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Energy hikes may put Jordan’s tourism in dire straits

Everyone is saying the recent oil and energy increases will now burn big holes in their pockets and ultimately cripple the economy. The local tourism sector is particularly nervous. Its practitioners are warning the hikes will force them to increase their own prices, a situation which will drive tourists away to other competitive markets, but they say they have no choice.

The Jordan Inbound Tour Operators Association (JITOA) says the tourism industry is particularly sensitive because many of the services it provides are directly linked to energy whether it’s in transport, catering, food and beverage, housekeeping and in arranging sight seeing tours.

JITOA is closely monitoring the situation, sending a memorandum to their members about the new hikes, and stressing it is presently meeting with government officials to try and limit the impact of new energy prices on the tourism industry.

JITOA Chairman Awni Kawar says the new hikes—varying from 3.33 percent for gasoline to 76 percent for diesel and kerosene to 126 percent for cooking gas—would create a knock-on effect on the tourism sector across the board from tour operators, hoteliers, touristic bus companies, and restaurants that will now be under increasing pressure to earmark their prices upwards.

Experts point out the results of this will undermine Jordan’s competitiveness in the international market in its bid to lure more tourists to the Kingdom, and make it more expensive vis-à-vis other destinations like Sharm Al Sheikh and Eilat.

Up till this last measure, Jordanian tourism was going well, being given the thumbs by many international operators who forecasted another growth year for 2008 similar to 2007 that saw revenues increase by 13 percent to $2.11 billion, a contribution of 13.4 percent to the country’s GDP.

Kawar, a tour operator himself, and general manager of Petra Tours, says if the energy increases remain in place, it would certainly pose great challenges to the future of tourism in Jordan and may mean wasted opportunities to the work that has been done to make the industry one of the most formidable forces as the number 2 sector in the Jordanian economy.

Over the years much investment was poured in the tourism industry. Between 1996 and 2006 the rate of cumulative investment had risen to JD 1.552 billion while today the tourism sector employs 33,000 and is indirectly involved for the generation of 130,000 through out the economy.

It is now feared the tourism sector could move into a recession if fuel and energy prices are not contained and a deal is not reached with the government to offset the raising imminent costs. For it’s part the government is in an unenviable position saying it had to raise energy prices because of the international oil prices and the fact continued subsidy on energy continues to drain the national budget.

However, the government is also committed to its five-year National Tourism Strategy drawn up in 2004 to make the tourism sector an export industry and where tourism infrastructure had been developed and top five-star hotels had been built in areas touristic areas like the Amman, Dead Sea, Petra and Aqaba.

In the final analysis, many like Kawar believe the government will not renegade on its position and tourism and a solution will ultimately be found and the situation and jitters in the tourism sector be contained.

As evidence of this is the holding of the Jordan Travel Mart (JTM) in the Dead Sea between 10-12 February that brought tour operators from the United States, Canada, Mexico and Brazil to meet their Jordanian counterparts in a bid to increase tourism traffic from the Americas to Amman.

“Many of our tour operator members participated in the event that proved very successful as a prelude to establishing contact for tour operators on both sides of the Atlantic,” says Kawar whilst praising the JTM as a great business effort in public-private sector cooperation.

The JTM is the brainchild of the Jordan Tourism Board, a public body that seeks to market Jordan internationally as a tourism destination. Its branch in the USA, under the directorship of Malia Asfour has made the travel mart a dream come true, as she said during the holding of the event.

“As a result of this touristic business event, we at JITOA believe the government is a whole is committed to the tourism sector as a growth industry in the long-term, however, the oil and energy hikes certainly pose food for thought and demands immediate action,” Kawar adds.

Tour operators are particularly upset because they say they had already made their plans for 2008 and signed deals with international tour operators and clients on prices calculated on levels that existed in 2007 and it would be difficult to re-adjust, and are fearful they would be left in the lurch.

In the memo to his members Kawar advises tour operators to tell their international clients that JITOA is doing all it can to limit the effect of the latest hikes on the current agreements and contracts that have been already reached and negotiations are going on.

But its early days yet with the situation being so fluid and the overall general prices in the economy still increasing with little control but it is expected that government ministries will step in as the next days to monitor more effectively the market.