Jordan - Tourism Project

FILE" COP Report No. 1069a-JO The Hashemite Kingdom of Jordan: Appraisal of a Tourism Project May 10, 1976 Tourism Projects Department FOR OFFICIAL USE ONLY Document of the World Bank This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  THE HASHEMITE KINGDOM OF JORDAN TOURISM PROJECT CURRENCY EQUIVALENTS Currency Unit = Jordan Dinars (JD) Fil 1 = JD 0.001 JD 0.33 US$1.00 JD 1.00 US$3.03 WEIGHTS AND MEASURES BQUIVALENTS 1 meter (m) 3.28 feet 1 square meter (m2) = 10.76 square feet 1 cubic meter (m3) = 35.29 cubic feet 1 kilogram (kg) = 2.205 pounds 1 metric ton (m ton) = 2,205 pounds 1 hectare (ha) = 2.47 acres 1 kilometer (km) = 0.62 miles I liter per second (1/sec) 22,800 US gallons per day 1 cubic meter per day (m3/d) 264 US gallons per day ACRONYMS AND ABBREVIATIONS ALIA - The Royal Jordanian Airline HRC - Hotels and Resthouses Corporation MMRA - Ministry of Municipalities and Rural Affairs MTA - Ministry of Tourism and Antiquities NPC - National Planning Council WSC - Water Supply Corporation ILO - International Labour Office UNDP - United Nations Development Programme UNESCO - United Nations Educational, Scientific and Cultural Organization FISCAL YEAR January 1 to December 31  FOR OFFICIAL USE ONLY THE HASHEMITE KINGDOM OF JORDAN APPRAISAL OF A TOURISM PROJECT Table of Contents Page No. SUMMARY ............ ........................ i-ii I. INTRODUCTION ............................... I II. THE TOURISM SECTOR ............... I III. THE PROJECT . . 3 A. Project Background and Objectives ..... 3 B. Project Description ............... 5 C. Cost Estimates ..................... 8 D. Execution and Operation .............. . 10 E. Financing Plan and Lending Arrangements .................. 13 F. Procurement and Disbursement ....... 13 IV. JUSTIFICATION .15 A. Market Demand .................... . 15 B. Development of Tourism Facilities ..... 19 C. Financial Aspects ..................... 20 D. Economic Justification . . 22 E. Social and Environmental Impact ....... 25 V. RECOMMENDATIONS ............................ 26 This report is based on the findings of a mission consisting of Messrs. Menezes, Bentjerodt, Calkins, Echeverria, Iizuka and Burrows (UNESCO Consultant). This document has a restricted distribution and may be used by recipients only in the performance of their official duties. Its contents may not otherwise be disclosed without World Bank authorization.  Table of Contents (Continued) Annex No, I. Project Description and Cost Estimates II. Historical and Archaeological Background III. The Tourism Sector IV. Financial Aspects V. Economic Justification Charts 1. Initial Implementation Schedule by Quarters 2. Schedule of Implementation, Expenditures and Disbursements Maps IBRD No. 11980R- Jordan: Project Location IBRD No. 1l98lR- Jerash:. Development Plan IBRD No. 11982R- Petra : Development Plan  THE HASHEMITE KINGDOM OF JORDAN APPRAISAL OF A TOURISM PROJECT SUMMARY i. This report appraises a project that would provide for the im- provement and expansion of visitor facilities and infrastructure in the historical sites of Petra and Jerash in Jordan, and for the preservation and protection of the archaeological assets of those sites. The visitor facilities would include upgrading and expansion of an existing 24-room hotel at Petra, improvements to the visitor centers in Petra and Jerash, and the construction of restaurants and related facilities. The infra- structure would consist of water supply and sewerage systems, electricity, lighting, telecommunications, solid waste disposal, access trails, land- scaping and watershed protection. Technical assistance from experts, along with tools and equipment, would be included in a program designed to preserve and protect the existing monuments from erosion and other hazards, and to provide for a modest amount of excavation work. ii. Situated in a region marked, since prehistoric times, by the ebb and flow of various peoples, armies, and civilizations, Jordan has been described as "history written in stone". The archaeological riches, com- bined with Jordan's scenic beauty and the hospitality of its people, have supported a rapid growth of the tourism sector. Prior to the 1967 war, the focus of tourism development was, understandably, on the Holy Land zone of the "West Bank". The immediate effect of the war was a decline in tourist arrivals in the Middle East. Jordan, however, faced a far more serious disruption resulting from the loss not only of her best known assets but also of 80% of her accommodation capacity. Since 1967, atten- tion has been shifted to the development of tourist attractions east of the Jordan River. While recovery has been somewhat delayed, the expansion of hotel facilities on the East Bank and the growth of demand since 1971 have combined to produce a dynamic increase in foreign visitor arrivals, with total arrivals to Jordan expected to be 750,000 in 1975, surpassing the 1966 peak by a substantial margin. In general, however, the develop- ment of accommodation capacity of international standard on the East Bank has tended to lag behind the growth of foreign visitor demand. As a result, hotel occupancy rates are relatively high and a number of hotels are now under construction or in the planning stage, iii. Since the 1967 war, foreign exchange receipts from tourism have grown from JD 4.6 million in 1968 to JD 32.2 million in 1975. This repre- sented over 18% of total 1975 exports of goods and services, ranking behind workers' remittances from abroad (30%) and ahead of phosphate ex- ports (10%).  iv. The most important of Jordants tourist assets on the East Bank are Petra and Jerash. Petra, an ancient Nabataean rock-hewn city located 250 km south of Amman, is undoubtedly one of the wonders of the ancient world. Its magic stems not only from the grandeur of its antiquities but also from the provocative mystery of its setting, deep in the heart of the surrounding mountain; it is approached through a long, narrow chasm, whose rock walls tower some two hundred feet overhead. Jerash, 50 km north of Amman, contains the ruins of an ancient town and is an impressive example of a well preserved Roman provincial city of the Eastern Empire. v. Both of these sites have been the subject of detailed planning studies, and both have been recommended by UNESCO as Jordants prime histor- ical and archaeological sites in a report prepared in 1974. These studies and report, together with further work done by the Ministry of Tourism and Antiquities and Bank Group missions, have served as a basis for appraisal. The plans include an integrated investment program designed to meet three major requirements of each site: (a) the need to preserve and protect the antiquities themselves, which are currently endangered both by the natural forces of erosion and by deterioration resulting from human activity; (b) the need to provide physical facilities and amenities for growing numbers of visitors without jeopardizing the archaeological value of the sites; and (c) the need to improve the presentation and interpretive services of each site in order to achieve higher levels of visitor satis- faction. vi. The project is estimated to cost about uS$12.1 million, including contingencies. The proposed credit of US$6.0 million would cover 92%/ of the foreign exchange component of the project; the Government would provide the balance of the funds required to finance the project, as well as any cost overruns. vii. Major civil works and equipment contracts would be awarded after international competitive bidding, in accordance with the Association's guidelines. Some contracts, however, would be too small to attract foreign bids, and it is proposed that they be awarded on the basis of locally advertised bids. The total value of such contracts is estimated not to exceed US$0.4 million equivalent. Because of the need for standardization, the telecommunications switching equipment, costing US$0.2 million would either be added to a current contract or negotiated separately with suppliers of such equipment. In addition, the Government would carry out, on force account, certain works, estimated to total about US$0.9 million equivalent. In evaluating international bids for equipment contracts, domestic manufacturers of equipment and furniture would be allowed a pref- erential margin of 15% of the c.i.f. price of competing imports or the prevailing level of customs duties, whichever is lower. viii. Responsibility for implementing the project would rest with the Ministry of Tourism and Antiquities, with the exception of certain utility components which would be the responsibility of specialized Government  - iii - agencies. At the operational stage, the hotel and restaurant facilities would be managed by an experienced hotel operating company on the basis of a management contract with the Ministry of Tourism and Antiquities. The infrastructure components would be turned over to the municipalities or to specialized Government agencies for operation and maintenance. ix. The economic rate of return on the project is estimated at 20.1%; it is not very sensitive to reductions in the projected number of visitors to Jordan and the project sites that could result from increased tensions in the region. When implemented, the project would employ about 560 persons directly in the hotel and other tourism facilities. Employment generated in construction, transport, handicrafts and other services would account for an estimated 600 additional jobs. Net foreign exchange earnings are estimated at US$1.5 million in 1979 and about US$4.8 million from 1988 on. x. The project is suitable for an IDA credit to the Government of US$6.0 million equivalent.   THE HASHEMITE KINGDOM OF JORDAN APPRAISAL OF A TOURISM PROJECT I. INTRODUCTION 1.01 In June 1975, an IDA mission visited The Hashemite Kingdom of Jordan to discuss with the Government the development of the tourism sector. At the Government's request, the mission subsequently assisted in drafting terms of reference for a master plan for the sector. Finan- cing arrangements for that plan have not yet been completed. In advance of the availability of a master plan, however, several studies have iden- tified two specific areas which are obviously of the highest priority in terms of both their current importance and their future development poten- tial: the historical sites at Petra and Jerash. 1.02 Both these sites have been the subject of detailed planning studies carried out by the U.S. National Park Service in 1968, and both have been recommended by UNESCO as Jordan's prime historical and archae- ological sites in a report prepared in 1974. Project preparation missions visited Jordan in September and October 1975 and, with the assistance of a UNESCO consultant, formulated a project proposal based on the earlier planning studies, updated and revised where necessary by the Ministry of Tourism and Antiquities. The proposed project would provide for the improvement and expansion of visitor facilities in each area and for the preservation and protection of the historical assets themselves. 1.03 Because of the earlier planning effort, project preparation work progressed rather quickly. A mission, consisting of Messrs. Menezes, Bentjerodt, Calkins, Echeverria, Iizuka, and Burrows (UNESCO consultant), collected much of the information needed for appraisal in December 1975. A visit to Jordan by Messrs. Calkins and Echeverria in February 1976 completed the needed field work. 1.04 This would be the first IDA credit for tourism in Jordan. II. THE TOURISM SECTOR 2.01 Jordan is situated in a region marked, since prehistoric times, by the ebb and flow of various peoples, armies and civilizations. The tides of history have left an impressive deposit of archaeological riches, from the relics of ancient civilizations to the cultural heritage of several of today's  - 2 - major religions. Jordan's scenic beauty and the well-known hospitality of its people, heighten the country's potential for the continued growth of foreign tourism. Although prior to the 1967 war the Holy Land zone of the "West Bank" was the focal point of tourism development, attention has since shifted to the development of attractions east of the Jordan River. With the capital city of Amman (Biblical Rabbath-Ammon and later Philadelphia) as the main staging area, tourist excursions lead south to Petra and the Gulf of Aqaba, east to the ancient castles of the desert, north to Jerash and Mount Nebo, and west to the Dead Sea, with many tour- ists continuing on across the Jordan River into the Holy Land. 2.02 The immediate effect of the 1967 war was a 26% decline (Annex III) in tourist arrivals in the Middle East; by 1974, however, most countries of the region, with the exception of Jordan, had recovered their 1966 tourist arrival levels. Jordan faced a far more serious dis- ruption resulting from the loss not only of her best known attractions but also of about 80% of her accommodation capacity. While recovery has been somewhat delayed, the expansion of hotel facilities on the East Bank and the growth of demand since 1971 have combined to produce a dynamic increase in foreign visitor arrivals (an annual increase of 29.3% between 1971 and 1974), with total visitors to Jordan in 1975 expected to surpass the 1966 peak by a substantial margin. The number of visitor arrivals for 1975 is estimated to be 750,000 compared to 617,000 visiting Jordan in 1966, including the "West Bank". (Past trends and projected future arrival numbers are described in paras. 4.01-4.09.) 2.03 In general, the development of tourist facilities on the East Bank has tended to lag behind the growth of foreign visitor demand, es- pecially for hotel accommodation of international standard. As a result of the recent shortage of hotel rooms, occupancy rates (and financial returns) for hotels are relatively high. In response to this situation, a number of hotels are either under construction or in the planning stage. In addition, other tourist facilities such as shops, restaurants and transportation facilities, are also being expanded. (The growth of supply is described in paras. 4.10-4.13.) 2.04 Although the private sector carries primary responsibility for developing tourism facilities, the Government's Ministry of Tourism and Antiquities (MTA) plays an important role in overall planning and pro- motion of tourism sector growth by: (a) development and implementation of tourism policies; (b) preparation of five-year plans for the sector; (c) identification, protection and improvement of historical and archaeo- logical assets; (d) advertising and promotional activities abroad; (e) im- plementation of some infrastructure works in specific tourist areas; and (f) in conjunction with the Ministry of Education, development of training programs and facilities for workers engaged in tourism services. 2.05 In order to encourage private sector interest in tourism devel- opment, the Government offers a number of investment incentives, including  - 3 - custom duty exemptions, tax holidays and the repatriation of foreign capital. Hotel credit, on reasonable terms, is also available for in- vestors in tourism facilities. On occasion, when private sector invest- ments are not forthcoming, the Government may also invest directly in accommodation and catering facilities through its own Hotels and Rest- houses Corporation (HRC). The HRC was recently formed in order to cen- tralize Government investments in hotels and restaurants, so that they could be independently managed and operated. Further support from the Government is derived from investments in the transportation sector, particularly in terms of international air access and internal road con- nections, which have facilitated the growth irn tourist arrivals. 2.06 The economic importance of tourism in Jordan is derived pri- marily from the level of net foreign exchange earnings generated by the sector. Average daily visitor expenditures have been estimated to be US$45.00 for Americans, US$38.00 for Europeans and US$ 15.00 for other visitors, excluding pilgrims. Since the 1967 war, gross foreign exchange receipts from tourism have grown from JD 4.6 million in 1968 to JD 32.2 million in 1975. This represented over 18% of total 1975 exports of goods and services, ranking behind workers' remittances from abroad (30%) and ahead of phosphate exports (10%). Net foreign exchange earnings from tour- ism, after deducting imported goods and services, are estimated to be about 65% of gross receipts. 2.07 At present, an estimated 5,000 people are employed in tourism facilities, and perhaps another 4,000 jobs are indirectly attributable to the tourist sector in agriculture, handicrafts, the construction industry and other services. 2.08 Given the growing importance of tourism to the economy, tourism has been accorded high priority in the Five-Year Plan for 1976-1980. Investments in the sector are projected at about JD 24 million for the Plan's period. The main objectives of the sector Plan are: (a) to in- crease tourism foreign exchange earnings in real terms from JD 17.3 mil- lion in 1974 to JD 43.0 million in 1980; (b) to stimulate domestic tour- ism; (c) to preserve historical and cultural assets; and (d) to expand training facilities. Although a target figure for visitor arrivals is not stated in the Plan, the foreign exchange earnings' objective implies that visitor arrivals are expected to increase from 750,000 in 1975 to 1.4 million by 1980. III. THE PROJECT A. Background and Objectives 3.01 Petra and Jerash are, without doubt, the most important of Jordan's tourism assets on the East Bank. In terms of cultural value, Petra has the potential to compete with the pyramids of Egypt and the  Acropolis of Athens, for, as a manifestation of ancient human endeavors, it is of like rank. Both Petra and Jerash have followed roughly similar patterns of development, from very early origins through a period of flourishing construction and commerce, to final declines, abandonment and centuries of tranquil seclusion until their "rediscovery" by separate explorers in the early 19th century. 1/ Beyond these similarities, how- ever, each is a uniquely individual tourist attraction. 3.02 Petra, located 250 km south of Amman, was, from the fourth century B.C. until its fall to Rome in 106 A.D., the capital city of the Nabataeans, whose power during that period extended as far north as Damascus. Deriving their wealth from control of the nearby caravan routes, the Nabataeans transformed their mountain stronghold into a city of houses, temples and tombs, all carved out of the mountain rock whose multi-colored hues glow in the sunlight to produce one of nature's finest displays of color and majesty. After its capture by Rome, the city was remodeled along the lines of a typical Roman town, complete with a colum- ned main street, a theater, baths and related structures which are still in evidence today. The magic of Petra, however, stems not only from the grandeur of its monuments, but also from the provocative mystery of its setting, deep in the heart of the surrounding mountain; the city is ap- proached through a long, narrow chasm known as the Siq, whose rock walls tower two hundred feet overhead. 3.03 Jerash, located in a peaceful valley surrounded by the moun- tains of Gilead, is about 50 km north of Amman on the road to Damascus. It is an impressive example of a well preserved Roman provincial town of the Eastern Empire. Dating from 6,000 B.C., Jerash experienced a long period of flourishing trade, intensive construction and development be- tween 63 B.C. and the third century A.D., when it was joined to the Roman Province of Syria. The town plan, of classic Roman design and pro- portion, is clearly in evidence today. The diversity and number of monu- ments, including temples, theaters, baths, a columned main street, and an elliptic forum surrounded by shops, all bear mute testimony to the wealth and prestige of Jerash, at the peak of its glory. While the city followed the fortunes of Rome into gradual decline, it enjoyed a period of reconstruction during the fourth and fifth centuries A.D., which pro- duced at least seven Byzantine churches. With the Moslem conquest of the seventh century A.D., however, the city's demise was nearly complete; it was finally abandoned after a series of earthquakes destroyed many of the buildings. 3.04 While both of these sites have had a long and glorious past, their accessibility to significant numbers of foreign visitors is a fairly recent development. Until 1967, with the attention of most tour- ists focused on the better known attractions of the West Bank, Government 1/ Annex II contains a description of the historical background of each site.  - 5 - activity at Petra and Jerash was confined primarily to relatively modest programs of excavation and restoration of selected monuments, and even these efforts were constrained by limited availability of budgetary re- sources and trained personnel. The Department of Antiquities of the MTA is responsible for the physical care and protection of the sites and monuments, which have been damaged by increasing human contact, as well as by forces of nature. The legislative framework to protect these sites is contained in Law No. 26 of 1968, under which both Petra and Jerash have been declared national treasures. This law has recently been re- vised in order to strengthen certain provisions, including, for example, tighter regulations governing the sale and disposition of historical artifacts. Additional land use controls, however, are required in order to protect the two sites. Detailed regulations governing the use of Government-owned land at each site are expected to be drafted by the MTA, under the authority of the (revised) Law No. 26. The Ministry of Munici- palities and Rural Affairs (MMRA), in cooperation with the MTA, is ex- pected to prepare zoning regulations and related development controls for land surrounding the two sites which is privately owned. The Government has agreed to adopt these regulations and development controls by July 1, 1977. Although master plans for the development of both sites were drawn up in 1968, the proposals have not yet been implemented. These plans, prepared by the U.S. National Park Service, include an integrated investment program designed to meet: (a) the need to preserve and protect the antiquities, which are currently endangered both by the natural forces of erosion and by deterioration resulting from human activity; (b) the need to provide physical facilities and amenities for growing numbers of visitors without jeopardizing the archaeological value of the sites; and (c) the need to improve the presentation and interpretive services of each site in order to achieve higher levels of visitor satisfaction. B. Project Description 3.05 The project would consist of the following main elements, de- scribed further below and listed in detail in Annex I: (a) tourist accommodation, related superstructure facilities and supporting infrastructure works near the entrance to Petra; (b) visitor facilities, infrastructure works and archaeological preservation in Petra Basin; also the resettlement of the Bedouins currently living there; and (c) visitor facilities (including a Sound & Light Program), infrastructure works and archaeo- logical preservation at Jerash.  - 6 - 3.06 In Petra, a distinction is made between the "Entrance" to the ancient city and the "Basin", where all the major monuments and related structures are located. In accordance with the master plan, the bulk of investments in Petra will take place at the "Entrance", which is located near the town of Wadi Musa. The investments in the "Basin" will be limited to the provision of some visitor facilities and to preservation and consolidation works. 3.07 The accommodation facilities at the Petra Entrance would consist of the upgrading and expansion of an existing 24-room hotel to include an additional 76 new rooms, catering, shopping, reception, administrative and camping facilities. The facilities would be de- signed to provide services both for hotel guests and campers, and for the large number of daily visitors. Provision would also be made for improvements to the existing visitor center, for additional staff quarters (12 units), and for a corral and cleaning area for the horses used to transport visitors to the Basin. 3.08 Infrastructure works at the Petra Entrance would include water supply and sewerage systems, solid waste disposal, electricity and lighting, telecommunications, landscaping and watershed protection. Water would be supplied through a connection to the expanded system serving the nearby town of Wadi Musa, and would be chlorinated and stored near the hotel complex. The sewerage system, involving treat- ment by means of an extended aeration-type lagoon, would serve primar- ily the visitor facilities and staff quarters. The water effluent, after chlorination, would be used for landscape irrigation. Under the project a dump truck and bulldozer would be provided for collecting and disposing of solid waste in a sanitary landfill to be established some two kilometers from the Petra Entrance. 3.09 The electricity component would consist of a diesel genera- ting unit installed in the Wadi Musa municipal power station to meet the additional energy demand created by the project, as well as a transmission line from Wadi Musa to the Petra Entrance, underground distribution lines and lighting. A new public telephone exchange, de- signed to serve both the project and the town of Wadi Musa, would be built to replace the existing obsolete system. An internal exchange system for the hotel and a telex printer would also be provided. The existing landscaping around the Petra Entrance would be extended and improved in order to create an attractive environment for the new hotel complex. Watershed protection would involve the construction of three velocity check-dams between the visitor facilities at the Entrance and the point at which the Siq begins,to slow the torrents of water in the River Wadi which occur after rainstorms, and which have cost the lives of tourists in the past. 3.10 The visitor facilities within the Petra Basin would include a visitors contact and first aid station, restrooms, a refreshment bar and a covered terrace for luncheon service. A small research facility  -7- would also be provided for archaeological investigations. These buildings would be grouped together and located in an area which would not obstruct the visual impact of the Basin. The Government has agreed to remove the existing camping amenities (Nazzal Camp) from the Basin not later than December 31, 1979, thereby eliminating the visual pollution caused by these facilities. 3.11 In support of these Basin facilities the project would include a number of infrastructure improvements. The existing well would be improved and water would be pumped through concealed pipes to a reservoir. Sewerage would be treated in septic tanks, with the effluent disposed of in under- ground absorption trenches downstream from the potable water source. Elec- tricity would be supplied from the Wadi Musa power plant and would be trans- mitted by underground cables through the Siq and within the Basin. Tele- phone lines would also be extended from the Entrance to the Basin using underground lines. 3M12 In order to control the erosion resulting from rapid runoff of rain water within the Basin and through the Siq, the project would provide for the construction of ten velocity check-dams within the Basin and nine in the Siq. In addition, the floor surface of the Siq would be cleared and stabilized, with a drainage channel constructed to ensure all-weather access to and from the Basin. Trails would be developed from the Siq and would lead into the Basin to the principal monuments. These trails, sur- faced with crushed stone and lime binders, would be combined with route and monument markers to provide self-guided interpretive circuits within the Basin. 3.13 Technical assistance from foreign experts, along with tools and equipment, would be included in a program (Annex II) designed to preserve and protect the existing monuments from erosion and other hazards, and to provide for a modest amount of excavation work which would enhance the tourist value of the site. 3.14 At present, about 96 Bedouin families live within the Petra Basin. Since these people have endangered the archaeological value of the site by, for example, walling up the entrances of tombs which they use for living quarters and by unauthorized digging for artifacts which they sell to tourists, the MTA has determined that they should be relocated to an area outside of the Petra archaeological site.l/ A Government Committee established to deal with the resettlement of the Bedouins has recently decided on a site on the out- skirts of the town of Wadi Musa, a site acceptable to the families currently living in the Petra Basin. The project would, therefore, include provision for housing and other community facilities at the new site for the Bedouin families. The site is large enough (300 ha) to allow for the construction of houses, as well as for agricultural activities. In addition, the Government has agreed to give the people to be relocated priority in the employment created by the project, and special assistance in preparing themselves for other occupations (para. 4.32). 1/ This action would be taken even if the project did not go ahead.  - 8 - It was further agreed that there would be a prohibition of vehicular traffic in the Basin, except for a limited number of balloon-tired ve- hicles. This would increase the employment of the local Bedouins who use their horses to trar