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The International Writers Magazine: Tourism in Jordan

Don’t kill tourism’s golden egg
Munir Nassar

For the sake of tourism’s long-term future in Jordan, hoteliers must not increase their prices to the point where they kill the goose that lays the golden egg.

Whilst in the light of the recent energy hikes implemented in Jordan, hoteliers may well be justified in increasing their prices, they have to be reasonable because such raises squeeze us as tour operators, touristic transport companies, and restaurateurs in the tourism value-chain. They will cause Jordan to loose its price competitiveness in the world markets.
Some hotels in Jordan have already raised their 2009 prices from 19 percent to 24.5 percent, a reasonable measure under the circumstances. However there are other hotel properties especially in the Dead Sea and Petra that belong to international chains, and have raised their rates by as much as 70 percent increasing to 100 percent in some cases.
Such hikes are not justified especially in view of the huge increase in occupancy, which increased by as much as 100 percent and 125 percent in many of the classified hotels in Amman, Wadi Musa, Aqaba and the Dead Sea in the first three months of 2008. This upward trend is expected to continue well into 2009 and beyond, according to the World Tourism Organization and the World Tourism and Travel Council.

Although this measure has yet only been taken by no more than two international hotels in Petra who seemed to have a tacit agreement amongst themselves to act in unison in imposing these high rates on the market, the problem as well, is there may be real danger of other international chains following suit and massively adjusting their room rates, just to keep with their international brand image.

Brand positioning in the market dictates one brand must price itself as close as possible to other comparative brands so it is perceived by consumers (in this case, tourists) as being in the same category.

But this would be disastrous for Jordan’s national economy, not only affecting the tourism sector which in 2007 contributed more than 13 percent to the country’s gross domestic product but directly affecting our international competitiveness vis-à-vis other tourism destinations as Egypt Turkey and possibly Syria and Israel.

This means as well that inbound tourism as an export industry generating hard currency from international visitors vital to the domestic economy will be hurt.

Tour packages to Egypt and Turkey already sell at cheaper rates than similar packages to Jordan because of lower airfares. The price advantage they will have in the year 2009, will definitely help them attract business away, leaving us in the economic doldrums.

Already our international tour operator partners, those who bring tourists to Jordan, are complaining. They have been advised by us in the Jordan Inbound Tour Operators Association, which represents major inbound tour operators who account for up to 80 percent of the tourism business, of the recent rate increases and many immediately stated the obvious that tourist demand to Jordan will drop drastically.

Others, as a result, are actively considering reducing the number of pages in their brochures dedicated to Jordan as a holiday destination while still others are threatening to stop selling Jordan completely because they will cease to generate enough bookings to justify their marketing and administrative costs.

It is no secret to say we as inbound tour operators are particularly vulnerable of drastic price hikes by hotels. Already many Jordan hotels are ignoring or "supplementing" their 2008 price contracts by suddenly increasing prices. We as inbound tour operators are forced to pay the increases from our pockets, since we work in an international business community where "contract" is not a flexible word, and we are bound to sell at previously agreed upon rates.

Inbound tour operators have already absorbed the increase in rates imposed last February by the tourist transport companies as a result of the hike in the price of diesel fuel. They have also had to absorb the increase rates that some hotels insisted on as of March of this year. The decision was forced on tour operators despite they fact they had already made committed rates to their clients abroad for their 2008 bookings.

The tourism business, which has already boomed in 2008, will likely get tougher because of the impending recession in western economies, which are our prime markets. Come 2009 we, in the inbound sector fear visitors from these countries will start prioritizing their dwindling incomes and book fewer long haul holidays to destinations such as ours and thus price will become a more dominant factor in determining where people will travel.

And if no regulation is installed and price controls are not strictly adhered to, our industry too will start experiencing recession, and all of us will face the worst. The loss of tourism income hurts tour operators, hotels, bus companies, and restaurants. It hurts the 600-plus licensed tour guides and their families. It hurts the taxi drivers, waiters, porters, souvenir shops and all their families. And then it will hurt supermarkets, the coffee shops, local restaurants, and all our Jordanian tourism sector workers would normally suffer. In short it hurts all of us.

More Jordanians earn their living, directly or indirectly, from inbound tourism than any other economic activity, except for those employed in the public sector. Figures show the tourism sector employs presently 32,000 people and the number is increasing all the time.

As a result the economic benefits of this sector are wide spread and impact Jordanians in almost every corner of Jordan, generating revenue that supplements family incomes in remote desert and rural communities.

Many micro and small enterprises thrive in providing services or products to guests coming for cultural tourism, spiritual tourism, to enjoy water-skiing and scuba-diving or experience the Kingdom’s unique nature reserves which generate hundreds of jobs in eco-tourism.

The inbound tour operators invite the hotel community to join forces in sustaining the increase in the tourism numbers we have seen over the last 10 months. It is certainly possible to do so and still earn a healthy profit. To prove this we invite the hotels to compare the financial results of their operations in the first few months of this year with the same period of 2007.

Let us be very clear. We are not against hotels increasing their earnings. All we call for is a reasonable increase that will not inhibit growth in the number of visitors to Jordan. We also want to avoid being described as greedy and opportunistic

© Muni Nassar May 14th 2008
Mr. Nassar is a former tourism minister and on the executive board of the Jordan Inbound Tour Operators Association.

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