- 22 Apr 2020
As the greatest global health crisis of our time, COVID-19 has hit the whole world hard, influencing markets, behaviours, and expectations.
The pandemic has particularly taken its toll on tourism, with the industry facing immediate and devastating repercussions worldwide.
In Jordan, tourism is a key economic driver, accounting for almost 14% of national income. However, according to the World Bank, COVID-19 will have an adverse effect on the sector in two ways. The first is the pull factor, corresponding to prevailing travel bans and lockdowns, and the second is the push factor, pertaining to the growing global economic slowdown.
Accordingly, what are the most fundamental COVID-19 challenges, and how can the Jordanian tourism sector overcome them?
Expectations vs. Reality
During the past few years, demand for tourism in Jordan skyrocketed. Data from the Ministry of Tourism and Antiquities shows that inbound tourists to Jordan reached more than 5.3 million in 2019 in comparison to 4.9 million in 2018, an increase of 8.2%. Additionally, in February 2020, the city of petra received 81,406 visitors in comparison to 74,413 in February 2019, an increase of 9.4%. Furthermore, Jordan Pass sales increased by 2.4% in the first two months of 2020 in comparison to the first two months of 2019. This is primarily attributed to:
- The introduction of new direct routes via low-cost airlines, opening up new opportunities from untapped markets and attracting a new wave of price-sensitive travellers
- An effective marketing strategy coupled with blogger testimonials highlighting Jordan as a ‘trending up-and-coming destination’ alive with culture, history, nature, and a unique overall experience
This brought about rising sentiments, encouraging many to expand, invest, and hire new workers, looking forward to a promising spring season.
Unfortunately, the market did not work in their favor, and the resulting mismatch between expected and actual demand caused financial and cash flow difficulties. All players in the tourism industry have suffered, with some companies possibly going bankrupt if the same conditions persist.
Not Merely a Health Crisis
Clearly, then, this is not merely a health crisis but also one of severe economic implications. Such heavy losses have drastic repercussions not only on the enterprise, but also on the government, whose tax revenues and fees have seriously plummeted, and on workers, whose income is falling and jobs are at stake.
Overall, in January 2020, tourism yielded around $500 million in revenues according to the Central Bank of Jordan. In light of current lockdowns and closures, this translates to an approximate loss of $500 million, on average, for every passing month. It is certain now that the sector has lost the spring and most of the summer seasons, which causes a loss of over $3 billion in foreign currency, forcing the government to seek politically-unpopular concessional loans from international organisations like the IMF.
A Big Employer On the Edge
Given its labour-intensive nature, the tourism industry will struggle with layoffs and wage cuts. In Jordan, the sector employs more than 50,000 workers directly, and many more indirectly, most of whom will be affected.
Although the recently issued Defence Order No. 6 protects employees from losing their jobs in the meantime, the decrees are not sustainable for the private sector, resulting in inevitable layoffs and rising unemployment in the long term.
As for wage cuts, many workers are prone to receiving a minimum of 50% of their salaries (given that it doesn’t fall short of the minimum wage) based on their ability to work remotely, the financial capacity of the employer, and the mutual agreement between the two.
Many workers in the tourism industry such as guides are self-employed day labourers, who have suffered the greatest losses in light of current suspensions and no other source of income.
Ultimately, the resulting cuts and job losses will have dire consequences on the livelihoods of affected individuals and families.
Concerns Beyond Travel Restrictions
Even after travel bans are lifted, demand will not immediately and automatically adjust. This is due to two reasons:
1. We are at the onset of a global economic crisis leading to a fall in income levels and creating new spending habits.
In general, travel has a high income elasticity and is thereby considered a ‘luxury’ or ‘superior’ good; therefore, a fall in income will lead to a more than proportionate fall in demand.
Travellers will thus forego or postpone travel arrangements until the economy and income levels stabilise. In the meantime, they will likely save and consume the mere basic necessities.
Furthermore, a significant proportion of inbound tourists were arriving via the newly-introduced budget airlines from Europe. However, it is currently one of the highest infected areas, and the virus is wreaking havoc on European economies as a result. This means that the number of inbound tourists from Europe – which constituted 16.4% of total tourists in 2019 – will likely drop dramatically for a long time to come.
2. Health and safety concerns will likely involve a time lag until they readjust to pre-corona patterns. Specifically, people have become overly cautious, preferring to stay in their home country.
In view of its interactive nature and key human aspect, tourism will likely struggle with the novel notion of social distancing for a long time to come. In Jordan, this poses profound challenges to the rise of the sharing economy (e.g. Airbnb and Homestay), experiential travel, and cultural immersion, as travellers are reluctant to interact, stay, and eat with locals for fears of inadequate health and safety conditions. This behaviour will hence contribute to devastating losses in income of vulnerable communities working in tourism, and hinder the progress of related development efforts to support them.
A Window of Opportunity
Although at this point it may be difficult to see a light at the end of the tunnel, the pandemic does open a window of opportunity. Development actors, SMEs, and startups must take note of the following:
Digital Transformation:
First and foremost, current closures offer the ideal time for projects and efforts to focus on digital transformation. Nowadays, most players in the tourism scene outsource their customer relationship management (CRM) to external booking sites called Online Travel Agents (OTA), who ask for very high commissions in return. In fact, when tourists book through such sites, in many cases, the OTA gets a bigger share of the fee than the service provider itself.
There is thus no better time to rethink the way forward, supporting and enabling the tourism sector in democratising technology by reducing or eliminating dependency on such global conglomerates.
Another byproduct of digital transformation is access to e-consulting opportunities through a pool of global experts, trainers, and consultants, which development actors can offer as part of their technical assistance to travel small businesses.
Virtual Reality (VR):
Though not a new phenomenon per se, the concept of VR is recently gaining a lot of traction. Given its transportative nature, virtual tourism could offer a bridging solution for those with wanderlust. While it may at first glance be seen as a substitute to actual tourism, with growth that is countercyclical and reliant on existing travel bans, it may very well develop into a complementary addition, becoming the ultimate tool for travel agents to promote and market their destinations. Development actors and tourism enterprises should therefore look into VR as a crisis response solution with sustainable, long term benefits for enterprises and startups.
Domestic Tourism:
Upon lifting lockdowns, development agencies and project beneficiaries could utilise the rising nationalistic attitude as well as international travel bans to promote domestic tourism in Jordan. There are many existing platforms that promote this form of tourism, like the government-owned Urdonna Jannah and private-led alternatives like Viavii, Sawwah, and Aqabawi. With regards to marketing communications, this means a complete alteration in promotional language, tone, and style in favour of one that appeals to Jordanians.
Highlighting Destination Safety and Resilience:
Later on, when travel bans are lifted, actors could divide their attention to both local and international tourists. In doing so, they must highlight global media outlets’ praise for Jordan’s resilience in combating the outbreak, thereby presenting Jordan as one of the safest must-visit destinations post-corona.
Additionally, in most countries, COVID-19 is hitting big cities and urban centres the hardest. As such, tourists may be turned away from densely-populated places in favour of more remote areas (e.g. Wadi Rum), deemed safer and not as contaminated. Fortunately, local and international development actors have been working hard on developing this form of unconventional, off-the-beaten-track tourism in Jordan, which could very well work in favour of the industry.
Slow Tourism:
As employers become more open to the idea of working from home and hiring remotely, Jordan could then be promoted as a hub for digital nomads: people who are location-independent and use technology to perform their jobs. This increasingly-popular trend can be utilised to promote slow tourism characterised by longer stays and shorter distances. Such tourism also exemplifies an approach to reduce the negative impact on the environment and aids in the transition to circular economy, due primarily to a preference towards slow, eco-friendly means of transport like walking or cycling. In Jordan, this model is ideal due to the diverse experiences, landscapes, and attractions only short distances apart, in addition to newly-constructed walking and biking trails that traverse the entire length of the country.