Amman - Around 14 hotel owners in Petra facing imminent foreclosure are pinning their hopes on a new proposal designed to resolve their outstanding debts.
The one-, two- and three-star hotels were crippled by a regional tourism slump that began with the 2000 Al Aqsa Intifada and continued after September 11 and the 2003 US-led war in Iraq.
The slowdown resulted in the hotels incurring a cumulative debt of JD1.9 million, of which 35 per cent are bank loans and the remainder interest and fines charged for late payments.
A committee comprising officials from the ministries of finance and tourism, the Banks Association and the Petra Hotels Association (PHA), devised a proposal, which is currently under review by the Cabinet.
A hotel industry source, who preferred anonymity, told The Jordan Times that the plan entails taking JD1 million from the Jordan Tourism Board's budget to cancel out the bank loans, with the remaining dues to be addressed by the government.
Fawwaz Hasanat, who heads the PHA, told The Jordan Times yesterday that the hotels have reached a critical stage.
"We've been going around in circles with the debt problem for the past five years with little to show for it," said Hasanat,
"It has been both demoralising and extremely frustrating. This proposal is our last hope, otherwise we will be forced to give up and that will be the end of 14 hotels operating in Petra," he added.
According to the PHA official, who is also a member of the committee, numerous efforts were made over the past five years to present their grievances to concerned authorities for a solution, including dialogue with banks, the tourism ministry, the governor of Maan and deputies, in addition to at least two sit-ins in Petra.
Hasanat said while some of these efforts helped keep their issue in the spotlight, they made little progress in solving their case. To compound the issue further, any progress made with the help of the serving tourism minister was hampered when a new minister took over, forcing them to start from square one.
Although past experiences left little room for optimism, Hasanat told The Jordan Times he hoped the issue would be solved and called for some reassurance in the meantime.
"We would like the Tourism Ministry to give us some indication that they are serious about taking stock of the issue by at least stopping the banks from proceeding with the foreclosures," Hasanat said.
According to the hotel owners, the cases of several hotels are already in court.
Mounting debt
The financial woes of owners of some the smaller hotels in Petra began with the tourist slowdown during Al Aqsa Intifada, which brought tourism to near paralysis in the aftermath of the September 11 attacks.
Financially crippled by the subsequent drop in tourist arrivals, several hotels were unable to meet basic operational costs such as water, electricity and staff payments. Some asked bill collectors for extensions, while others faced public utility suspensions.
Some of these hotels already faced bank lawsuits for nonpayment of debts.
Although the government does not have a say in banking policies, it stepped in to diffuse the debt-repayment issue by requesting creditors to defray part of the interest these hotels owed on bank loans from July 2002, and also extend deadlines for debt repayments for some hotels.
Others were exempted from interest payments for one year.
The government also reduced the sales tax on hotel rooms from 13 to 3 per cent until the end of June 2002 and slashed entry fees for non-Jordanian tourists from JD21 to JD10 to help rejuvenate tourism activity in Petra.
Another JD2 million was allocated through a US government assistance package to help those in the industry most affected by the US-led war on Iraq.
Under the plan, JD500,000 was allocated for interest payments, while another JD500,000 was earmarked to cover social security contributions of hotel employees.
At the time, many hotel owners complained about the formula devised by the government for distributing funds, as some of the assistance went to hotels that were not as affected by the tourism slump.
Other assistance to help Petra hoteliers included a government-sponsored subsidised room-rate scheme to boost domestic tourism to Petra. The summer programme drew hundreds of Jordanians to the historical site, helping improve business. However, some of the bigger hotels in the area reduced their room rates, some from $130 per night to around $30 per night, forcing smaller establishments to reduce their room rates to as low as $10 and negatively affecting their business.
Still struggling financially, some of the smaller hotels in Petra faced another setback in July 2006 following Israel's attack on Lebanon, which resulted in extensive cancellations.
Several hoteliers reported 50 per cent cancellations by tour groups from Western Europe and the Far East slated to visit the country between August and November that year.
Ahmad Hilali, a hotel owner in Petra, said he hoped the proposal under review would be approved, otherwise hoteliers would face another bitter battle to overcome their debts.
"We hope to get a reply in under a month's time and are keeping our fingers crossed that this will finally put an end to our troubles," Hilali said.
"We simply can't afford to sustain our businesses at this rate and hope the government will reconsider its position to assist us," he added.
According to the hotel owner, Petra's smaller hotels, which are owned and operated by members of the local community, do not have the same support as properties owned by international chains.
He said these hoteliers have invested their money and energy to build the hospitality industry in Petra and refuse to give up what they have worked so hard for.
"We are part of this community and refuse to give up," Hilali stressed.
By Dalya Dajani
© Jordan Times 2008
