Impact of COVID-19 on Jordan’s Tourism Hotel Industry (Part 1)
Hotel Jordania: You can bail out anytime you like…
Tourism has been His Majesty’s top and first priority since he came on the throne by releasing a promotional video to the world where he was the tour guide: The Royal Tour
Despite early successes and with Jordan managing to attract international hotel brands to set up shop, the past decade has been a very bumpy ride for tourism: starting with the Arab Spring in 2011 then with ISIS in 2015, the Ministry of Tourism along with the Jordan Tourism Board, under the leadership of H.E. Lina Annab (previous CEO to Zara Group), have managed to keep up promotional campaigns both abroad to attract foreign visitors as well as locally (for both Jordanians and foreign expats) with the launch of jannah.jo and the Jordan Trail. In November of 2019, Petra celebrated its 1 million visitor that year. All that abruptly ended with the arrival of COVID-19.
Looking at airport traffic data, it is but clear that the Corona virus 🦠 has had a tremendous impact on incoming passengers with numbers falling 70% in 2020.
How has this affected the hotel industry, specifically the publicly traded international brand names? Have they managed to recover? Do some hotels hold an advantage over others?
Let’s dig in:
(this is the first part of a three part newsletter where we shall set the stage and introduce the companies in the sector and in the third part compare the data and see which companies received preferential treatment during the COVID 19 pandemic)
ARAB INTERNATIONAL HOTELS (Ticker: AIHO)
Source: Marriott
(As of 01/07/2021)
AIHO owns and operates the Marriott Hotel in Amman that opened its doors in 1982 and with agreement to manage the brand name until 2041. AIHO also invests in various other tourism related projects most notable of which are: Marriott Dead Sea & Petra (37%) and Sheraton Amman (26%). The latter is publicly traded and will be discussed in the next newsletter.
Share price: 0.89
Market Capitalisation: 28.48 million JODs
Equity ratio: 67.6%
Revenue in 2021: 3.17 million JODs
Profit/Loss: -6.5 million
Revenue drop due to COVID: -70.7%
Revenue/Share price: 8.98
Major shareholders: Muasher Family (including related companies such as Ranco and Ahli Bank) 70%, Social Security Corporation 1%
Source: SDC
Other information: -15.7% less employees (some have gone to early retirement)
-30% drop in revenue generated from solar power
AIHO also receives special preferential interest rates on its loans from AHLI Bank as shown below (CBJ main base rate: 2.5%)
MEDITERRANEAN TOURISM INVESTMENT (Ticker: MDTR)
Source: Four Seasons
MDTR owns and operates the Four Season hotel in Amman which opened its doors in 2003 (current agreement valid until 2033)
Share price: 2
Market Capitalisation: 90 million JODs
Equity ratio: 79%
Revenue in 2021: 3.8 million JODs
Profit/Loss: -3.65
Revenue drop due to COVID: -74%
Revenue/Share price: 23
Major shareholders: Al Qadi family (including AJIB bank and sister companies) 58.7%
Other information: MDTR receives preferential rates for loans from its sister company AJIB bank
AL-SHARQ INVESTMENTS PROJECTS (Ticker: AIPC)
Source: Booking.com
AIPC owns and operates Mövenpick Amman since 2019 (previously Holiday Inn).
Share price: 1.76
Market Capitalisation: 28.16 million JODs
Equity ratio: 95.7%
Revenue in 2021: 2 million JODs
Profit/Loss: -1.34 million JODs
Revenue drop due to COVID: -64%
Revenue/Share price: 14.08
Major shareholders: Al Hourani Family 56.9%, Social Security 1.47%
In the next newsletter, we will be looking at the giant hotels including Zara group (including Intercontinental) & Tala bay and we will be finishing the newsletter with the remaining publicly traded hotels and comparing notes:
Which hotels have recovered the quickest and have the ability to outperform during the roaring 20s? Which hotels received preferential treatment during the pandemic by hosting forced quarantine arrivals? Which hotels received a preferential loan from the CBJ? Did any hotel receive preferential treatment for simply being owned by a bank?