VZCZCXRO0775
RR RUEHBC RUEHDE RUEHDH RUEHKUK RUEHROV
DE RUEHAM #1070/01 1310413
ZNR UUUUU ZZH
R 110413Z MAY 09
FM AMEMBASSY AMMAN
TO RUEHC/SECSTATE WASHDC 5046
INFO RUEHMO/AMEMBASSY MOSCOW 0219
RUEHTV/AMEMBASSY TEL AVIV 1699
RUEHEE/ARAB LEAGUE COLLECTIVE
RUCPDOC/DEPT OF COMMERCE WASHDC
RUEATRS/DEPT OF TREASURY WASHDC

UNCLAS SECTION 01 OF 02 AMMAN 001070 
 
SIPDIS 
 
STATE FOR NEA/ELA 
STATE PASS USAID 
 
E.O. 12958: N/A 
TAGS: ECON EIND EAID JO
SUBJECT: JORDAN'S TOURISM SECTOR LIKELY TO DECREASE IN 2009 TO 2007 
REVENUE LEVELS 
 
REF: 07 AMMAN 3159 
 
¶1. (SBU) Summary: Jordan's tourism sector revenues grew 28% in 2008 
to a record $2.97 billion from $2.31 billion in 2007.  While 
officials had hoped for similar growth in 2009, the industry now 
expects that revenues may return to their 2007 levels due to the 
slowing worldwide economy.  Business travel and travel by Russian 
tourists have fallen the fastest.  The sector is likely to be 
further hurt by its high cost structure relative to other 
destinations and by worldwide trends toward shorter vacations booked 
with less advance notice.  Construction on an additional 10,000 
hotel rooms concentrated in the Dead Sea and Aqaba over the next 
five years, however, remains largely on schedule.  End Summary. 
 
2008 Record Year for Tourism Sector Revenues 
-------------------------------------------- 
 
¶2. (U) Jordan's tourism sector revenues grew 28% in 2008 to a record 
$2.97 billion from $2.31 billion in 2007.  The number of travelers 
grew by 8.8% from 6.5 million in 2007 to 7.1 million in 2008.  These 
tourism revenues equaled 14.7% of GDP in 2008.  An Ernst and Young 
Middle East Hotel Benchmark survey found that average hotel 
occupancy rates increased from 63% in 2007 to 66% in 2008 and the 
average room rate increased from $116 in 2007 to $132 in 2008.  At a 
USAID-funded tourism conference on March 4, Minister of Tourism Maha 
Khatib expressed hope that annual tourism revenues would increase an 
additional 25% or $500 million in 2009. 
 
Revenue Projections Unknown After May 2009 
------------------------------------------ 
 
¶3. (SBU) Such dramatic increases are no longer expected and industry 
officials while wishful that 2009 revenue levels will match 2008 
figures, now predict that revenues may fall back to the 2007 level. 
Such declines are primarily attributed to the worldwide economic 
slowdown.  Ministry of Tourism Secretary General Farouk Hadidi said 
January 2009 revenues were very low because of the Gaza conflict and 
that while monthly revenues grew from February to April they were 
still well below 2008 levels.  Seham Gammouh, Director of Research 
for the Jordan Tourism Board (JTB), said that the number of 
overnight travelers declined 2% in the first three months of 2009 
and that revenue numbers had fallen even more steeply.  She added 
that the number of Russian travelers declined 60% because of 
Russia's seriously ailing economy and that the number of European 
travelers declined an average 22%.  The decline in Russian tourists 
was viewed as particularly troubling because they generate the most 
revenue per traveler.  Jordan Restaurant Association President Zaid 
Goussous estimated that restaurant revenues are also down an 
estimated 10% in 2009. 
 
¶4. (SBU) All interlocutors said that May occupancy rates and revenue 
projections are very high because of the Pope's visit (May 8-10) and 
the World Economic Forum (May 15-17).  They lamented, however, that 
hotel reservations for June and beyond are currently light and 
difficult to predict.  Gammouh estimates that hotel revenues will be 
down 20% for the first six months of 2009 and that the decline for 
the second half of the year could be worse.  Tourism operators fear 
that there will be significant cancellations of already-booked 
travel, and that many people who might have traveled twice a year, 
will now only travel once because of the economy. 
 
Business Travel Will Be Impacted Most 
------------------------------------- 
 
¶5. (SBU) Tourism officials expect particularly steep drops in 
business, incentive and convention travel -- a sub-sector that has 
already been hard hit.  While Jordan has historically attracted some 
European conferences, business people appear to be traveling less 
and staying closer to home.  One tourism consultant described a 
financial services company which cancelled a company sales 
conference that it had already fully paid for because of its public 
relations concerns about luxury travel during an economic downturn. 
 
 
Worldwide Trends Further Challenge Tourism Sector 
--------------------------------------------- ---- 
 
¶6. (SBU) Jordan is particularly vulnerable to the global trends of 
vacationers taking shorter trips and reducing the time between 
booking vacations and traveling during a recession.  A majority of 
travelers visit Jordan as part of a seven-to-ten day tour of the 
Holy Land and the distance between sites in Jordan makes it a 
difficult destination for long weekend get-aways.  Hadidi said that 
historically trips to Jordan have been booked twelve months in 
advance but that travelers are now nervous and "waiting to see what 
 
AMMAN 00001070  002 OF 002 
 
 
happens."  Tour operators are seeing customers shorten their trips 
from ten days to seven, and many customers are waiting for prices to 
fall further before booking. 
 
Jordan Remains an Expensive Destination 
--------------------------------------- 
 
¶7. (SBU) Further impacting Jordan's tourism sector is the country's 
reputation as a comparatively expensive destination with tourist 
packages of uneven quality.  Due to the high cost of hotels, 
transportation, and guides in Jordan, tour operators are 
increasingly creating regional tours which include Egypt, Israel, 
and Lebanon but exclude Jordan.  In February, in an effort to lower 
the cost of package tours and increase the number of travelers, the 
GOJ reduced hotel taxes from 14% to 8%.  Hadidi said that package 
tours have already fallen in price but other interlocutors disagreed 
noting that package prices which rose 35% in 2008 because of demand, 
fuel prices, and inflation have not yet fallen in 2009. 
 
Hotel Construction Mostly on Schedule 
------------------------------------- 
 
¶8. (SBU) Hotel rooms in Jordan are often expensive because there are 
insufficient rooms during peak season at many destinations.  An 
additional 10,000 hotel rooms are planned for construction over the 
next five years in Jordan primarily five-star hotels in Aqaba, the 
Dead Sea, Petra, and Amman.  No hotel construction projects are 
known to have been cancelled because of the downward economy but 
some have been slightly delayed or changed.  Ibrahim Saba, Sales 
Manager for a newly opened boutique hotel, said that the opening of 
a new Crown Plaza hotel at the Dead Sea has been delayed for several 
months because of the economy and not because of the 
publically-stated construction delays.  Hadidi explained that while 
some residential projects in the resort areas of Aqaba and the Dead 
Sea have been put on-hold because of slow sales, hotel projects are 
all continuing.  He said three residential projects have also been 
re-categorized as hotel-apartments rather than as strictly 
apartments to better match demand. 
 
Visit Amman's Classified Website at 
http://www.state.sgov.gov/p/nea/amman 
 
BEECROFT