Whilst in the light of the recent energy hikes implemented in the country hoteliers may well be justified in increasing their prices, they have to be reasonable because such raises squeeze tour operators, tourist transport companies and restaurateurs in the tourism value chain. They will cause Jordan to lose its price competitiveness in the world markets.

Some hotels have already raised their 2009 prices from 19 per cent to 24.5 per cent, a reasonable measure under the circumstances. However, there are other hotel properties, especially at the Dead Sea and Petra, that belong to international chains and have raised their rates by 70 per cent to as much as 100 per cent in some cases.

Such hikes are not justified, especially in view of the occupancy, which increased by as much as 100 per cent and 125 per cent in many of the classified hotels in Amman, Wadi Musa, Aqaba and the Dead Sea in the first three months of 2008. This upwards trend is expected to continue well into 2009 and beyond, according to the World Tourism Organisation and the World Tourism and Travel Council.

Although this measure has been taken by only two international hotels in Petra, which seemed to have a tacit agreement to act in unison in imposing these high rates on the market, 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 that one brand should 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 economy, affecting not only the tourism sector, which in 2007 contributed more than 13 per cent to the country's gross domestic product, but also our international competitiveness vis-à-vis other tourist destinations, such 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 2009 will definitely help them attract business away from Jordan, leaving us in economic doldrums.

Already our international tour operator partners, those who bring tourists to Jordan, are complaining. They have been advised by the Jordan Inbound Tour Operators Association, which represents major inbound tour operators who account for up to 80 per cent 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 that we, inbound tour operators, are particularly vulnerable to the drastic price hikes by hotels. Already many hotels in Jordan are ignoring or "supplementing" their 2008 price contracts by suddenly increasing prices. Inbound tour operators are forced to pay the increases from their pockets, since they work in an international business community where "contract" is not a flexible word, and they 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 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 the fact that they had already made committed rates to their clients abroad for their 2008 bookings.

The tourism business, which already shows signs of boom 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 prioritising their dwindling incomes and book fewer long-haul holidays to destinations such as ours, and thus price will become a dominant factor in determining where people travel. And if no regulation is put in place 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 taxi drivers, waiters, porters, souvenir shops and all their families. And then it will hurt supermarkets, coffee shops, local restaurants, and all our tourism sector workers will normally suffer. In short, it hurts all of us.

More Jordanians earn their living, directly or indirectly, from inbound tourism than from 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 widespread and impact Jordanians in almost every corner of the country, generating revenue that supplements family incomes in remote desert and rural communities.

Many micro and small enterprises thrive by providing services or products to guests coming for cultural or 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 and sustain the increase in the number of tourists witnessed 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.

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

By Munir Nassar

© Jordan Times 2008

 

Community Comments (1) - Comment on this article

The opinions of the authors expressed herein do not necessarily state or reflect Zawya. Read our Comment Policy.

 

Jordanian hotel managers must consider the costs … by Dean Peters, Program Management Director, blogJordan.com - 13-May-08
I agree with Munir Nassar's sentiments. So much so that I blogged about it over on http://blogJordan.com.

Considering that the tourism sector accounted for more than 13 percent, or $2.11 billion of Jordan’s gross domestic product 2007, losing shares to competitive destinations such as Egypt, Turkey, and even Syria could indeed be the disastrous setback Mr. Nassar warns us about.

Moreover, considering the recent spike in fuel prices, unrealistic rises in hotel prices insures tepid tourism as would-be visitors are already having to choose between home energy costs against future travel plans.

The only question is, will the Jordanian Hotel industry heed Mr. Nassar's sage advice? [Report Abuse | Email to a Friend | Reply to this Comment]

 

 

 

 

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