30% of local travel agencies expected to close shop, turn online

AMMAN — Around 30 per cent of local travel agencies are expected to close down and turn into online businesses in 2017 due to current red tape, according to a sector leader. 

A total of 62 out of some 700 inbound, outbound and domestic tour operators have closed down in 2016, with 25 of them closing down for “natural” causes based on financial losses, Shaher Hamdan, president of the Jordan Society of Tourism and Travel Agents, said on Saturday.

The other 37 agencies did not renew their licences, he said.

Meanwhile, the number of businesses quitting the local market is expected to increase in 2017 due to the “increasing expenses” that licensed agencies have to keep up with as opposed to online booking businesses, which are not required to pay any fees or obtain licences, he said.

Hamdan explained that travel agencies have to obtain licences from the ministries of industry, tourism and awqaf (if they deal with travel for Hajj and umra). 

In addition, they have to obtain the approval of municipalities, register at a number of associations, as well as with the Jordan Tourism Board.

Other expenses include securing bank guarantees, rent, bills and employees’ salaries, as well as income tax.

None of the above applies to online businesses, he noted.

Commenting on layoffs of employees, Hamdan said old regulations required each travel agency to hire a minimum of five Jordanians, while new regulations decreased the number to three, including the owner.

“We are talking about layoffs of two to three employees in each closed down agency,” he told The Jordan Times.

The recently enforced general sales tax on outbound tour operators is expected to further contribute to the issue, Hamdan added.