September September 2012

Transcription

1 September

2 1. Executive summary 3 2. Economic Overview 4 Economic Performance Main Economic Indicators Credit Facilities Targeting the Tourism Sector 3. Medical Tourism 9 4. Jordan National Tourism Strategy Sector Performance / Indicators 14 Sector Statistics Historical Performance Tourism Statistics 2011 Overnight Visitors vs. Same Day Visitors Arrivals Numbers & Profile Visitors to Main Tourist Sites Occupancy Rate Number of Nights Spent at Major Cites/Sites Employment in the Sector Accomodation Statistics 6. Sector Performance (1st Quarter of 2012) Financial Analysis 33 Income Statement & Balance Sheet Financial Indicators Profitability Indicators liquidity Indicators Financial Leverage Indicators Stock Performance Indicators 2

3 Executive Summary The Jordanian tourism sector has grown steadily in the past and has proven to be resilient to many challenges including the global financial crisis back in In fact, the tourism sector has to a great extent escaped the turbulence caused by the global recession as the sector was back on the fast track in 2010 after a somewhat slower growth in the year following the economic downturn. Aided by the boom in the real estate sector in recent years and the emergence of Jordan as a medical hub, the tourism sector has surfaced as one of the most reliable pillars shoring the Kingdom s economy when declining foreign investments and workers remittances have presented serious impediments and have shaken confidence levels in the country s prospects. However, notwithstanding the importance of the tourism sector, the ramifications of the political unrest that has swept a number of Arab countries in what came to be known as the Arab Spring have left their imprints on the sector. The tourism sector as well as medical tourism have both been hard hit as figures show a decline in number of arrivals and revenues during The National Tourism Strategy (NTS) ( ) that builds on the achievements made since the launch of the initial strategy ( ) addresses many of the factors that contribute to a sustainable growth and underpins ambitious targets. However, the main strategy areas ought to be revisited in light with the recent development and the prevailing circumstances in the region; especially that 86% of medical tourists are from neighboring Arab countries. 3

4 2. Economic Overview September 2012 Economic Performance The overall performance of the Jordanian economy during the first half of 2012 showed mixed results according to the latest statistics issued by the Central Bank of Jordan (CBJ). In particular, tourism receipts, worker s remittances and credit facilities extended by licensed banks have all showed significant improvements, while on the other hand, current account deficit and net outstanding public debt have deteriorated further. Inflation rate as measured by the consumer price index slowed down to 3.9% in the first five months of 2012 compared to a rate of 4.6% during the same period of last year. The unemployment rate also improved as it was recorded at 11.6% in the second quarter of 2012 relative to a rate of 13.2% in the same quarter of Foreign currency reserves at the CBJ declined by US$ billion, standing at US$ billion by the end of May 2012, thus shedding 27% compared to their levels recorded at the end of last year. Within the framework of its monetary policy, the CBJ raised official interest rates by 25 basis points in 2011, followed by another 50 basis point increase in February 2012, thus generating a rediscount rate of 5% and an overnight interest rate on repurchase agreements of 4.75%, while the overnight deposit window rate stood at 2.75%. This followed a 50 basis point reduction during the year 2010, which was implemented in order to contain inflationary pressures and maintain competitive returns on financial instrument savings in Jordanian Dinars. Moreover, the central government recorded a JD1.387 billion budget deficit, including foreign aid by the end of This is compared to a deficit of JD1.045 billion in Should foreign aid figures be excluded, the budget would record a deficit of JD1.26 billion, compared to a deficit of JD1.4 billion during

5 Main Economic Indicators Main Economic Indicators JD Million Money and Banking June Currency with Public 2, , , , ,200.9 Deposits of Residents in Jordan Dinar 12, , , , ,166.7 Deposits of Residents in Foreign Currencies 3, , , , ,495.8 Money Supply (M2) 18, , , , ,863.4 Foreign Assets (Net) 7, , , , ,605.7 Domestic Assets (Net) 11, , , , ,257.7 Public Finance Domestic Revenues 3, , , , ,478.9 Foreign Grants Current Expenditures 4, , , , ,716.3 Capital Expenditures , , Overall Deficit (Including Grants) (616.7) (1,509.3) (1,046.4) -1, Overall Deficit (Excluding Grants) (1,173.8) (1,842.7) (1,448.1) -2, Internal and External Public Debt Gross Domestic Debt of Central Government 5, , ,980 9,996 11,555 External Public Debt Outstanding 3, , , , ,492.0 External Public Debt Service (Commitment Basis) N/A External Public Debt Service (Cash Basis) N/A External Sector Jan - Mar Current Account -1, , , ,395.2 Trade Balance Deficit -5, , , , ,030.7 Exports, f.o.b. 5, , , , ,317.3 Imports, f.o.b. 10, , , , ,348.0 Services Balance (Net) Income Account (Net) Current Transfers (Net) 2, , , , Capital and Financial Account (Net) o/w : 1, , Direct Foreign Investment in Jordan 2, , , , Gross Official Reserves 5, , , , ,703.8 Production and Prices Jan - Mar Nominal GDP at Market Prices (JD Million) 16, , , , ,883.5 Population in Million N/A Per Capita GDP at Current Market Prices (JD) 2,754 2,828 3,069 3,277 N/A Percentage Change in Consumer Price Index (Jan -May) 13.9 (0.7)

6 Notwithstanding the unfavorable economic and political conditions in the region, economic growth as measured by real GDP recorded a growth of 3% at market prices during the first quarter of 2012 compared to a growth of 2.3% in the same period of The following chart shows the percentage contribution of GDP according to the different economic activites at the end of the first quarter of % 25% Gross Domestic Product by Economic Activity at Constant Basic Prices - Q % 20% 18.9% 17.2% 15% 12.2% 13.5% 10% 5% 0% 4.3% 2.2% 2.1% 4.3% 4.7% 0.5% 0.6% Agriculture Mining and Quarrying Manufacturing Electricity and Water Construction Trade, Restaurants and Hotels Transport and Communications Finance, Insurance, Real Estate and Business Services Social and Personal Services Producers of Government Services Producers of Private Non-Profit Services for Households Domestic Household Services On the other hand, total debt (gross domestic debt & outstanding external debt) stood at JD billion by the end of 2011, thus representing 71% of Gross Domestic Product (GDP) at current market prices. Debt to GDP Ratio JD Billion % % % % 67% % 70% 60% 50% 40% 30% 20% 10% % Gross Domestic Debt Outstanding External Debt Total Debt to GDP Ratio 6

7 Credit Facilities Targeting the Tourism Sector Credit facilities and loans granted by licensed banks operating in the Kingdom rose by 9.7% during the year 2011, while a growth 8.7% was recorded during the first seven months of 2012 compared to their level at the end of This was reflected in a JD billion increase which raised the standing balance of total credit facilities to approximately JD17.2 billion by the end of July The public services and utilities sector was the prime beneficiary of these facilities, accounting for more than JD676.4 million of the total increase in facilities during the first seven months of 2012, while credit facilities extended to individuals witnessed a growth of JD298 million or 19% increase, compared with levels recorded at the end of The classification of extended credit facilities according to the borrower reveals that the boost in the credit facilities during the first seven months of 2012 was mainly due to the credit facilities extended to the private sector (resident), which increased by JD775.6 million, followed by the central government, with an increase of JD651.8 million, growing by over three folds compared to their level at the end of 2011 according to the latest figures issued by the CBJ. Credit Facilities According to Economic Activity - July 2012 Financial Services 2.7% Other 19.1% Buying Shares 2.2% Agriculture 1.5% Mining 0.5% Industry 14.7% Public Services and Utilities 10.5% Tourism, Hotels and Restaurants 3.1% Transportation Services 3.1% Construction 20.7% General Trade 21.7% 7 In parallel to the growth in total credit facilities, extended credit facilities targeting the tourism sector has followed suit recording a percentage increase of 9.2% by the end of July 2012, thus standing at JD539.2 million compared to JD493.7 million in In terms of market share, credit facilities extended to the tourism sector correspond to a 3.1% share out of total credit facilities during the first seven months of 2012.

8 JD Million YEAR July 2012 Chg. % Chg. Agriculture % Mining % Industry 1, , , , % General Trade 2, , , , % Construction 2, , , , % Transportation Services % Tourism, Hotels & Restaurants % Public Services & Utilities , , % Financial Services % Buying Stocks % Other 3, , , , , % Total Credit Facilities 13, , , , , , % The largest share of credit facilities during the first seven months of 2012 was attributed to the general trade sector as it locked down a share of 21.7% of total facilities followed by the construction sector with a share of 20.7%. The percentage growth in credit facilities targeting the largest two sectors in terms of their share of credit facilities, namely, general trade and construction are shown in the following graph along with grwoth rates associated with credit facilities targeting the tourism, hotels & restaurants sector. 50% 45% 40% 35% 30% 25% 20% 15% 10% 5% 0% -5% Growth Rates in Credit Facilities 43.3% 22.7% 19.0% 18.1% 16.7% 12.6% 12.5% 15.5% 9.7% 8.7% 8.5% 9.3% 10.3% 9.2% 8.0% 3.2% 6.9% 2.1% 5.1% Jul % General Trade Construction Tourism, Hotels and Restaurants Total Credit Facilities 8

9 3. Medical Tourism September 2012 Jordan has long held a reputation for its commitment to offering high quality healthcare to its population that was achieved through high levels of public and private investments in hospitals, medical facilities in addition to promoting international standards. As such, Jordan has emerged as a hub of medical tourism in the Middle East as it combines top quality healthcare facilities and medical technology, accredited hospitals and highly qualified physicians and surgeons, all offered at a fraction of the costs charged in the US or Europe. Accordingly, Jordan ranked first in the region and fifth globally as a medical tourism destination according to a 2010 World Bank report. Accreditation There are seven Jordanian private hospitals accredited by the Joint Commission International (JCI), with five others in the process of obtaining this accreditation. The JCI is an independent, nonprofit organization which accredits and certifies more than 15,000 health care organizations and programs in the United States, recognized nationwide as a symbol of quality that reflects an organization s commitment to meeting certain performance standards. Facilities & Staff The Kingdom is a host to 102 hospitals, 30 of which are operated by the Ministry of Health, 11 by the Royal Medical Services, 59 by the private sector and two by universities, in addition to physicans, 22,000 nurses according to Jordan Hospitals Association (JHA). JHA is a private, voluntary, non-profit organization aiming to make efficient use of the medical sector s potential by means of increasing competitiveness between Jordanian private hospitals locally, regionally and internationally, promoting and protecting the interests of private hospitals and interacting with members to ensure private hospitals continue to be dynamic in meeting the ever changing needs of the Jordanian community and international markets. 9

10 Jordan as a Medical Hub Accessibility and ease of obtaining a visa to visit the Kingdom are among the main factors that prompt foreign patients to choose Jordan as their medical destination. Citizens of many countries are not required to obtain a visa to visit the Kingdom, or are offered visas on arrival, which represents an advantage over other rival destinations. Moreover, according to a 2011 study conducted by JHA, the Kingdom was distinguished in the success rate of different critical medical procedures conducted by Jordanian medics, as the rate of patient satisfaction with procedures conducted in the Kingdom was recorded at 90%. Foreign Patients and Revenues In Jordan received about 220,000 patients that came for treatment in the Kingdom s hospitals, 90% of whom came from the MENA region according to Private Hospitals Association (PHA) figures. While revenue for the sector stood at approximately US$ 1 billion in However due to the uncertainty generated by the so-called Arab Spring, the number of patients seeking treatment in Jordan fell to roughly 180,000 in The sector was particularly very much affected by the conflicts in Libya and Yemen earlier in Yet, it has somewhat recovered during the second half of the year as patients from these countries have arrived to the Kingdom for treatment. 10

11 4. Jordan National Tourism Strategy The National Tourism Strategy (NTS) builds upon the significant achievements made since the launch of the original strategy ( ), during which Jordan firmly strengthened its reputation as a destination of choice for both visitor and investors. Managing this success in to the future now poses new challenges for all stakeholders in the industry in terms of sustaining momentum and level required to underpin long-term sustainable growth. It has been agrees that the new National Tourism Strategy will be private sector- led with public sector partnership, and the strategy response to the new realities of the industry at the local and global levels. Defined implementation activities and ambitious growth targets have been agreed on, and the crosscutting themes of competitiveness and sustainability are integrated to maximize the contribution tourism can make to economic and social development in Jordan, while contributing to business success and sustaining natural and cultural assets. National Tourism Strategy The first National Tourism Strategy was developed through a publicprivate partnership and covered the period It was based on four main pillars and helped guide the development and growth of the sector in each of these areas. As a result marketing and promotion efforts have been strengthened, the quality and variety of tourism products and services have improved, professional human resource practices have been more widely adopted across the industry, and important steps have been taken in creating a regulatory environment that is more conducive to tourism development. Collectively this led to great economic advantages, and today tourism accounted for over 12.4% of Jordan s GDP in Highlights for the coming five years The changed competitive environment in international tourism of recent years has indicated that Jordan s strategy for the coming five years must pace a stronger emphasis on raising the overall competitiveness of the industry by focusing on: Delivering planned improvements and enhancements in the enabling environment that will empower the industry, deepen stakeholder partnerships and provide for world class regulation.

12 Raising overall tourism revenue by increasing the average length of stay of international visitors (particularly higher spend tourists), increase arrivals in the off-season, and stimulate the domestic tourism market. Reducing the impact of seasonality further by increasing tourist volumes during the shoulder and off-peak months. Better marketing and promotion of Jordan as a destination through further strengthening of the branding message and utilizing new distribution channels, with a priority on e-marking, social networking and web-based platforms. Specifically- targeted programs of work designed to build great visitor experience there by creating a competitive advantage for Jordan. Building on the excellent base already established to create and retain the best human resources in the region in order to drive industry success at every level. The strategic challenges facing Jordan s tourism development are undoubtedly complex, involving multiple supply and demand factors. Yet, in facing these challenges, the iconic quality of the Kingdom s tourism resources and the natural hospitality of Jordanians provide fundamental core strengths which can be used to effectively differentiate Jordan in unique ways, as well as to support its positioning and branding as a distinctive world-class destination. The National Tourism Strategy for Jordan The new National Tourism Strategy is designed to build on the solid foundation established since 2004 and provide the necessary direction for stakeholders in tourism by presenting a clear path forward to underpin future growth. Its development and implementation will be guided by a vision and a mission that are adapted from those within the first NTS in order to focus attention on the need to further develop a distinctive, unique and competitive tourism industry. 12

13 The NTS retains the four-pillar framework, which has proven so successful, although these pillars and the related strategic objectives have been slightly amended to ensure that the need for increased competitiveness is at the forefront of all activities. The range of measures identified under the four pillars, when implemented, will significantly contribute to both securing the achievements seen to date in Jordan s tourism sector and to raising the overall competitiveness of the industry to maintain growth and underpin long-term sustainability Strategic Vision for Strategic Mission for Jordan will be a distinctive destination offering diverse, year-round visitor experiences that will enrich the lives of Jordanian s and their guests. Plan and implement the changes and actions necessary to: - Raise the overall competitiveness of Jordan s tourism industry; - Enhance the visitor experience through innovation in product development; - Better position and promote the tourism offering to global markets so as attract higher yield customers throughout the year; - Create a regulatory and operating environment which drives better business performance and releases the full energy of the private sector as the engine of growth. Strategic Goal Increase tourism receipts to 4.2 billion in

14 5. Sector Performance Indicators Sector Statistics Placing the tourism sector in a statistical context is necessary to provide an insight of the sector s performance. In this section of the report, statistics relating to collective tourist accommodation including capacity and occupancy rate as well as statistics relating to the number of arrivals, their profile and expenditures will be exposed and analyzed along with other indicators in order to uncover the performance of the sector. Therefore, in measuring the performance of the Jordanian tourism sector, it is important to look at tourism receipts; defined as consumption expenditures or payments for goods and services made by foreign visitors out of foreign currency resources. In this context, the ratio of tourism receipts relative to GDP reflects the vital role the tourism sector plays within the Jordanian economy as shown in the following graph. 40% Ratio of Tourism Reciepts Relative to GDP (Constant Market Prices) 35% 30% 25% 20% 15% 13.8% 13.8% 18.3% 19.0% 22.6% 21.2% 23.9% 20.8% 10% 5% 0% The ratio of tourism receipts relative to GDP recorded an average of 21% during the past six years. As can be seen from the graph above, the ratio of tourism receipts relative to GDP recorded an average of 21% during the past six years. As such, the sector s receipts relative to GDP have witnessed a steady increase during the said period compared to a ratio of only 13.8% during 2004 and This stands witness to the increased importance the sector has come to represent within the Jordanian economy. Having said that, last year developments in terms of tourism receipts show a decline of almost 10.65%. Such a decline came after a healthy performance during 2010, whereby tourism receipts surged by 15.3% 14

15 Historical Performance compared to The decline during 2011 is directly related to social unrest and the mass uprisings in a number of Arab countries in what came to be known as the Arab Spring. Although Jordan was able to portray itself as a safe destination amid a troubled region, instability in neighboring countries has negatively affected the sector in Jordan. At this point it is of relevance to point out to the major developments and milestones in the sector s recent history in order to arrive at a better perspective of the sector s performance. In particular, the tourism industry in Jordan was exposed to a number of external influences including the reprercussions of the unfortunate September 11 th attacks in 2001 and the more recent global financial crisis that unfolded during The following graph depicts the value of tourism receipts since year 1995 up until Tourism Reciepts ,384 2,089 2,067 2,130 JD Million ,021 1,640 1, Tourism receipts have surged in the period after the September 2001 attacks, recording a growth of 12% and 35% during 2002 and 2003, respectively. The events of September 11 th caused a global disruption to the airline and tourism industries worldwide. Business travelers were affected by the events, while many expected that the larger influence will impact leisure travelers. However, in the case of Jordan, and contrary to many expectations, tourism receipts have surged in the period after the September 2001 attacks, recording a growth of 12% and 35% during 2002 and 2003, respectively. More importantly, tourism receipts in 2008 have more than quadrupled compared to their value back in year 2000, as they stood at JD2.097 billion compared to JD512 million in year 2000, thus increasing by 309%. 15 Arrivals by nationality statistics for 2002 published by the CBJ statistical bulletin show that the number of visitors from Arab countries

16 increased by over 46% during 2002 compared to year 2000, growing from million to million. On the other hand, numbers for non-arab visitors coming into Jordan have declined by over 18% during the same period, recording 631,000 travelers in 2002 compared to 775,500 back in It follows that there has been a significant increase in the numbers of Arab arrivals during 2002 in the wake of the 2001 September attacks on the United States, while the number of non-arab visitors has in fact declined. Looking at the larger picture, the average number of Arab visitors during the six years period extending from 1996 to 2001 was recorded at million/year, while this number almost doubled reaching 4.14 million/year during the six year period that followed year This notion coupled with the fact that Arab visitors form on average 5 times the number of non-arab visitors may well explain the reason behind the surge in tourist receipts in the period after year The tourism sector in Jordan remained largely immune to the damaging effects caused by the global financial crisis as reflected in the slight decline of no more than 1% in tourism receipts during 2009 The tourism sector in Jordan remained largely immune to the damaging effects caused by the global financial crisis that has left a worldwide effect on a wide range of economic sectors. Such immunity was better reflected in the slight decline of no more than 1% in tourism receipts during 2009; a decrease which is quite acceptable considering the distortions the crisis has inflicted during that period on the world s economies. Statistics obtained from the Ministry of Tourism and Antiquities categorizes tourism receipts according to country groups, namely, Jordanians residing abroad, Arab countries, and foreign countries Changes in tourism receipts associated with these country groups during last year are presented in the following graph: % Change in Tourism Reciepts According to Nationality Group 40% 30% 20% 10% 0% -10% -20% -30% 33.9% 29.8% 28.5% 22.7% 25.7% 14.8% 10.7% 4.0% 11.7% 4.2% 5.9% -0.5% % -16.6% -26.8% Jordanians Residing Abroad Arabs Foreigners 16

17 In 2009, receipts generated by foreigners have in fact declined by 6.4%, while growth in receipts attributed to Arab visitors declined by a mere 0.5% during the same year. On the other hand, it is noted that receipts generated by Jordanians residing abroad continued to increase during 2009, albeit at a slower pace compared to Tourism receipts in 2010 were on the upside once again, as they have witnessed a notable increase of 15.3% compared to the year before. The insignificant decline witnessed during 2009 was short lived as tourism receipts in 2010 were on the upside once again, as they have witnessed a notable increase of 15.3% compared to the year before. As such, foreigners contribution in terms of tourism reciepts recorded the highest increase standing at 25.7% during 2010, followed by Arabs with an increase of 14.8%. Meanwhile, receipts from Jordanians living abroad witnessed the lowest increase recording a growth of only 5.9%. However, a more dramatic decline has taken place during last year; as receipts generated by Jordanians living abroad slipped by over 26%, while Arab receipts dropped by another 16%. Tourist receipts by foreigners, on the other hand, have witnessed a slower growth rather than a decline, as they were up by 11.7% compared to a growth of 25.7% in Tourism Receipts By Country Groups JD Million Jordanians Residing Abroad Arab Gulf Countries Arabs Foreigners Receipts generated by foreigners have increased by 34% during the period extended from , while receipts from Jordanians residing abroad improved by almost 29%, followed by Arabs and Arab Gulf Countries, each recording a growth of 22% and 24%, during the same period, respectively. Arab countries (including the Gulf States) contribute the most to total tourism receipts; however, such contribution has dropped from a high 17

18 of 48.5% in 2006 to 42.7% as per the end of On the other hand, tourism receipts by Jordanians living abroad maintained a 27% share of total receipts, while foreigners share of total tourism receipts jumped from 24.3% in 2006 to 30% by the end of 2010, as their expenditures surged by over JD371 million during the period from 2006 and 2010, thus standing at JD726.6 million. Tourism Statistics 2011 The number of arrivals witnessed a growth of almost 34.1%, standing at 7.1 million in 2009 compared to million back in Growth in arrivals maintained an average of 6.9 million during the four year period extending from 2006 and It has also been noticed that overnight visitors constitute on average 53% of total arrivals, while same day visitors form another 47% during the said period. The drop in tourism receipts during 2011 was manily attributed to the decline in the receipts of both Arab gulf countries and Jordanians residing abroad categories. During 2011 and amid the spread of the Arab Spring and the rising of political tensions in a number of Arab countries, the drop in tourism receipts was mainly attributed to the decline in the receipts of both Arab gulf countries and Jordanians residing abroad categories. The former reciepts dropped by 41.4%, while the latter dropped by 26.8%. Meanwhile, receipts associated with other Arab countries were up by 2.6% and a larger increase was recorded by foreigners receipts that were on the rise adding 11.7%. Overnight Visitors vs. Same Day Visitors Following an increase of 15.5% in total number of arrivals in 2010, last year witnesses a decline of almost 17% as the number of arrivals stood at 6.8 million compared to 8.2 million recorded by the end of Total Number of Tourist Arrivals Total Number of Arrivals Tourists (Overnight visiors) Same Day Visitors Millions

19 Although the number of overnight visitors has dropped by 13% during 2011, a larger decline of 21% was recorded in terms of the number of same day visitors. Same day visitors dropped to 41% in terms of total number of arrivals compared to 44% back in 2010 Despite the decline in arrivals in 2011, overnight visitors contributed to 59% of total number of arrivals compared to 56% in 2010, while same day visitors dropped to 41% in terms of total number of arrivals compared to 44% back in The former type of visitors are more likely to have higher spending during their relatively longer visits compared to the same day visitors, especially in terms of accommodation and thus contribute to a higher occupancy rate and higher tourism receipts. Arrivals Numbers & Profile Arrivals during the years 2009, 2010 and 2011 are distributed according to six groups as presented in the following table: Nationality Change in 2011 Africa 15,449 15,042 16,069 18,580 2,511 America 237, , , ,141 (36,106) Asia 228, , , ,814 1,925 Europe 994, ,191 1,109, ,027 (204,499) Arabs 4,792,734 4,834,879 5,395,670 4,405,847 (989,823) Jordanians Residing Abroad 825, ,192 1,185, ,276 (192,460) Total 7,102,512 7,101,574 8,264,456 6,828,685 (1,435,771) Visitors from Arab countries constitute the largest share of total arrivals to the Kingdom, as they represented 64.5% of total visitors during Arab visitors constitute - by far - the largest share of total arrivals to the Kingdom, as they represented 64.5% of total visitors during 2011, followed by Jordanians living abroad (14.5%) and Europeans (13.3%), while visitors from all other countries constitute the remaining (7.7%). Arabs 65.4% Arrivals by Nationality Relative Importance Jordanians Residing Abroad 14.4% Arrivals by Nationality Relative Importance Arabs 64.5% Jordanians Residing Abroad 14.5% 19 Europe 13.5% Africa, America and Asia 6.7% Europe 13.3% Africa, America and Asia 7.7%

20 The number of arrivals dropped by 1.43 million during 2011, 70% of which was attributed to the drop in arrivals from Arab nationalities. It is noted that visitors from all nationalities have increased in number during However, during 2011 the number of arrivals dropped by 1.43 million, 70% of which, was attributed to the drop in arrivals from Arab nationalities. It is worth noting that the percentage decline associated with the different nationalities was contained between 14% and 18%. Number of Arrivals by Nationality Millions % -14.3% 0.7% -18.4% -18.3% Africa America Asia Europe Arabs Jordanians Residing Relative Change 10/11 Abroad -16.2% 20% 15% 10% 5% 0% -5% -10% -15% -20% -25% As for Jordanians residing abroad, arrivals of that category have witnessed the largest growth of 36.6% during The notable influx of Jordanians living broad into the Kingdom during 2010 totaled 1.18 million represented an increase of 317 thousand over Such an increase is more drastic considering that an increase of only 43 thousand was recorded during 2009 relative to The most plausible justification to such an increase in 2010 could very much be attributed to the repercussions of the global financial crisis and the fact that many of the Jordanian expatriates have returned to Jordan after their contracts have been terminated, especially in the Arab gulf countries. Having said that, the number of Jordanian expatriates arriving to Jordan during 2011 stood at 993 thousand compared to million back in Although representing a drop of 16% over 2010, figures of 2011 are more in line with their average during 2008 and

21 Visitors to Main Tourist Sites Jordan has a rich archaeological heritage and a treasure of antiquities with which is considered to be one of the most important attractions in the world. Having such remarkable historical and religious sites, the kingdom is considered to be a hot spot for visitors from around the world. Along with the kingdom s desirable climate and cultural resources, Jordan is a destination with many iconic tourist attractions, such as Petra, Wadi Rum, Jarash, Ajlun and Madaba, just to name a few. The Ministry of Tourism and Antiquities makes reference to tourist numbers arriving at the main tourist attractions as presented in the following table: Number of Visitors to Main Tourist Sites Location (Sites) % Change Foreign Jordanian Total Foreign Jordanian Total Petra 876,218 99, , , , , % Jarash 354,508 58, , ,700 62, , % Um Qais 82,290 91, ,710 46, , , % Mount Nebo 393,427 1, , ,512 1, , % Ajlun 122,523 69, ,266 64,143 91, , % Madaba (Map) 397,317 1, , , , % Wadi Rum 265,614 19, , ,184 9, , % Karak 171,671 14, ,270 82,600 14,950 97, % Maghtas 149,930 10, ,673 88,016 9,514 97, % Dead Sea 9,801 7,072 16,873 7,554 8,057 15, % Qusayer Amra 88,246 1,966 90,212 38,063 2,894 40, % Madaba Visit Center 227, , , , % Pella 8,988 21,908 30,896 17,491 15,623 33, % Um ALjmal 1, ,765 1, , % Shobak 31,489 3,729 35,218 17,681 3,379 21, % Afra 2,368 26,131 28,499 4,431 32,122 36, % Harranah Castel 83,343 1,763 85,106 37,744 2,932 40, % Folklore Museum 115,600 46, ,450 68,250 51, , % Jordan's Museum 233,600 26, , ,400 43, , % Aqaba Museum 9,978 4,139 14,117 6,344 3,988 10, % Madaba Museum 21,900 1,600 23,500 11,350 1,950 13, % Salt Museum 956 1,468 2, ,156 1, % Umalrsas 14, ,834 11,033 1,132 12, % Mukawir 16,892 1,746 18,638 13, , % Alhlabat Castel 3, ,041 5, , % Mar Elyas , , % 21 Total 3,689, ,354 4,213,810 2,005, ,345 2,653, %

22 During 2011 the number of visitors to main tourist sites dropped by 37% after recording a remakable increase of over 30% during 2010 The number of visitors to main tourist sites in Jordan has dropped by 37% during 2011, falling from 4.2 million in year 2010 to 2.6 million by the end of It is worth noting that total number of visitors recorded a remarkable increase during 2010, growing by a little over 30% compared to The most visited attractions/sites during 2011, namely, Petra, Jarash, Um Qais, Mount Nebo, Madaba, Jordan s Museum and Ajlun together contribute to approximately 70% of the total number of visitors to tourist sites in Petra Petra was elected as the new 7th wonder of the world on July 7th 2007, which was considered as an important milestone that helped open tourists eyes to the ancient city. In 2011, and out of 26 main tourist attractions in the Kingdom, Petra s share of total visitors was recorded at 24%. In 2011, and out of 26 main tourist attractions in the Kingdom, Petra s share of total visitors was recorded at 24%. Although the city is still the number one destination for tourists, growth in the number of recorded visitors that have flocked the city was moderated during 2010 as it witnessed an increase of 27% compared to an increase of 40% during 2009, while a drop of 35% in the number of tourists arriving to Petra was recorded during Nonetheless, the tourism exposure surrounding Petra since 2007 has contributed to the popularity of other fascinating and religious sites in the Kingdom such as Mount Nebo and Madaba, both located in the city of Madaba. Jordan's Museum 6.2% Madaba (Map) 9.5% Number of Tourists to Main Tourist Attractions Relative Importance Other 33.4% Madaba (Map) 8.2% Jordan's Museum 6.7% Number of Tourists to Main Tourist Attractions Relative Importance Other 30.9% Ajlun 4.6% Mount Nebo 9.4% Um Qais 4.1% Jarash 9.8% Petra 23.1% Ajlun 5.9% Mount Nebo 7.8% Um Qais 7.6% Jarash 9.1% Petra 23.7% 22

23 The relatively higher share of Mount Nebo and Madaba in terms of visitors, with each contributing to approximately 8% to total visitors may well be related to their religious significance especially amongst the Christian community which represents the majority of visitors from America and Europe visiting these sites. On the other hand, Jarash, one of the major and most beautiful cities of the Roman Empire, contribute to a 9% share of Jordan s visitors during The number of foreign visitors arriving at tourist sites dropped by 46% during 2011, while Jordanian visitors recorded a growth of 23% during the same period. The vast majority of tourists arriving at these sites were foreign visitors. In fact, their share of total visitors has even increased more during the period from 2007 and 2010, rising from a share of 81% to a high of 89% by the end of However, figures for last year reveal a different trend. Particularly, the number of foreign visitors arriving at tourist sites dropped by 46% during 2011, while Jordanian visitors recorded a growth of 23% during the same period. Accordingly, Jordanian visitors to local tourist sites have come to represent 24% out of the total number of visitors, while foreigners share dropped to 76% as depicted in the following charts comparing figures of 2011 compared to those recorded at the end of 2007 and Visitors to Main Tourist Sites Relative Importance 2007 Jordanians 19% Visitors to Main Tourist Sites Relative Importance 2010 Jordanians 11% Visitors to Main Tourist Sites Relative Importance 2011 Jordanians 24% Foreigners 81% Foreigners 89% Foreigners 76% Jordanian visitors to tourist sites surged by over 122 thousand during 2011 compared to an increase of only 52 thousand recorded during 2010 Until the end of 2010, Jordanian inbound tourism activities seemed to be very much limited as represented by an increase of only 52 thousand visitors to the main touristic sites during 2010 compared to figures of 2009, thus exposing further the weakness of inbound tourism and its appeal to the different segments of the Jordanian community. However, figures for 2011 reveal an increase of more than 122 thousand Jordanian visitors to tourist sites compared to Again, such an increase is most likely attributed to the social unrest and the uprisings that took place in neighboring Arab countries and the instability that shock the region during 2011, especially in Egypt and later in Syria. 23

24 Foreign visitors to main tourist sites witnessed an increase of approximately one million during Nonetheless, the remarkable increase in terms of foreign visitors during 2010 that witnessed the increase of foreign visitors by approximately one million in additional visitors may very well be attributed to the Ministry of Tourism & Antiquities campaigns targeting European travelers. Occupancy Rate The occupancy rate for Jordan that takes into account only classified hotels has dropped to 39% by the end of 2011, after recording a high of 46% in This is not surprising knowing that total number of arrivals dropped by 1.43 million during last year No. of Rooms 15,186 14,720 15,483 15,854 17,114 17,263 No. of Beds 28,640 27,956 29,444 29,880 31,990 32,228 No. of Rooms Occupied 2,403,977 2,644,674 3,027,431 2,521,087 2,861,377 2,440,575 No. of Nights Occupied 3,795,540 4,152,766 4,798,314 3,942,551 4,524,520 3,937, % 90% 80% 70% 60% 50% 40% 30% 20% 10% 0% Occupancy Rate in Jordan (Classified Hotels) 54% 49% 43% 44% 46% 39% Typical with the tourism industry, tourism in Jordan is more of a seasonal industry as depicted in the following graph showing occupancy rate in Jordan on monthly basis: Occupancy Rate - Monthly Basis 80% 70% 60% % 40% 30% 20% January February March April May June July August September October November December 24

25 The occupancy rate in Jordan is usually the highest during April, August and October. As noted from the above graph, occupancy rates build up during the first four months of the year reaching their peak in April, which traditionally has the highest occupancy rate. However, statistics for the last two years indicate that occupancy rates during the month of August have dropped to a rate of around 40% compared to an average of 60% recorded during 2007 and On the other hand, the lowest occupancy rates are largely those recorded during January, February and December. Number of Nights Spent at Major Cities/Sites Another informative indicator is related to the number of nights spent according to the city destination within Jordan. Such data is shown in the following table: City % Change Amman 3,222,409 2,859, % Aqaba 934, , % Petra 504, , % Madaba 36,751 29, % Dead Sea 490, , % Irbed 17,013 20, % Jerash 7,870 6, % The capital city of Amman has the highest number of nights spent. This is largely attributed to the fact the kingdom s major airport is located in Amman, which is host to a large number of the well-known hotel chains, while most of other governorates lack upper scale services and accommodation. Amman witnessed a drop of 11.3% in terms of the number of nights spent in 2011 relative to However, Amman witnessed a drop of 11.3% in terms of the number of nights spent in 2011 relative to However, the most notable decline was recorded in Petra. The number of nights spent in Petra dropped by 41% over the past year, while on the other hand, a 1% increase in nights spent was recorded in the city of Aqaba. Nonetheless, Irbid was the city which has witnessed the largest increase over the past year as the number of nights spent went up by almost 21%. 25

26 Employment in the Sector The number of employees within the tourism sector was recorded at approximately 42,000 employees at the end of 2011, of which 33,841 are Jordanian employees and 8,038 are non-jordanians. The Tourism sector is a host to approximately 42,000 employees as per the end of 2011, of which a total of 33,841 are Jordanian employees and 8,038 are non-jordanians. Worth mentioning is that non- Jordanian employees constitute around 19.2% of total employment in the sector, mainly concentrated in the tourist restaurant segment, whereby they contribute to almost 34.8% of total employment in that segment in particular. During year 2011, Jordanian employees formed 87.4% of the hotels employment -representing 13,259 employees out of 15,174 working in this sector- due to training programs provided by hotel institutions, in addition to privileges provided for the employees. Employment in The Tourism Sector Jordanian Non-Jordanian Total % Share Hotels 13,259 1,915 15, % Tourism Restaurants 10,985 5,870 16, % Travel Agencies 4, , % Rent a Car Offices 1, , % Tourist Shops % Tourist Guides 1, , % Horses Guides % Tourist Transpor. Comp % Diving Centers % Water Sports % Total 33,841 8,038 41,879 Employment According to Activity Type Tourism Sector Tourist Guides 3% Hotels 36% Other Activities 6% Car Rental Offices 4% Tourist Restaurant 11% Travel Agencies 40% Employment in the tourism sector is rather concentrated within two segments, namely, tourist restaurants and hotels, as both segments are responsible for almost 76.5% of the sector s total employment 26

27 by the end of 2011 as they collectively employ 16,855 and 15,174 employees, representing 40.2% and 36.2% of total employment in the sector, respectively. The following graph depicts growth rates in terms of employment figures in the tourism sector in accordance with each activity (segment type). Number of Employees in Tourism Sector Acording to Activity Type 18, % 16,000 14, % 2011 Relative Change 02/11 200% 12,000 10,000 8,000 6,000 4,000 47% 82% 44% 135% 100% 149% 111% 150% 100% 50% 2, % The latest figures of 2011 reflect a zero growth in the overall number of workers within the sector, The most notable increase in terms of employment numbers has taken place within the tourist restaurants segment as it witnessed a growth of 197% during the last nine years, whereby total employment in the segment has grown from 5,674 employees by the end of 2002 to 16,855 by the end of However, the latest figures of 2011 reflect a zero growth in the overall number of workers within the sector, as total employment stood at 41,879 employees by the end of last year compared to 41,900 back in In particular, employment in the largest segments, namely tourist restaurants dropped by 3% during 2011 while a growth of only 1% was recorded in the hotels segment. 27

28 Accommodation Statistics The following table shows number of hotels, rooms, and beds according to the main cities in Jordan by the end of year City Number of Hotels / Apartments & Suites Number of Rooms Number of Beds Amman ,212 28,555 Petra 39 2,139 4,063 Aqaba 55 3,952 8,304 Dead Sea 5 1,415 2,298 Maín Irbid Ajloun Karak Jarash Zarqa Azraq Madaba Rwaished Al Fuhais Maán Al Tafileh Al shobak Wadi Rum ,470 Total ,401 46,860 Amman hosts 66% of total number of hotels in Jordan. The capital city of Amman has the lion s share as it hosts 66% of total number of hotels in Jordan, represented by a total number of 324 hotels as it is the main hub for tourists. Moreover, despite the modest number of hotels in Dead Sea and Wadi Rum, both sites are reasonably equipped to accommodate the growing number of visitors with a room capacity of 2,298 and 1,470 rooms, respectively. Dead Sea 6% Cities' Share of Total Number of Rooms Wadi Rum 3% Other 4% Cities' Share of Total Number of Hotels Petra 8% Aqaba 11% Irbid 3% Aqaba 16% Wadi Rum 2% Petra 9% Amman 62% Amman 66% Other 10% 28

29 6. Sector Performance (1st Quarter ) This section of the report shows the latest developments related to the tourism sector during the first quarter of 2012 in relation to the number of visitors (overnight visitors and same day visitors), arrivals by nationality, number of visitors to main tourist sites, and tourism receipts. Indicator Q1/ 2011 Q1/ 2012 % Change Total Number of Visitors 1,613,829 1,428, % Overnight Tourists 908, , % Same Day Visitors 705, ,300-27% Tourism Receipts (Million JD) % A decline of 11.5% was recorded in terms of visitors during the first quarter of 2012 compared to the same period of year Total number of visitors witnessed a decline of almost 11.5% during the first quarter of 2012 compared to the same period of year Overnight visitors represented 64%, while same day visitors represented the remaining 36%. During the first quarter of year 2012, overnight tourists were recorded at thousand, an increase of over five thousand visitors compared to the same period of 2011, whereas same day visitors have witnessed a decline of 27% during the mentioned period. The distribution of total number of arrivals (overnight visitors, same day visitors) is shown in the graph below: Total Number of Tourist Arrivals Total Visitors Tourist Overnight Same Day Visitors 1.43 Millions Q Q Visitors during the first quarter of 2012 and their comparative 2011 figures are distributed according to the different nationalities as shown in the following table:

30 Nationality Q1/ 2011 Q1/ 2012 % Change Africa 4,118 5, % America 58,728 43, % Asia 86,411 67, % Europe 210, , % Arabs 732, , % Total Gulf 225, , % Jordanians Residing Abroad 295, , % Total 1,613,829 1,428, % Arab visitors (including Gulf countries) constituted almost 59% of total visitors during the first quarter of 2012, followed by Jordanians living abroad (21.3%) and Europeans (11.7%), while visitors from all other countries constitute the remaining 8%. Arab visitors(excluding gulf countries) dropped by 16.7% during the first quarter of 2012, recording almost thousand less arrivals compared to the same period of By looking at the previous table, the number of Arab visitors(excluding gulf countries) dropped by 16.7% during the first quarter of 2012, recording almost thousand less arrivals compared to the same period of On the other hand, arrivals from Arab Gulf countries witnessed an increase of 6,000 during the same comparative period. Arrivals from America constituted the largest percentage decline during the first quarter of 2012, as their numbers were down by a little more than 26%. Number of Arrivals by Nationality % 2.90% 2.67% 30% 20% 10% Millions % % % % 0% -10% -20% 0.0 Africa America Asia Europe Arabs Jordanians Residing Q Q % Change Q1 11/12 Abroad Total Gulf -30% As evident in the above graph, Arab arrivals still constitute, by far, the largest share in terms of total arrivals during the 1st quarter of Percentage share of arrivals according to nationality are shown in the following graph: 30

31 Arrivals by Nationality Relative Importance - Q Total Gulf 16.2% Africa 0.4% America 3.0% Asia 4.7% Europe 11.7% Jordanians Residing Abroad 21.3% Arabs 42.7% The Ministry of Tourism and Antiquities makes reference to tourist numbers arriving at the main tourist attractions as presented in the following table: Number of Visitors to Main Tourist Sites Attraction (Site) Q Q % Change Petra 180, , % Jarash 69,950 46, % Um Qais 75,346 30, % Mount Nebo 62,957 43, % Ajlun 24,000 28, % Madaba (Map) 69,775 46, % Wadi Rum 44,814 31, % Karak 30,600 18, % Maghtas 28,185 19, % Dead Sea 3,716 3, % Madaba Visit Center 34,883 21, % Pella 10,453 9, % Um ALjmal % Shobak 4,966 2, % Afra 8,301 7, % Desert Castle 16,002 6, % Folklore Museum 31,250 30, % Jordan's Museum 54,600 39, % Aqaba Museum 3,308 3, % Madaba Museum 3,600 3, % Salt Museum % Umalrsas 3,533 2, % Mukawir 4,907 3, % Alhlabat Castel 1,172 1, % Mar Elyas 2,860 4, % 31

32 The number of visitors to main tourist sites in Jordan has dropped significantly during the first quarter of year 2012 compared to the same period of year 2011 as the number of tourists have decreased by 29%. In particular, it has been noticed that during the first quarter of year 2012, 7 out of the main 26 sites dominated almost 70% of the total number of visitors. The 7 sites are Petra, Jarash, Madaba (Map), Mount Nebo, Jordan s Museum, Wadi Rum and Um Qais. As such, during the first quarter of 2012 Petra was in the lead with a 26% share of visitors whereas Mount Nebo and Madaba (Map) both located in the city of Madaba constituted a share of 16% of visitors. The following charts show the relative importance of the number of tourists to main tourist attractions during the first quarter of year Number of Visitors to Main Tourist Attractions relative Importance Q Other 12% Maghtas 4% Petra 26% Madaba Visit Center 4% Ajlun 5% Folklore Museum 6% Um Qais 6% Wadi Rum 6% Jordan's Museum 7% Mount Nebo 8% Jarash 8% Madaba (Map) 8% 32

33 7. Financial Analysis September 2012 In an attempt to provide an overview of the financial performance of the tourism industry, the following section of the report studies the performance of five listed companies that are representative of the hotel sector within the larger Jordanian tourism industry. Although our sample of five companies may not provide a broad and full representation of the tourism industry, it nevertheless, reflects the performance of an integral part of the industry and sheds light on its financial performance and its overall profitability. Also, the fact that the five companies representing our sample are listed on the ASE facilitates access to their financials, and hence, grants a necessary tool for conducting financial analysis on a sample of companies that share the same business nature and run similar operations. Our sample includes five listed companies representing the hotel industry on the ASE, which are the following: Zara Investment Holdings (ZARA), Mediterranean Tourism Investment (MDTR), Jordan Hotels and Tourism (JOHT), Arab International Hotels (AIHO) and Al- Dawliyah for Hotels & Malls (MALL). As a first step, we shed light on the income statements of the five listed companies. Therefore, sales revenues, cost of revenue, gross profits and gross profit margin are analyzed and compared. Income Statement & Balance Sheet Code Sales Revenue Cost of Sales Gross Profit H H Growth H H Growth H H Growth ZARA 39,921,573 43,275, % 27,786,949 29,693, % 12,134,624 13,582, % MDTR 7,848,768 8,555, % 5,191,966 5,549, % 2,656,802 3,006, % JOHT 9,285,361 11,920, % 6,150,814 7,598, % 3,134,547 4,322, % AIHO 5,050,889 6,437, % 3,515,762 4,028, % 1,535,127 2,409, % MALL 7,339,657 8,597, % 4,554,300 5,210, % 2,785,357 3,387, % Total 69,446,248 78,787, % 47,199,791 52,079, % 22,246,457 26,707, % 33 Total sales revenues for the sample grew by 13.4% during the first half of 2012, thus reaching JD78.79 million compared to JD69.4 million recorded during the same period of 2011, while on the other hand, cost of revenue grew by 10.3% during the same period. Accordingly,

34 gross profit for the sample witnessed a growth of 20% in the first half of 2012, standing at JD26.7 million compared to JD22.2 million during the same period of The contribution by each company to the overall sector s gross profit varies with ZARA being at the top of the list capturing almost (50.8%) followed by JOHT (16.21%), while at the bottom of the list comes MDTR (11.2%) and AIHO (9%). Sales Revenue vs. Cost of Revenue (Gross Profit ) JD million Sales Revenue Cost of Revenue ZARA MDTR JOHT AIHO MALL The sample s overall gross profit margin was recorded at 33.9% by the end of June 2012 compared to a gross profit margin of 32% during the same period of In particular, MALL recorded the highest gross profit margin among the sample companies as it stood at 39.4%, while the lowest margin was associated with ZARA at 31.4%. 40% 35% 31.4% 30.4% Gross Profit Margin 36.3% 37.4% 35.1% 33.8% 33.8% 30.4% 39.4% 37.9% 30% 25% 20% 15% 10% 5% 0% ZARA MDTR JOHT AIHO MALL Net operating profits for our sample surged to JD8.97 million by the end of the first half of 2012 compared to only JD3.16 million recorded during the same period of last year. Meanwhile, Operating expenses have recorded a decline of almost 5% as they were recorded at JD17.7 million compared to JD18.6 million during the first half of last year. 34