Tourism already accounts for about RO1bn ($2.6bn) of Oman’s GDP, but the government views this as only the tip of a much larger iceberg.

A series of large-scale investment projects, with both private and public sector backing, are set to diversify the sultanate’s tourism appeal. The aim is to both boost the numbers and broaden the range of visitors, thereby generating more revenue and, more importantly, jobs.

One of the core objectives of Muscat’s strategy is to increase the contribution of the tourism sector to GDP. That contribution is estimated at 3 per cent of GDP by the UK-based World Travel and Tourism Council (WWTC), and accounts for 37,000 direct jobs.

This is expected to increase as the relative value of tourism to the national economy rises. 

More tourists

Tourism numbers are on an upward curve. Inbound tourists for the year to end-September 2014, the last month for which the Tourism Ministry has figures, reached 1.58 million, compared with 1.4 million in the same period in 2013.

The government is undertaking several measures to support the tourism industry, notably in overhauling and expanding transport infrastructure to cater for the hoped-for increases in tourist arrivals.

The expansion of the airport and ferry terminal in Muscat are pivotal here. A consortium led by the US’ Bechtel is designing and building a new terminal and associated facilities at Muscat International airport, which will open in 2016.

The 29-gate passenger terminal building will accommodate 12 million passengers annually from 2016, from just over 8 million today. This capacity increase has already led Air India among several airlines to plan new routes to Oman.

Long-term vision

The government wants to forge a long-term strategic vision for this critical sector. In February, the Tourism Ministry tasked Spain’s THR Innovative Tourism Advisors to prepare a 25-year national tourism strategy, including short, medium and long-term strategies.

The work includes the development of an implementation plan based on major pillars including tourism competitiveness, marketing and product development, governance, education, and socioeconomic development.

Hotel construction is meanwhile continuing apace. Oman has 5,000 rooms in the pipeline, on top of 10,000 branded three-to-five-star rooms already in the market.

In Muscat, room numbers are set to double over the next three years, with close to 350 rooms recently opened and 990 due for construction. There is a higher proportion in the four-star range than is typical elsewhere, notes US consultancy PwC.

New hotels

New luxury hotels in the pipeline include Crowne Plaza, Four Seasons, Copthorne, and W Muscat, while there are Golden Tulip and Premier Inn properties planned in the mid-scale range.

PwC says there has been a noticeable increase in the number of operators offering two-centre holidays, combining shopping in Dubai with a more diverse experience in Muscat.  

Muscat hotel occupancy rates last year, at 66 per cent in 2014 according to PwC, are respectable. But the government knows it faces stiff completion from other regional centres.

Hotel occupancy in Muscat last year declined by 0.4 per cent over the previous year, whereas Doha saw a 13.6 per cent increase and Abu Dhabi a 9 per cent rise. 

This year to date has been tough in terms of revenue per room (RevPAR). Muscat has seen a fall in RevPar of 13.7 per cent, according to UK consultancy STR Global.  

Alongside hotels, tourism-related projects in Oman cover four museums and libraries, six malls, a theatre, five sports stadiums and a leisure complex, a theme park, and four convention centres.

Resort tourism

Some of the biggest developers are focused on resort tourism. Oman Tourism Development Company (Omran) is set to play a key role in masterplanning these mixed-use developments, with space for private developers to carry out their own projects.

Omran has 39 projects in the pipeline. The most advanced mixed-use development is Medina Irfaan, near the Muscat airport, which will cover 6 million square metres. A detailed masterplan is under way by UK-based architect Allies & Morrison, and the project will have its official launch in March 2016.

Port Sultan Qaboos in Muscat is also expected to be redeveloped as a leisure destination.

A three-phase plan from the Transport & Communications Ministry envisages the first phase starting in 2016, to involve a 180-room, five-star hotel and a 150-room, four-star hotel. It will also include 7,500 sq m of retail space and a 39,000-sq-m mall, among other facilities. 

Duqm project

The local Al-Jazeera International and Australia’s XSite have formed a joint venture, Duqm Beach Touristic Resort (DBTR), to develop a mixed-use development in Duqm.

DBTR will cost $500m and cover 450,000 sq m in the Special Economic Zone at Duqm. The first phase of the scheme will be worth $100m-$150m. 

Private sector-led projects will also be encouraged. Omran is looking at joint ventures and selling stakes in existing or planned assets, as well as space for private developers within masterplans in Masirah, Salalah and Musandam.