Terror, taxes hinder Jordan tourism sector
Experts argue that tour operators will eventually have to charge more for their services, which will affect performance of tourism sector.
Tourists visit the ancient city of Petra in Jordan, on May 9th, 2016. (AFP)
2017/01/22 Issue: 90 Page: 18
The Arab Weekly
Amman - Fears that Jordan’s tourism industry could decline this year following the December 18th attack on Karak Crusader Castle were brushed aside by government officials but workers in the tourism sector remained deeply sceptical.
Jordanian Minister of Tourism Lina Annab stressed the resilience of the tourism sector, saying it had cushioned itself from the repercussions of militant attacks with few signs of a significant drop in tourist arrivals.
“It’s business as usual and the cancellations have been minimal. Unfortunately, as for danger there is no place that is 100% safe,” Annab said in a statement.
She said revenues were stable at $4 billion in 2016 against the previous year with 3.8 million foreign visitors spending at least one night in the country, a rise of 2.6% from 2015.
Officials said the kingdom has drawn larger numbers of tourists from Gulf Arab states in recent years and they have made up for a drop in package tours by European operators.
Tourism expert and owner of the tourism company Skygate Tours Murad Ghsoun is less confident, however.
“In the global tourism environment, any terrorist attack might have a negative effect on the economy as a whole and not only on tourism,” he said. “We are in this industry and we depend on it and we know when things are bad or not and so far we are suffering.”
Ghsoun argued that, in most cases, countries had to take unprecedented security measures after terror incidents but he said he was positive that the need for upgraded security would not scare away visitors. “Jordan remains a safe place for tourists and will always be no matter what has happened,” he insisted.
More than a dozen people, including a Canadian tourist, were killed in two attacks by Islamist militants in December in the southern city of Karak. Islamic State militants claimed responsibility for the violence.
Three American servicemen were killed by a Jordanian guard in November. Washington issued a travel warning to Americans travelling to Jordan because of threats from militant groups. Jordanian officials criticised the warning as unnecessary.
Travel and tour operators said they are concerned about government plans to introduce a 16% sales tax, which was announced by Annab at the end of last year. The tax enforcement was supposed to go into effect in mid-January but it was delayed due to the controversy around it.
“If the government insists on forcing the tax the whole sector will suffer and as tour operators working in this field for decades we will start looking for other options to make ends meet,” Ghsoun said.
“This sector has been suffering a lot lately and we do not need additional challenges to deal with. The profit margin is really low and with this new tax we will be out of business. The government should rethink the decision.”
Ghsoun explained that the sales tax on tourism will be applied on outbound tourism, stipulating a 16% rise in the cost of travel outside the kingdom and, consequently, travel offices will charge 16% more for their services.
Former parliament member Amjad Msalamani slammed the move as “unacceptable” and “not well-studied”, cautioning against adverse repercussions.
“It adds more (financial) burden on travel agents who work only 90 days in a year. It will merely contribute to making more than 2,000 employees unemployed,” Msalamani said.
“This will happen sooner than expected as many will have no other choice but to close their offices, lay off employees and move somewhere else or work online. Is this what we really want to happen to a sector that is already suffering?”
Shifting the operation online requires merely obtaining licences from the ministries of Industry, Tourism and Endowment — the latter in case of tour operators organising travel to Mecca — but no registration. They will then not be obliged to follow the ministries’ regulations, including the sales tax law.
Experts argue that tour operators will eventually have to charge more for their services, which will affect the performance of the tourism sector. Jordanians will think twice before travelling or visiting tourist sites and operators will be forced to compete in a smaller market by lowering prices while bearing higher overhead costs.
Tourism is one of the Jordan’s main sources of foreign currency and constitutes around 10% of the country’s gross domestic product. Investors have poured billions of dollars in the past decade into a string of hotels across the country.