of tourists arriving from the GCC are the summer months,” she told OBG. “As Eid Al Fitr coincides with the end of the school holidays this year, we are hopeful we will see an increase in Saudi tourists from July onwards.”

Hotel Occupancy

The downturn in visitors is also reflected in MoTA data for Jordan’s hotels. It showed average room occupancy across all one- to five-star hotels fell from 45.9% in 2014 to 39.3% in 2015. The sharpest falls were in the country’s more upmarket hotels, with average five-star room occupancy dropping from 56.3% to 46.3% and declining from 44.1% to 35.2% in four-star hotels. Conversely, the market for hotel apartments picked up, with apartment occupancy rising from 34.5% in 2014 to 37.4% in 2015.

The interests of the country’s hoteliers are represented by the Jordan Hotel Association (JHA), which acts on behalf of 245 hotels, including 32 hotels categorised as five-star and 31 establishments classed as four-star. According to the JHA, five-star hotels typically charge JD110 ($155) to JD150 ($211) per night, while rates at four-star hotels range from JD55 ($77.40) to JD75 ($105). In addition, the country has 165 apartment and suite hotels and 19 tourist campsites.

Increased Supply

Despite the overall fall in demand for hotel accommodation, investment in the sector is continuing. “There is not really a market for all these new hotels; however, we need to build the infrastructure to create demand. The increase in hotel numbers will drive competition and hopefully decrease room rates, which will be good for the industry,” Jamal Shasha’a, CEO of interior design company Artline, told OBG. “Let us not forget that not everybody in the Gulf can afford or is willing to travel to the West or East Asia, and Jordan is a very good option for them.” According to the JTB, the total number of hotels in Jordan grew by 14.6% between 2010 and 2015, from 487 to 558, while over the same period room numbers grew by 15%, from 24,009 to 27,664, representing an overall investment of JD2.15bn ($3bn) over the five years. The JHA expects the number of hotel rooms to grow by as many as 8000 by 2018. “In the next two years we are expecting to see 8-10 new five-star hotels and 30 hotels with other classifications, including hotel apartments,” Rida Hashem, general manager of the JHA, told OBG. Indeed, a number of international hotel chains are scheduled to add to the current supply of five-star accommodation between 2016 and 2018. UAE-based hospitality group Rotana has opened two properties in the Jordanian capital in two years. The Boulevard Arjaan by Rotana, which comprises 391 hotel apartments and international restaurants, was completed in 2015, while the second quarter of 2016 saw the opening of the Amman Rotana, which has 412 rooms and suites, six restaurants and a health club.

Other developments set to come on-line in the capital in 2016-17 include a new 300-room hotel by Fairmont Hotels and Resorts and a 280-room W Amman operated by Starwood Hotels and Resorts. Starwood also plans to add a further 570 rooms to the supply through the completion of a St Regis hotel, also in Amman, in 2017, and a resort and spa in Aqaba in 2016. Real estate developer Al Seraje is likewise working on the 180-room Campbell Grey Amman, which will open in 2018. Looking further down the line, two five-star Hilton Worldwide hotels scheduled for a 2019 opening will add 346 rooms to the supply in Aqaba and 536 rooms in Amman.

Whether the current lack of demand in the market will affect the construction timeline of these new hotels is unclear. Michael Koth, director of operations, Levant, InterContinental Hotels, and general manager of the InterContinental Jordan in Amman, believes the pace of construction on some new projects will be dictated ad hoc by market conditions. “I think any investor building a new five-star hotel would be prudent to delay the opening until 2018, so that they are not hit by an over-saturated market at the same time as a fall in demand,” Koth told OBG. He added that he sees other openings in the less up-market segments of Jordan’s hotel market. “I think there is a real opportunity for hotel apartments pitched at the three- to four-star market with an international brand,” he told OBG.

New Attractions

Five major schemes with a hospitality focus are also in the pipeline that could potentially boost the tourism sector. On the eastern side of the Dead Sea, the Jordan Development Zones Company has signed a $200m agreement with Fahares Investment Company to develop the Jewel of the Dead Sea, a hotel, conferencing, spa and entertainment complex covering 192,000 sq metres, while on the sea’s northern shores, hotels, restaurants, shopping malls and a beach plaza are included in plans for the newly created Corniche District, with investment opportunities on plots ranging from 4047 to 68,797 sq metres.

Meanwhile, on the Red Sea, construction on a 3.2m-sq-metre mixed-use mega-project – Marsa Zayed – is under way. The development will include residential, retail, recreation and business facilities, and several branded hotels. Part of the plan is to develop marinas that will help promote Aqaba as a premier yachting destination. In line with this, the newly created Berenice beach club, which occupies 500 metres of the coastline, offers a variety of activities, including yachting, diving and watersports. The last big upcoming development, also in Aqaba, is the Red Sea Astrarium, a 745,000-sq-metre integrated resort that, when complete, will include a $1.55bn theme park based around the popular TV show and movie franchise, Star Trek.

The coastal city is also looking forward to the Ayla project, a community that stretches across 17 km of newly created waterfront. The private sector development will include 4.3m sq metres of residential and commercial space, offering hotels, beach clubs, public parks and the country’s first 18-hole golf course. Construction started in 2008 and is expected to take three phases over the next 12 years, with the first stage to end in 2018. In addition, the authorities in Aqaba are now focused on a new plan intended to draw in more visitors from Europe, with the JTB signing an agreement with a Hungarian charter flight firms, Anubis travel, in early October 2016. Under the deal the company will charter weekly flights from Budapest to Aqaba.

Enhanced Offering

In Amman, hotels have been accommodating increasing numbers of business guests travelling to Jordan as part of their work with charities or international relief organisations and are investing in upgrades to better serve these clients. Beyond capital, some resorts are looking to the domestic market for business, and hoteliers recognise that Jordanian holidaymakers and foreign tourists have different expectations. “In the Dead Sea resorts, up to 80% of visitors are local people looking for entertainment for themselves and their children, rather than European tourists who might seek solitude and quiet,” Al Khaled told OBG. “So those hotels are putting more effort into catering for local visitors.” In Aqaba, on Jordan’s 26-km coastline, some hotels have seen an increase in bookings as holidaymakers look for alternatives to Sharm El Sheikh following the downing of a tourist flight from Egypt.

Ancient Wonders

Jordan has many holy sites that have significance for Muslims, Christians and Jews in the Jordan Valley, and the country has worked hard to cater for pilgrims of all three faiths, attracting in particular Muslims from South-east Asia and Christians from Italy. The country also welcomes tourists to the pink stone buildings of the ancient city of Petra, the Roman ruins at Jerash and the Byzantine mosaic at Madaba. Jordan has four UNESCO heritage sites: Petra; Bethany Beyond the Jordan, which is the site of Jesus’s baptism; the 8th-century desert castle Quseir Amra; and Um er-Rasas, a Roman settlement dating back to the 3rd century CE. The overall decline in international tourism has been felt keenly in the communities around these and other sites, and in 2015 Petra experienced a 27.9% fall in overall visitor numbers and a 33.2% decline in international guests, as per MoTA figures.

In the first quarter of 2016 there was a mixed picture for these tourist sites compared to the same period in 2015. The number of tourists, foreign and local, visiting the Bronze Age city of Jerash, Bethany Beyond the Jordan and the valley of Wadi Rum, a UNESCO World Heritage site, increased by 14.1%, 9.6% and 40.4%, respectively. However, the number of visitors to Madaba and Mount Nebo declined by 6.7% and 7.6%, respectively, and Petra saw a 6.5% fall off, with over 82,000 visitors to the site in the first three months of the year.

Film Tourism

In addition to their religious and historical significance, Jordan’s heritage sites have also proved hugely popular with the international film industry. The country’s ancient sites and desert landscapes have featured in a number of well-known titles, including the 1962 epic Lawrence of Arabia, the Hollywood blockbuster Indiana Jones and the critically acclaimed Jordanian Arabic-language film Theeb.

Capitalising on the success of the local film industry to boost tourist numbers, the MoTA has teamed up with The Royal Film Commission (RFC), which is in charge of developing the film industry in Jordan by attracting foreign producers, to promote the country as a film tourism destination, encouraging visitors to come and see those sites used on the big screen. To this end, the MoTA is developing marketing strategies centred on the films shot in Jordan. The most recent campaign aimed at the UK, for example, uses the slogan “Jordan: Literally Out of This World”, in reference to The Martian, a sci-fi thriller directed by Ridley Scott that was filmed at Wadi Rum and released in 2015. According to Nayef Al Fayez, former minister of tourism and antiquities, who spoke to the local press in December 2015, campaigns such as this will increase Jordan’s visibility around the world whilst promoting the country as a safe and attractive destination. “The tourism sector in Jordan is realising its potential for leveraging the film industry, although it is going a bit slowly,” George David, general manager at the RFC, told OBG. “Years ago, a Brazilian soap opera was filmed in Jordan and a couple of months later the number of visitors from Brazil increased. The problem is that this was a one-time thing. There should be a strategy to keep this going after the film is shot. That is what the JTB has tried to capitalise on with The Martian.”

To further develop the film industry in Jordan, the RFC has trained people to work in the industry so that foreign production companies can now hire 95% of the crew locally. Indeed, to qualify for tax incentives, production teams are required to hire a proportion of their crews from inside the country. However, despite its natural attractiveness and burgeoning local film industry, competition from other countries marketing themselves as film locations to foreign producers is strong, and while the Jordanian government offers a range of incentives, including a 16% exemption on value-added tax, it lacks the attractive cash rebate incentive that other countries offer. Morocco, for example, is cheaper to film in and offers a 20% cash rebate in its incentives package. To boost Jordan’s competitiveness, the government is working on additional incentives, although no details are available as yet. According to David, there is also room for the private sector to play a larger role in developing the film industry, with banks investing more in film developments and cinemas becoming more open to showing not only blockbusters but also different genres of films and supporting Jordanian films.

Changing Perceptions

When it comes to winning back visitors to Jordan, the single most difficult task is challenging the perception that the country itself is unsafe, because of the conflicts in neighbouring states. “Although there are encouraging signs for some target markets, others are still facing challenges,” Al Khaled told OBG. “There is still this fundamental perception that Jordan is in the middle of a war zone. A lot of work has been done to promote Jordan as a destination, but it hasn’t been easy.” The scale of the challenge has been recognised by the Jordanian government, which has significantly increased the marketing budget. “For many years the annual marketing budget for Visit Jordan was JD7m-10m ($9.8m-14.1m), but since 2016 the government has given us JD37m ($52m) and this will be extremely important in enabling us to promote Jordan as a destination and as an experience,” Gammoh told OBG. The idea of marketing a range of experiences in Jordan rather than a list of destinations also informed the JTB’s decision to tackle the issue of perception by inviting 620 journalists and bloggers to the country in 2015 to give their own unique perspectives on opportunities for travel, exploration and adventure.

In line with the promotional campaign, attractions are being developed in alternative segments, such as adventure tourism. Work is under way to organise guides and waymarking for the Jordan Trail, a 36-day hike from the green landscapes in the north of the country down through eight regions and 52 villages to the deserts in the south, covering more than 600 km. JITOA has recognised the potential for growth in this segment and has run seminars on adventure tourism.

Best Practice

Between 2015 and 2020, $36m in the US Agency for International Development (USAID) funding is being used to support new marketing initiatives, adaptations of the regulatory framework, improvements to facilities, skills and service quality, and access to finance for companies in the tourism sector. Those running the USAID Building Economic Stability through Tourism (BEST) programme in Jordan believe it can help the country’s tourism sector to cope and develop in challenging times. “At the moment, we feel like the macro figures on visitor numbers and the health of the tourism industry may offer somewhat of a skewed look, without showing the overall health of the full tourism cluster components,” Ibrahim Osta, chief of party for USAID BEST, told OBG. The concentration of arrivals in Amman, he said, to some extent reflects healthy business arrivals, which may include people working for aid agencies and charities. The impact of their visits improves occupancy levels for Amman hotels, he added, but leisure tourism arrivals are yet to return to those seen in the 2010 peak year, so that the full components of the tourism value chain, especially in regions outside Amman, can benefit and return to growth. “Multi-purpose visitors better catalyse value chain components, such as booking hire cars, using tour operator services, eating in tourist restaurants outside the capital and purchasing handicrafts,” he said.

National Plan

A previous USAID-funded exercise, the Jordan Tourism Development Project – which ran from 2005 to 2008 – provided support for the Jordan National Tourism Strategy, launched by King Abdullah II at the World Economic Forum meeting in Jordan in 2005, with the aim of doubling tourism receipts by 2010. In 2016 a new national strategy has been drawn up, with input from government departments and agencies as well as industry representatives. In addition to plans for marketing, regulation and standards, the strategy will focus on training and improvements to technology.

The tourism workforce in Jordan – more than 49,000-strong in 2015, according to the MoTA – is supported by a range of education and training facilities. The JHA, which runs its own in-house training, has said that there are hospitality courses at 25 schools and five universities in Jordan, and it anticipates that new hotels opening before 2018 will require 12,000-15,000 new staff. “In our hotel sector they always need skills training, and so it is vital to run good training courses,” Hashem told OBG. One of the projects USAID BEST is running focuses on providing IT training for small businesses, enabling them to market themselves through their own websites. On a larger scale, Sabre, which runs a global distribution system platform for the international travel industry, is in discussions with the Jordanian government and industry players. “We are pushing all of Jordan’s travel agencies to get online because it is a necessity rather than a choice, and it is essential that the country’s tourism industry has the latest technology available,” Yassar Al Majali, Jordan country manager at Sabre Travel Network Middle East, told OBG.

Outlook

With a raft of hotels and hospitality projects opening their doors in the coming years, Jordan’s tourism offering is set to receive a substantial boost. What remains unclear is whether the money being spent on promoting the country as a secure destination can reverse the current downwards trend in international visitors. Al Majali believes technology should be a key pillar of the tourism strategy, so that the latest techniques can be used to make travel to Jordan easier and more appealing for international tourists, as well as provide greater insights into their interests and requirements. Although they have no control over events in the wider region, players in Jordan’s tourism industry are united in promoting the country as open to business.