The Rum Group: A Lesson in Resilience

Jordan’s tourism sector is going through a rough patch. But the Rum Group, which has a foothold in everything from hospitality to aviation, is better positioned than most to weather the downturn.

By Rebecca Irvine

Now is arguably not a great time to be working in the tourism sector. There are some initial signs that the industry may finally be on the up; with third-quarter of 2015 arrivals up 3.6 percent year-on-year. Despite this, it’s impossible to ignore the elephant in the room of the current regional context when discussing Jordanian tourism. Many once-thriving companies are now struggling in the harsh realities of the sector at present, and learning to adapt to the circumstances is a must. It’s in this context that the Rum Group—one of the prominent players in the sector in Jordan—is now operating.

“Of course right now we’re in a very tough situation,” conceded Marwan Shennara, Rum Group’s general manager. “But we still can deal with it to a certain level.” As it stands, Shennara has reason to remain optimistic, with tourist numbers, while unspectacular, are at least holding at a fairly respectable level. He said his group’s coach division handles more than 115,000 passengers annually, while 18,000 guests check-into the Rum Hotel during the same period.

As a company, Rum Group is markedly different from other tourism providers within the Kingdom, in that it straddles several parts of the sector. Founded in 2002 by Jordanian businessman Riad Khashman, the group began operations with land transportation services, catering to tourists visiting the Kingdom. This evolved into an integrated service after expanding to cater to several dimensions of the tourism experience in the country.

The group acts as an umbrella for the subsidiary brands that it is made up of. The company’s original service—its coaches—now functions under the brand Rum Trans, while Rum Tours, Rum Hotels, and Rum Aviation offer their respective services. “We can welcome the guest, transport them, accommodate them, and have them enjoy a good journey in the country, from the north to the south,” explained Shennara.

By 2005, the Group had set up the Rum Hotel in Amman. The 50-room hotel was 3-star when it was bought, and developed into a 4-star hotel over time. The Rum Group retains a 51 percent stake of its low-cost air carrier, originally named Petra Airlines and re-launched as Air Arabia Jordan in 2015 when Sharjah’s Air Arabia bought 49 percent of the company.

Highs and Lows

A culmination of the company’s growth came at the end of 2015, when the group won a prestigious award from the Land Regulatory Commission, a department of the Ministry of Transport. The prize, awarded for the best company serving tourists’ transportation in Jordan, has for the previous 10 years been won by Jordan Express Tourist Transportation (JETT) and marked a first win for Rum Group. According to Shennara, this came after several years of investment and improvement in Rum Trans, in the buses themselves, the logistics, and the business plan. “Security, technology, a 24/7-call center, and English speaking drivers—these are areas where we have improved,” he said.

It hasn’t been plain sailing for the group in recent years, however. The regional political situation has vastly increased competition in the sector, which is now far more “aggressive,” Shennara said. While improvements and investments, such as those to the bus service have gained recognition, the market is undoubtedly tougher than in earlier years. “It’s not a classic marketing plan that’s needed—it’s a crisis. In some areas we have results, for example [tourists] from the UK and Spain. However, we still lack some out of the box ideas in terms of marketing,’ Shennara said.

Further issues affecting the company are common complaints across the sector: fluctuating fuel prices, and high taxes and operating costs. Compared to destinations in the Gulf, and even Egypt and Lebanon, the running expenses for the tourism sector are high, and many companies struggle to make ends meet in tough times.

The challenging operational environment has meant a diversification of the customers of the Rum Group’s services. While in the company’s early years only around 30 percent of the business was corporate, these days it’s around half. Shennara said the regional crisis and ensuing downturn in the tourism sector has meant there is “no choice but to move into this field.” Local consumers in this way have come from a variety of different fields. “We serve several embassies—we are the first suppliers for the American embassy, and we served the US President Barack Obama’s visit three years ago. We work with a Swedish company transporting refugees on the border, and are BP’s number one supplier when they have their employees in Jordan.” Beyond this, many corporate clients, including the UN, utilize the hotel as a location for workshops, events, and seminars.

Another consequence of the political situation is the group’s reduced interest in the growth that has previously been steady. “For the time being, considering the tough situation we have started to be a little bit conservative [in our plans],” Shennara explained. For this reason, the plans to buy several more hotels, and further expansion into the transportation and tour wings of the business have been shelved for the moment.

However, while company-wide growth is hampered at present due to Jordan’s stilted tourism sector, there’s real potential for expansion with the group’s aviation arm, Air Arabia Jordan. The Kingdom’s 2010 open-skies agreement with the EU provided an attractive situation for investors. The airline currently flies to destinations across the region, with plans to expand into new destinations in the pipeline for the coming year.

“This year we will expand to Europe,” Shennara said. Though the move is still awaiting final confirmation, he added that the chosen locations are likely to be Rome and London. This expansion beyond the region brings huge potential for the group, and more widely to Jordanian tourism, as it offers low-cost, budget options for travel to the Kingdom.

Ultimately, this mixed picture isn’t uncommon for the sector at present. The resilience and optimism of Shennara and the group are crucial for their current vitality within what is undoubtedly a troubled industry. While there is likely still a difficult few years ahead, the uniquely integrated tourism company seems well placed to forge through.