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External appearances are deceptive. If it wasn't for the pair of flambeaux blazing away by the front door, I was on the point of asking the taxi driver to back out of the dusty dead end street. However once inside all is Eden. The Dar Dhiafa is a dream-like labrinyth of arches, sitting rooms and vaulted passages that leads through a succession of small courtyards. The hotel has been constructed by merging together three traditional Jerban courtyard houses. None of the intimacy, the sense of an enclosed domestic space, has been lost, nor has that precious patina of age, the timeworn stone or thick layers of whitewash, been removed. All that has been added is efficient plumbing, two small swimming pools and a remarkable restaurant.

There are just fourteen bedrooms in the hotel, all of which occupy the rooms round the courtyards. Each bedroom and bathroom is different, partly for the love of indivuality but partly out of the necessity of making careful use of these ancient and erratic spaces. A discriminating eye has furnished them with fine indigenous textiles and painted furniture.

Neat arrangements of modern wooden sunbeds and chairs allow guests to float from courtyard to courtyard, sipping a capuccino here, taking a chilled bottle of white wine over there or just passing out for some serious sun-bathing. The domed hammam, built to a generous scale, allows you to bathe mercifully unassisted and is free from the drain-stink so often associated with traditional baths. Book a day in advance to get up the right level of heat.

Breakfast and dinner are served in the a la carte restuarant, a cosy red dining room in winter or a palm tree and star dominated courtyard in summer. Malek, the resident chef, as well as baking fresh pastries in the morning can guide you through the subtlities of traditional Tunisian cooking - including the showy spectacle of a gargoulette feast - or feed you up on succulent chops.

The Dar Diafa stands plumb in the centre of the island, in the village of Er-Riadh (sometimes still referred to by its old name of Hara Kebira). It backs onto the ancient walled cemetery of the Jews, on the righthand side of the road, as you come in from the central town of Houmt Souk. Er Riadh is an oasis of calm, a thousand miles from the bland package tourism bustle that has disfigured the north-eastern quarter of the island. The one historical attraction in the area, the ancient synagogue of "El Ghriba" (the marvellous) is in the neighbouring village of Hara Seghira.

Transport: In the cool of the evening and morning you can walk straight out of the hotel door and wander through the quiet streets and old squares of Er Riadh lined by whitewashed village houses. For anything more ambitious get a cab. The reception desk can summon up one of the island's yellow cabs, "now or in five or ten minutes, as you wish." Jerban cabs are numbered, metered and scrupulously honest. In just one stay I had one black bag (complete with passport and tickets) and my chidren's khaki water bottle returned. A trip into the market town of Houmt Souk (7km away) costs around 1.50. At these prices it is foolish to rent a car, though a bicycle or a mobylette might be tempting for a long stay.

Time to International airport: from the British Isles you can fly to the national capital of Tunis in just two and a half hours on a regular daily schedule run by Tunis Air and GB/British Airways from either Heathrow or Gatwick. At Tunis airport change onto the 35 minute Tuninter flight to the island of Jerba. Alternatively look at some of the European national carriers, especially Air France and Luthansa, who have direct flights to Jerba. It is 15km from the airport to Dar Diafa, about 6 Tunisian dinars (3).

Lying back against a bank of cushions piled up on our double bed I could look up into the lofty ceiling, roofed with slim beams and boards painted an etheral satin blue. To one side of the room we had an imposing alcove lined by a U shaped bench covered with killim cushions. The other bedrooms were equally inventive: one had its bed on a raised dias, another placed it under a handsome dome, while some were composed on three levels. Antique killims, embroideries, balconies, pictures, blue painted screens and small pieces of painted furniture competed for your eye. The bathrooms were similarly individual. We had a tadlakt bath for two, but there were also opulent showers lined with old Moorish tiles as well as ball and claw bathtubs approached up ancient stairways.

Freebies: beautifully wrapped cubes of olive oil soap and bottles of honey and lemon shampoo.

Keeping in touch: all rooms have telephones and a mini-bar hidden in a painted cabinet. Television is confined to a large sofa filled sitting room, with fireplace, in the last courtyard.

170 Tunisian dinar (85) for two people occupying one of the nine bedrooms with a double bed or 250 Tunisian dinar (125) for the Sultan, the grandest suite. Slightly more competitive rates, which also include breakfast, plus return flights are available through Wigmore Travel, tel 020-7836-4999. For direct bookings telephone (216) 5 671166, fax (216) 5-670 793, e-mail "dar.dhiafa@gent.tn"

I'm not paying that: Without falling into the hands of the vast beach hotels, there are other options in Jerba. Houmt Souk boasts half a dozen small and characterful places to stay, such as Sables d'Or (tel 650423) or the Erriadh (tel 650756) as well as such cheap places as the Marhala (tel 650146) and El Aricha (tel 650384) which occupy old fondouk courtyards.

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