One of the leading figures in Jordan’s vital tourism industry is urging the government to build on efforts to lure visitors back to the Kingdom. Despite regional unrest keeping away many international travelers and occupancy rates below 50 percent across the Kingdom, Jordan’s hotel industry has still managed to hold up surprisingly well. Room capacity has almost doubled to 27,000 rooms over the past 15 years.
Now, Michael Nazzal, the chairman of both the Jordan Hotel Association and the Federation of Tourism Association, believes the government should contribute more towards strengthening the sector by advising investors to put their money into building three and four star hotels, as opposed to backing yet more luxury projects.
Nazzal says for the government to maximize its returns, and that of the investors, it needs to spend more to attract more tourists.
What types of hotel accommodation are available in Jordan today?
Our rooms are categorized from five to one star, plus the hotel apartments and suites, which are different categories. There are also the camps and now we have Airbnb. They haven’t been registered yet, but they will be eventually. It’s anybody who is trying to rent an apartment on a daily basis, whether it’s through Airbnb or other websites. This trend is coming in strongly in the market worldwide, including Jordan. Just like what happened with Uber. It’s the same structure—these also need to be registered for at least two reasons; one is that you have to pay the 16 percent VAT because otherwise it becomes an unfair competition with the current sector. Why are you paying 16 percent in hotels and not apartments which became a business? And the other is that you have to register your guests for security purposes.
What about occupancy rates?
Our occupancy rates have been low since 2011. In 2010 it was above 50 percent, since then it’s been much lower. This year, for instance, if we’re going to have good months from now till the end of the year we could reach 46 percent, compared to 38 percent last year.
Which part of the Kingdom received the most visitors and occupancy rates?
The highest occupancy is in Aqaba, and the lowest is in Petra because it’s very seasonal. Amman’s occupancy rates are higher than the Dead Sea.
Do you think high prices have something to do with it?
The rates here are very low. I would not only look at surrounding countries, but worldwide. We are talking about rates in hotels on beaches – that’s what people complain about basically which is Aqaba and the Dead Sea. But for the quality of hotels that we have the price is very low. Our average room rate in Amman went down to below JD100 in the five star hotels segment. If you compare that to Lebanon, which is facing many problems, they still have a much higher average room rate while you cannot go to Dubai today without paying JD400 for a room that you pay JD200 for in Amman or less. But locals of course complain about the Dead Sea and Aqaba they go to during feasts or during the weekends. I assure you that you can go during the week and find cheaper rates of JD75.
We’ve been seeing many new five star hotels emerging in the capital. Is there a need in Jordan for more five star hotel rooms?
Definitely not. This is a big mistake from the government that will cause a major problem for the hotel industry and for Jordan’s tourism. We need more investors all the time because Jordan’s major problem is to employ people and to do that we know that certain sectors cannot employ people, like the agriculture or the industrial sectors. Our tourism has to grow. Jordan has 28,000 archeological sites, and the sector can grow much faster than other countries. We offer an organic destination and not a manufactured destination, we should be able to attract more tourists. However, the supply creates the demand, you cannot offer a supply of five star hotels only while the demand wants three and four stars. So what happens is that you will get more three and four star clients staying at five star hotels at the rates of three and four because they wouldn’t be able to fill the hotels except at those rates. There will be no return on investments for the hotels. There will be no new investors because the current return rate is very low.
Doesn’t the government consult with the association before allowing new investors to build new hotels?
Unfortunately, the government looks at it shortsightedly. Somebody is going to build means they will employ people, but whether they will make money or lose, that is very short sighted because if he loses then no new investor will follow suit and this is a major problem today. It’s like filling a plane with first class seats leaving only five economy ones.
We need much more three and four-star hotels. Worldwide 90 percent of your capacity should be three and four, and 10 percent should be five. It’s the opposite here and that’s very unfortunate because we’re going to have a major problem on the return on the investment side for the new investors.
Do you think we have enough hotels in areas outside Amman?
We submitted a plan to the government with a distribution for all governorates. What do we need and we hope one day they will accept—we’re not going to say we will stop somebody from building a hotel, but if you want to build a five star hotel in Amman, you will not get tax exemptions, go build a chalet’s resort in Ajloun and you will get tax exemptions. There has to be a clear direction where tourism flow will be well distributed across the Kingdom and all governorates can benefit. The government however is still saying they will not stop anybody, as I said they are short sighted in that aspect.
What are some of the main challenges that the hotel industry is facing today in Jordan?
Our costs in general are high, [including] beverages, this adds up to the clients stay. The guests complain that Jordan is expensive because in a restaurant whether in a hotel or not their average check is way above JD30 or 40, which is very high. There are many challenges, and only if we solve our challenges that we can be competitive with other countries in the region.
Jordan has had to deal with the ripple effects of the Syrian-Iraqi crisis. How can the Kingdom mitigate the risk of being in a restless region?
Since we are capable of getting a number of tourists, half of the number of those who used to come, the relatives of those who came can come, so we should have more marketing money by the government. It is the main beneficiary of tourism growth, they collect VAT, visa fees, entry fees, airport taxes on tickets, so in total every guest is paying around JD200 in taxes directly to the government so it should be a partner that invests more. Currently there is not enough money to support the marketing of Jordan in order to attract more tourists. Yes we have more arrivals but the arrivals we are getting are limited to more Arabs and other types of tourists that are not visiting Jordan; when we’re talking about an Arab tourist coming by car to an apartment which is an Airbnb that does not mean that the travel agents, or the guides, or the souvenir shops worked. A few restaurants and malls might have benefited from those tourists. But the whole tourism sector is not working.
Many of the visitors here complain about the quality of services offered at restaurants or even hotels. When do you think we will start becoming more service-oriented to compete with the likes of Egypt and Lebanon?
Complaints are usually about the cleanliness of Jordan and this is a major problem that’s affecting tourism. We’re doing something about it as the Hotels Association. We have the Adopt a Highway program where we clean an area once a week after the weekend. Other complaints are about price more than services. The current Jordan Hotel School Ammon does not produce enough graduates to cover the needs. We graduate about 600 to 700 people each year but we lose much more per year to other industries including restaurants, cleaning companies, hospitals or the Gulf states. Now we are growing with our training programs to cover some Vocational Training Centers (VTCs) which we took over from the government, in Madaba, Zarqa and the Dead Sea and we have to grow much faster with training programs in order to provide adequate supply for the industry and to cover for the losses.
How do you see the future of the sector?
Jordan’s economy has to produce 200,000 jobs each year. No sector in Jordan can provide this but the tourism sector. Tourism has to grow much faster. It currently provides direct and indirect jobs each year. Direct jobs is one person per room, if you build another 10,000 rooms you hire 10,000 people. But effectively you employ 60,000 people, it’s six jobs per room. Because if you open a hotel in Mafraq tomorrow you will immediately have a baker, a butcher, and so on supplying the hotel, as well as taxis and tailors. The growth is rapid, it will get more people culturally involved with tourists as well.
As a hotels association we are doing all the necessary things to keep the sector alive, to keep it ahead of other sectors in Jordan. We do our own inspections, we have courses for the industry to train the staff, we are cleaning roads and training more people and all this is to keep the industry afloat and to try and bring more tourists to Jordan. Of course the hotel industry is the major contributor to the tourism board. We pay half percent of our revenue to the tourism board, of every JD100 half a dinar goes to the tourism board and that amounts to tens of thousands of dinars each year from each hotel.
If we get 500,000 more tourists visiting Petra the government will make JD350 million. To get these tourists [the government] can subsidize every air ticket by JD100, we keep pushing and maybe it will happen. Arriving to Jordan is costly.