COMMENT: Increasing tourism is priority for Jordan

Limited leisure tourism infrastructure in Jordan and the continued Syrian conflict are deterrents to travellers who traditionally come from Europe. Nadejda Popova, senior analyst travel and tourism at Euromonitor International looks at the pressure Jordan’s tourism is under.

In 2013, the travel and tourism industry in Jordan witnessed a 2% decrease in the total number of international arrivals, as a result of the Arab Spring and the conflict in Syria. Current difficulties in the region are therefore casting a grim shadow over the entire Levant and overall arrivals in the country are expected to register just 2% growth over 2012-2017, with Egypt and Lebanon expected to be the main source markets.

The falling tourist and business demand in the country in 2013 is also exemplified by easyJet’s latest decision to cancel its route to Amman, which only started in 2011. Increased airline taxes and high airport charges in Jordan are diminishing the attractiveness of the destination to low-cost carriers. Although variable across the region, there is a trend toward newly restrictive air tax regimes which are driving up the price of airline tickets. Morocco is another country in the region which is going down this route by planning to raise its air tax from April.

The cancellation of the easyJet route in Jordan is therefore reducing competition and allowing regional  low-cost airlines like flydubai and Air Arabia to dominate at Queen Alia International Airport, whilst blocking exposure to European markets, which are Jordan’s major source markets.

Added to the problem is the recently raised tax on hotels by the local government which, as of May 2013, stood at 16%. Banking on the fact that the Kingdom itself has remained stable and safe from any outbursts of violence during the last couple of years, the Jordanian government is venturing into increasing taxation as a tool for enhancing revenues and lessening its budget deficit.

While rises in taxation can generate income in the short term, they can also reduce incoming tourist receipts in the country, which plays one of the major roles in sustaining economic activity in Jordan. Thus in raising taxation, the government may be doing more harm than good, given that tourism in the country is already under pressure due to the low levels of consumer confidence.

Can Jordan withstand external impacts?

Over the short term, Jordan will likely continue its moderate economic expansion with real GDP growth rates recording 3.3% in 2013 while in 2014 it is expected to reach 3.5%.

There are great challenges ahead with regard to the development of a long-term tourism strategy. Jordan will need to secure investment and lure international tourism developers at a time when such players are eyeing destinations like the UAE, Saudi Arabia, Morocco and emerging destinations Qatar and Oman.

Increasing tourist numbers is now as much of a priority as sustaining investment and maintaining planned development projects, including hotels and other tourism facilities. There will likely be a shift in interest from some markets towards others as a result of ongoing political turmoil and security concerns across the region.