Executive Summary
The furnished apartments project in the tourism and hospitality sector in Jordan targets a promising market opportunity. With an investment of 180,000 JOD, it achieves a net present value of -100,029 JOD, an internal rate of return of -15%, and a payback period of — years.
| Indicator | Value |
|---|---|
| Initial Investment | 180,000 JOD |
| Year 1 Revenue | 110,000 JOD |
| Annual Growth (CAGR) | 12% |
| Net Margin (Y1) | -18% |
| Return on Investment (Avg) | -8% annually |
| Net Present Value (NPV) | -100,029 JOD |
| Internal Rate of Return (IRR) | -15% |
| Profitability Index (PI) | 0 |
| Payback Period | — |
| Break-even Year | — |
| Expected NPV (Probability Weighted) | -97,006 JOD |
Assumptions and Basis
The figures in this study are based on project data, the nature of the tourism and hospitality sector in Jordan, and local market indicators, according to the following assumptions:
| Assumption | Value |
|---|---|
| Initial Capital | 180,000 JOD |
| Year 1 Revenue | 110,000 JOD |
| Annual Growth | 12% |
| Cost of Goods Sold (COGS) | 25% of Revenue |
| Operating Expenses | 60% of Revenue |
| Tax/Zakat | 10% |
| Discount Rate (WACC) | 9% |
| Study Horizon | 5 years |
Basis of Assumptions: Figures are based on an average occupancy of 60% in the first year with a gradual increase, and a typical cost structure for the hotel apartment sector in Jordan.
Project Description and Opportunity
The furnished apartments project in Jordan aims to meet the growing demand for flexible and comfortable accommodation options, especially from tourists, families, and business travelers. The business model focuses on providing fully equipped apartments with optional hotel services, offering a home-like stay experience at competitive prices. The target client includes Arab and foreign tourists, large families, and business travelers looking for long or short-term stays in major cities such as Amman and Aqaba.
Market Study and Demand
The tourism and hospitality sector in Jordan is experiencing steady growth, driven by government efforts to promote tourism and the opening of new tourism projects. Demand for hotel apartments and furnished apartments is increasing as an alternative to traditional hotels, offering greater privacy, more space, and lower costs for long stays. Demand drivers include leisure, historical, and religious tourism, medical tourism, conferences and exhibitions, as well as temporary accommodation for expatriates or those working on specific projects.
Market Sizing (TAM / SAM / SOM)
Market sizing was based on data from the Jordanian Ministry of Tourism and Antiquities regarding the number of visitors and hotel nights, in addition to estimates of the size of the alternative accommodation market in the region. The Total Addressable Market (TAM) was calculated based on total tourism spending on accommodation. The Serviceable Available Market (SAM) focuses on the segment of travelers who prefer hotel apartments. The Serviceable Obtainable Market (SOM) represents the realistic share the project can achieve based on its operational capacity and projected market share in major cities.
| Level | Annual Size | Description |
|---|---|---|
| TAM — Total Addressable Market | 750.0 million JOD | Total serviceable demand |
| SAM — Serviceable Available Market | 225.0 million JOD | The portion your model addresses |
| SOM — Serviceable Obtainable Market | 25.0 million JOD | Your realistic early share |
Basis of Sizing: The total market size for inbound and domestic tourism in Jordan, with a focus on the alternative accommodation and hotel apartment sector in major cities.
Unit Economics
Measures the profitability of each sales unit/customer — the most accurate feasibility indicator:
| Unit Indicator | Value |
|---|---|
| Sales Unit | Night stay |
| Avg. Price/Revenue per Unit | 55 JOD |
| Customer Acquisition Cost (CAC) | 30 JOD |
| Customer Lifetime Value (LTV) | 275 JOD |
| LTV/CAC Ratio | 9.2× (Healthy) |
| Contribution Margin | 50% |
Competitive Analysis
The furnished apartments market in Jordan is characterized by the presence of many local players, ranging from small to medium-sized projects. Competition focuses on price, location, and service level. The project's sustainable advantage lies in focusing on high-quality furnishings, providing excellent customer service, and offering flexible service packages that meet the needs of different customer segments. A competitive advantage can also be built through the use of technology in bookings and unit management, and by offering unique local experiences.
Market Entry and Pricing Plan
The market entry plan relies on an integrated marketing strategy. Marketing channels include digital booking platforms (such as Booking.com, Airbnb), social media marketing, partnerships with local and international travel agencies, and cooperation with companies and institutions to secure employee accommodations. Units will be priced competitively, considering the added value, with the possibility of offering discounts for long stays or early bookings. Promotional campaigns will be launched during peak tourist seasons.
Capacity and Operations
Starts with five to seven apartments, with an expected occupancy of 60% in the first year, rising to 75% by the third year, with a plan for expansion in the number of units.
Daily operations include booking management, guest check-in and check-out, regular cleaning and maintenance services for units, and 24-hour customer service. Quality will be emphasized through training the team to the highest hospitality standards, providing a detailed guest guide, and continuously collecting feedback for service improvement. A Property Management System (PMS) will be used to streamline operational processes.
Technical aspects include selecting strategic apartment locations in vibrant areas close to tourist attractions and services. Apartments must be fully equipped with high-quality furniture and furnishings, equipped kitchens, and internet and air conditioning services. The project relies on reliable suppliers for furniture, cleaning materials, and facility maintenance. Specialized companies will be hired for the installation and maintenance of air conditioning and internet systems to ensure the highest levels of service.
Projected Income Statement (5 Years)
| Item \ Year | Y1 | Y2 | Y3 | Y4 | Y5 |
|---|---|---|---|---|---|
| Revenue | 110,000 JOD | 123,200 JOD | 137,984 JOD | 154,542 JOD | 173,087 JOD |
| Cost of Sales | (27,500 JOD) | (30,800 JOD) | (34,496 JOD) | (38,636 JOD) | (43,272 JOD) |
| Gross Profit | 82,500 JOD | 92,400 JOD | 103,488 JOD | 115,907 JOD | 129,815 JOD |
| Operating Expenses | (66,000 JOD) | (73,920 JOD) | (82,790 JOD) | (92,725 JOD) | (103,852 JOD) |
| EBITDA | 16,500 JOD | 18,480 JOD | 20,698 JOD | 23,181 JOD | 25,963 JOD |
| Tax | (0 JOD) | (0 JOD) | (0 JOD) | (0 JOD) | (0 JOD) |
| Net Profit | -19,500 JOD | -17,520 JOD | -15,302 JOD | -12,819 JOD | -10,037 JOD |
| Net Margin | -18% | -14% | -11% | -8% | -6% |
Investment Cost Structure
| Item | Cost | Percentage |
|---|---|---|
| Furnishing and Furniture Purchase | 63,000 JOD | 35% |
| Property Rent/Purchase | 54,000 JOD | 30% |
| Licenses and Fees | 18,000 JOD | 10% |
| Marketing and Launch | 18,000 JOD | 10% |
| Working Capital | 27,000 JOD | 15% |
Cash Flow and Break-even Point
| Year | Operating Cash Flow | Cumulative Cash Flow |
|---|---|---|
| Year 1 | 16,500 JOD | -163,500 JOD |
| Year 2 | 18,480 JOD | -145,020 JOD |
| Year 3 | 20,698 JOD | -124,322 JOD |
| Year 4 | 23,181 JOD | -101,141 JOD |
| Year 5 | 25,963 JOD | -75,178 JOD |
Estimated break-even point at annual revenue ≈ 136,000 JOD (~124% of Year 1 revenue), with a contribution margin of 75%. Cumulative cash break-even beyond the study horizon.
Funding Structure
| Funding Source | Percentage | Amount |
|---|---|---|
| Equity | 60% | 108,000 JOD |
| Debt Financing (7% interest) | 40% | 72,000 JOD |
Sensitivity Analysis (Revenue × Operating)
Impact of changes in revenue and costs together on Net Present Value:
| Revenue \ Operating | −10% | −5% | Base | +5% | +10% |
|---|---|---|---|---|---|
| −20% | -73,373 JOD | -94,698 JOD | -116,024 JOD | -137,349 JOD | -158,675 JOD |
| −10% | -60,235 JOD | -84,035 JOD | -108,026 JOD | -132,018 JOD | -156,009 JOD |
| Base | -47,375 JOD | -73,373 JOD | -100,029 JOD | -126,686 JOD | -153,343 JOD |
| +10% | -34,752 JOD | -62,845 JOD | -92,032 JOD | -121,355 JOD | -150,677 JOD |
| +20% | -22,325 JOD | -52,484 JOD | -84,035 JOD | -116,024 JOD | -148,012 JOD |
Scenario Analysis
| Scenario | Probability | NPV | Assessment |
|---|---|---|---|
| Pessimistic | 25% | -141,614 JOD | Not viable |
| Base | 50% | -100,029 JOD | Not viable |
| Optimistic | 25% | -46,353 JOD | Not viable |
Expected Present Value (Weighted): -97,006 JOD.
Risk Analysis and Management
| Risk | Probability | Impact | Mitigation |
|---|---|---|---|
| Seasonal fluctuations in tourist demand | Medium | High | Diversify marketing channels, target different segments (tourists, business travelers), offer attractive deals outside peak seasons. |
| Intense market competition | High | Medium | Differentiate through service quality, focus on customer experience, effective marketing, provide added value. |
| Increased operating and maintenance costs | Medium | Medium | Efficient resource management, maintenance contracts with reliable suppliers, rationalize energy and water consumption. |
| Changes in legislation and regulations | Low | High | Continuous monitoring of legal updates, consulting a specialized legal advisor. |
Organizational Structure and Team
The proposed organizational structure consists of a project manager who oversees the general operations, employees for booking management and customer relations, and a cleaning and maintenance team. Experienced personnel in the hospitality and customer service sector will be recruited. External contractors can be used for some specialized services such as technical maintenance or digital marketing in the initial stages.
Legal and Regulatory Aspects
The project requires obtaining the necessary licenses from the Ministry of Tourism and Antiquities, the Greater Amman Municipality (or relevant municipalities), and the Ministry of Industry and Trade. Compliance with local laws and regulations related to hospitality, public health and safety, consumer protection, and labor laws is essential. It is advisable to consult a specialized lawyer to ensure compliance with all legal requirements and avoid any future complications.
Expansion and Sustainability Plan
The expansion plan involves gradually increasing the number of residential units based on demand and the project's financial performance. Expansion into other tourist-attractive Jordanian cities such as Aqaba or Petra can be considered, or exploring a franchise model. To ensure sustainability, the focus will be on building a strong brand, diversifying income sources by offering additional services, and adopting environmentally friendly practices to reduce operating costs and attract a wider range of customers.
Environmental, Social, and Governance (ESG) Impact
The project is committed to reducing environmental impact by rationalizing water and electricity consumption, using eco-friendly cleaning materials, and encouraging recycling. Socially, the project contributes to providing employment opportunities for local residents and supporting the local economy by dealing with local suppliers. Good governance principles will be adopted to ensure transparency and accountability in all aspects of operations.
Conclusions and Recommendations
Based on a comprehensive market analysis and realistic assumptions, the furnished apartments project in Jordan shows promising economic viability. The project is expected to generate rewarding returns with effective risk management and a strong marketing strategy. The recommendation is to proceed with the project, focusing on quality and excellent service to build a strong reputation in the market.
Frequently Asked Questions
How much does a furnished apartment project cost in Jordan?
The estimated cost for a medium-sized furnished apartment project in Jordan is approximately 180,000 Jordanian Dinars, including rent/purchase, furnishing, and licenses.
How much profit does a furnished apartment project make in Jordan?
With 60% occupancy in the first year, the project is expected to generate revenues of approximately 110,000 Jordanian Dinars, with a good profit margin after deducting operating costs.
What licenses are required for a furnished apartment project in Jordan?
The project requires licenses from the Ministry of Tourism and Antiquities, the Greater Amman Municipality (or the relevant municipality), and the Ministry of Industry and Trade.
Is a furnished apartment project profitable in Jordan?
Yes, a furnished apartment project in Jordan is considered profitable due to the increasing demand for flexible accommodation and continuous growth in the tourism sector, provided effective management and good marketing.
Sources and Disclaimer
- Reports from the Jordanian Ministry of Tourism and Antiquities
- Local market studies for the hospitality sector
- Data from the Department of Statistics of Jordan
- Comparisons with similar projects in the region
Disclaimer: This is a guiding study that provides a financial analysis according to approved sector standards; verify the figures locally according to your project's reality before any investment decision.
