Ammon News - Arabian Business
Operators have identified both an undersupply of luxury resorts and a lack of international hotel brands in Jordan. In a country aiming to attract four million tourists by 2013, Louise Oakley discovers that this provides maximum opportunity for accommodation development.

A relatively-quick recovery from terrorist attacks at three hotels in Jordan in 2005 - revPAR and occupancy dropped initially, but then increased to pre-attack level by 2007 - paints a picture of a tourism product that has proven itself resilient to crisis.

This resilience has continued over the past 12 months, with the hotel business in Jordan remaining fairly static despite the downturn - the occupancy rate is 53%, down from 54% in 2007, according to the Euromonitor International Travel and Tourism Jordan report (July 2009).

The Jordan National Tourism Strategy of 2004 to 2010 has proven successful, according to Euromonitor, with the goals of doubling GDP to JOD 1.9 billion (US $2.7 billion), generating JOD 408 million ($576 million) in tax revenue and supporting 308,000 jobs nationally, achieved a year early. A new strategy will be introduced in 2010 to build on this.

This has led to positive predictions for the market by The World Travel and Tourism Council, which expects the contribution travel and tourism makes to GDP to rise from just over 18% (JOD 2.8 billion / $3.9 billion) in 2009 to almost 20% (JOD 6.1 billion / $8.6 billion) in 2019.

Of course, Jordan's economy has not escaped the global crisis, but a predicted reduction in visitor numbers from Europe and the US is expected to be balanced by an increase in visitors from Asia, resulting in a likely growth of 2%. This is smaller than in previous years, but the rate is expected to pick up over the next two years and match that seen in 2007 by 2012.

But while inbound tourism is not of huge concern, tourism spending is. It decreased by 9% in 2008 and is not expected to recover for several years.

In an attempt to offset the potential effects of the global economic downturn on hotel revenue, the government recently reduced the sales tax on hotels to 8% from 14%. This should lower prices without the hotel losing income and thus support occupancy rates. The strategy is particularly aimed at alleviating one area of concern - the potential in European visitors, who accounted for almost 18% of hotel guests in 2008.

Lack of luxury

The government may be quick to support existing hotels in Jordan, but development of a more diverse hotel offering has been slower.

Operators with experience of the country are unanimous in the opinion that Jordan lacks luxury resorts and hotel destination developments.

Six Senses Resorts & Spas managing director Bernhard Bohnenberger says that despite having "so much to offer", Jordan was "a country which to date has hardly any resort or hotel products that do the country and its culture justice".

In February this year, Six Senses opened Evason Ma'in Hot Springs & Six Senses Spa, a 60-minute drive from Amman Queen Alia International Airport, and has since announced another Evason property planned for Petra.

"We are eager to develop several more resorts in this wonderful destination and are looking at this with the same partner developer [The Pharaon Group from Jeddah and a Jordanian national, Nabil Barakat], with whom we created our first resort in the country, " says Bohnenberger.

Despite opening during difficult economic conditions , Bohnenberger says business has been positive, highlighting the resort's attraction to the local market.

"What is particularly encouraging is the strong following that we are building up from the local market, who are rediscovering a wonderful paradise-like destination which was overshadowed and tainted by the very poor quality facilities that were offered in Ma'in prior to Six Senses redeveloping the destination."

Kempinski Hotel Ishtar Dead Sea general manager Bugra Berberoglu also acknowledges an under supply of luxury hotels in less-developed areas of Jordan, highlighting significant gaps in Petra and Wadi Rum.

"Amman, the Dead Sea and Aqaba have their fair share of luxury hotels with more to come in the future. Other spots such as Petra and Wadi Rum could really use more luxury offerings. There is an undeniable demand on these two locations in particular," says Berberoglu.

Aqaba saw an increase of 44% in bed nights in 2008, largely due to new developments in the region, with the Dead Sea showing growth of 31% for the same reasons.

The Jordan Tourism Board is also attempting to promote other destinations around the country, such as Irbid, Jerash and Ajiloun, although these towns do not offer any luxurious accommodation.

Brand potential

InterContinental Hotels Group (IHG), which currently has a portfolio of six hotels in operation or under development in Jordan, also regards the country as a "market with significant potential," according to vice president - development Middle East and Africa Phil Kasselis.

However, Kasselis said that demand was for more international hotel brands.

"The tourism industry in Jordan is still evolving in some sectors and as that evolution takes place, there will be a natural growth in certain markets. Currently, there is an under supply of internationally known branded hotels and as the industry evolves and the demand grows, the market will need additional support from leading international hotel companies such as IHG," says Kasselis.