Muscat taps the leisure market

18 September 2008
Oman’s investment in tourism infrastructure is paying off, with visitor numbers rising and the sector on track to meet its target of generating 3 per cent of gross domestic product by 2020.

Oman has much to offer tourists. With world-famous geological sites, a strong cultural heritage and a reputation for hospitality, the sultanate is well positioned to be a major destination for holiday makers.

The tourism sector is a key strand in Oman’s economic diversification strategy. More than $30bn has been invested in tourism infrastructure since the Vision 2020 plan was launched in June 1995. This outlines the country’s economic goals over a 25-year period and is split into five phases.

Oman now has 9,000 hotel rooms and under the fourth phase of the plan, a further 9,000 rooms will be created by 2015, primarily in three to five-star luxury and boutique hotels.

The sector has been set an annual growth target of 7 per cent between 2006 and 2010, and funding for that period includes public sector investment of $2bn and $1.4bn from the private sector.

The investment is already reaping returns. Total visitor numbers approached 1 million in 2007, up from 600,000 in 2006. And yet such rapid growth belies the fact that the sector’s contribution to gross domestic product (GDP) remains modest, at about 0.9 per cent.

Under the Vision 2020 plan, the Omani government has set itself targets of growing tourism’s annual GDP contribution to 3 per cent by 2020, and for 80 per cent of the sector’s workforce to be Omanis by the same date.

Absorbing skills

Charged with spearheading this growth is the Oman Tourism Development Company (Omran), which was set up in early 2006 as a fully government-owned body.

“In all likelihood, that 3 per cent will be achieved much earlier and, by 2020, we should have exceeded that figure by a long way,” says Wael al-Lawati, chief executive officer of Omran.

Given the focus on diversification in the sultanate, Omran has entered into six joint venture partnerships to accelerate the growth of tourism. One of the most notable is the $1.7bn Salam-Yiti project, which Omran is developing with Sama Dubai.

“There are two key reasons why the government is developing the tourism sector with such haste,” says Al-Lawati. “One is the revenue it will contribute to GDP, but the other, equally important, element is job creation.

“We are a very young nation. It is well documented that 50 per cent of our population are under the age of 18 and tourism is an ideal industry for absorbing all these school leavers as it does not require a high skill set.

It is a service-oriented industry that is natural to the culture and can provide employment in various parts of the country.”

Environmental impact

After spending its first 18 months focusing on its joint ventures, Omran has turned its attention to developing its own flagship projects.

Both independently and through joint ventures, Omran is developing more than 10 resort-style projects with a value in excess of $10bn, all of which are due to be completed within the next five years.

With Muscat and the surrounding area now boasting a good choice of luxury accommodation, this new wave of development is spreading beyond the capital.

“It is only natural that the first few developments have all been planned around Muscat, so there is now a ripple effect taking place,” says Al-Lawati.

Indeed, the projects today are spread across the sultanate, from Jebel Sifah in the Hajjar mountains one hour from Muscat, to the Duqm hotel project half-way along the country’s coastline and the Salalah Beach project in the far west of the country.

As well as developing these hotel and resort projects, Omran is building Oman’s first sports village to host the second Asian Beach Games in June 2010.

This is a new event that was launched by the Olympic Council of Asia, with the first Asian Beach Games being held in Bali in October this year.

The 1 million-square-metre site will comprise sports arenas, villages to house up to 3,000 athletes and grandstands to accommodate up to 5,000 spectators, as well as hotels, restaurants and other recreational facilities.

More than 10,000 athletes, officials and media representatives from 45 countries are expected to gather in Muscat for the 2010 event, where athletes will compete in 11 beach sports. Construction on the site began in June.

“The project will play a key role in driving future tourism,” says Al-Lawati.

“The government is using the Asian Beach Games as an incentive to build a major sports, leisure and tourism resort providing significant benefits to the national and local economy.”

While these projects are on different scales and will serve different purposes, they share one common theme: sustainability.

As the first country in the region to set up an environment ministry in the 1980s, Oman has long understood the sensitivity that needs to be applied to its environment.

Every project that Omran undertakes has an environmental impact assessment carried out before construction begins.

Omran is now going one step further by considering guidelines and criteria that seek to reduce the environmental impact of all tourism projects.

“We are debating whether to apply an established system like [US green building rating system] Leadership in Energy & Environmental Design to our projects or create our own system that is tailored to our requirements and then benchmark this against an established standard,” says Al-Lawati.

In this way, Oman is catering to the increasingly popular trend of eco-tourism, or ‘geo-tourism’ as it is now known in the industry.

“It is a growing segment,” says Al-Lawati. “All the studies show that an increasing number of people are prepared to pay more to stay in a hotel that is a green operator. We have to make sure we manage the environment carefully or people won’t come back.”

Spillover effect

In addition to charting its own form of environmentally friendly tourism, Oman is benefiting from its proximity to Dubai. “It is the spillover effect where visitors can not get hold of a room in Dubai because it is fully booked or it is just too expensive,” says Al-Lawati.

As a result, average daily room rates have risen by 200 per cent over the past three years. A large growth area for the sultanate has been combined tourism packages with Dubai, which offer five days in the emirate and four nights in Oman.

While such marketing is a welcome development to Oman’s tourism development, Omran is well aware of the need to roll out its projects as efficiently as possible over the next few years to ensure that demand does not outstrip supply. “The fact that we only have 2,000 hotel rooms of four and five-star category indicates that we are undersupplied,” says Al-Lawati.

However, while Oman’s tourism is still in its early stages, it is clear that the government is pursuing a sensible and effective approach to growing the sector. Recent legislative changes to make Oman a more accessible tourism destination mean that tourists from more than 60 countries can now obtain visas on arrival.

To cater to the huge number of tourists expected in future, infrastructure is also being improved. Three new airports were announced in 2007 and Seeb International airport is set to expand its capacity to 12 million people by 2010. National carrier Oman Air launched a daily service to London Gatwick in November 2007, also adding Bangkok to its long-haul destinations.

Meanwhile, the Tourism Promotion Board has been allocated a $30m budget to market Oman’s attractions overseas. “There is no shortage of money,” says Al-Lawati. “If I need more cash there are lots of places I can tap into it.”

The main challenge for Omran is common to all countries in the region: a shortage of raw materials and human capital. “It is the challenge of achieving this fine balance between how much effort, focus and money we invest in the environmental sustainability of these tourism developments versus the profitability element,” says Al-Lawati.

By focusing on developing different types of tourism, rather than just beach holidays, Oman is differentiating itself from it neighbours.

With high hopes being pinned on tourism’s potential to contribute to the diversification of Oman’s economy, the success of this promising sector will be closely watched over the coming years.

Key fact


The Tourism Promotion Board's budget to market Oman overseas

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