Oman has more to offer tourists in terms of scenery, heritage and adventure sports than most Gulf countries.
Yet its tourism market is a rather underdeveloped one. According to the World Travel & Tourism Council (WTTC), the tourism sector contributed some RO765m ($2bn) to the economy in 2014, equivalent to about 2.6 per cent of total GDP. That marked a decline from RO983m and 3 per cent of GDP in the organisation’s report for the previous year. Compared with other countries in the region there is clearly some ground to make up.
Oman falls below the regional average on most measures, including the contribution that the travel and tourism industry makes to GDP, as well as in terms of employment, capital investment and exports.
There are some moves to turn things around. In February, the Ministry of Tourism appointed Spanish firm THR Innovative Tourism Advisors to prepare a new tourism strategy for the country. Due to be released in the near future, the plan will set out the country’s ambitions for the development of its tourism industry between now and 2040, with a series of short-, medium- and long-term goals.
This is just the latest in a series of tourism strategies that Oman has developed in recent years. A priority action plan for tourism was set out in 2000 and since then there have been several marketing plans. The decision to develop a new strategy suggests that these previous plans have not worked out too well, or at least that some fresh thinking is required.
THR, which has previously worked with tourism authorities in countries such as Croatia, Portugal and Peru, does at least have good ground to build on. Oman has four sites included on the Unesco World Heritage list, including the Banu Nebhan fort at Bahla, and a 5,000-year-old archaeological site at Bat. A further eight are on the tentative list, which means Oman could nominate them for inclusion in the full list in the future.
In all, there are at least 26 major castles and forts open to the public around the country, along with six large museums, including the Frankincense Land Museum in Salalah and the Natural History Museum in Muscat, as well as the Royal Opera House, which was opened in Muscat in 2012.
The country’s heritage has not always been well looked after. Bahla fort was on the Unesco endangered list from 1988 to 2004 because of development plans that put the integrity of the site at risk. Those plans were rethought, but in 2007 the country suffered the embarrassment of having its Arabian Oryx sanctuary removed from the World Heritage list after Muscat decided to reduce the protected area by 90 per cent. It was the first time Unesco had taken such a drastic step.
These days, the authorities in Muscat appear more intent on developing rather than damaging the country’s tourism potential and the Ministry of Tourism is trying to develop more sites. In August, for example, it launched a competition to develop the cave system of Majlis al-Jinn at Quriyat, some 100 kilometres southeast from Muscat, as a site for adventure tourism. The bid deadline is 29 February 2016.
Areas likely to garner further attention in the tourism strategy range from eco-tourism to cruise ships. The opportunity for sports and adventure tourism is one of the country’s key attributes, from hiking in the mountains to diving around the Musandam peninsula. Other areas likely to garner further attention in the tourism strategy range from eco-tourism to cruise ships.
However, there are some doubts about the ability of the government to continue with all of its development plans in the light of the lower revenues it is receiving from reduced oil prices.
In late September, London-based Capital Economics warned that Oman was facing a period of fiscal consolidation and predicted economic growth of no more than 1.5 per cent for 2016-17.
Other observers take a similar view. “In terms of capital expenditure, we think the story is similar to elsewhere in the region, where ongoing projects will continue but new projects are going to be put on hold,” says Paul Gamble, director at the UK/US Fitch Ratings, of the Omani government’s spending plans.
What that will mean for major tourism projects remains to be seen, but the Ministry of Tourism has been trying to develop the market for private financial and other support. In April, it signed memorandums of understanding with the Al-Raffd Fund and the Public Authority for Small & Medium Enterprises Development to provide training and advice to small-to-medium-sized enterprises (SMEs) involved in the tourism industry.
It followed that up in May with a series of agreements with local banks, including Oman Development Bank, Bank Muscat, Oman Arab Bank and the National Bank of Oman, which was also designed to support local SMEs.
Local lenders have proved willing to support some large projects too. In September, the local Saraya Bandar Jissah announced that it had secured a $275m loan to help with the development of its $600m tourist resort in the northeast of the country. Bank Muscat and Bank Dhofar provided the financing. The first phase of Saraya Bandar Jissah scheme is made up of three residential zones as well as two hotels from the Dubai-based Jumeirah Group.
There are now more than a dozen such resorts constructed or planned around Oman. Known as integrated tourism complexes, they often appear to be as much real estate developments as tourist projects, with laws allowing foreigners to buy freehold properties at these sites a key element.
In a similar vein, the local Al-Jazeera International and Australia’s XSite announced in May that they were forming a joint venture to develop a mixed-use scheme in Duqm. The Duqm Beach Touristic Resort will cost $500m and cover 0.5 square km in the Special Economic Zone. The project is expected to be completed in five years and will provide up to 1,000 jobs by 2020.
Although these are sizeable schemes, they pale in comparison to some others. To the north of the capital, the Omagine project will include a theme park, an exhibition space, an open-air amphitheatre, hotels and other facilities. The 1-square-km site is being developed by a consortium including US-listed Omagine, Athens-headquartered Consolidated Contractors Company and the office of Royal Court Affairs.
Even more extensive is the Hay al-Irfan urban development, which will lead to the remodelling of a 7.4 square km section of central Muscat with new business, residential, retail and tourist facilities. It is being managed by the state-owned Oman Tourism Development Company (Omran). The UK’s Allies & Morrison was appointed in January to draw up the masterplan.
Omran has stakes in many hotels around the country and often acts as a joint-venture partner alongside international developers. It is also working with Qatari Diar, for example, on the Ras al-Hadd eco-tourism project, which will include 700 hotel rooms and a wildlife park.
The conference market is another area Omran is keen to develop. In January, the company awarded the construction contract for a 300-room Crowne Plaza hotel at the Oman Conference & Exhibition Centre to India’s Larsen & Toubro. It is one of several hotels in the pipeline, with a total capacity of 1,000 hotel rooms planned for the site.
For the convention centre itself, Omran awarded the third package of work to Indian contractor Shapoorji Pallonji & Co for RO85m in February. The contract includes the main 3,100-seat auditorium, as well as a second 450-seat auditorium, two ballrooms, a food court, meeting rooms, roads and car parks. It is the largest of 10 construction packages for the convention centre. The project is due for completion in 2017.
Omran says the conference centre will contribute up to RO230m to the wider economy by 2030 and generate between 15,000 and 30,000 jobs. If true, that will mark a significant rise in the contribution the tourism sector makes to the local jobs market. According to the WTTC, the tourism sector employs some 44,500 people directly, accounting for 2.8 per cent of total employment, and a further 46,100 indirectly.
For all the investment pouring into the sector, tourism numbers remain limited. The total number of inbound tourists in the first half of this year was 1.14 million, according to the National Centre for Statistics & Information (NCSI).
Visitors from the rest of the GCC make up the largest share of the tourism market, accounting for 367,542 of the total. The next most important source market is India with 131,341 tourists, followed by the UK with 76,520 and Germany with 61,729.
The WTTC says Oman was ranked 88th in the world in 2014 in terms of the size of its tourism industry, and 148th in terms of the contribution tourism makes to the economy. International visitors spent some $1.9bn in the country last year, compared with $5.5bn in the likes of Jordan.
There are some heady growth forecasts for the next decade, however. The WTTC reckons that tourism and travel will contribute RO1.8bn to the economy by 2024, or 3.9 per cent of GDP.
For that to happen, the developments under way will need to attract a lot of visitors. Hotels alone are unlikely to be enough. Data from the NCSI shows that average hotel occupancy rates have been less than 50 per cent in recent years. A lot will ride on the success of the marketing strategy that the country is about to launch.