On the Cusp of a tourism upswing

Over 25 hotel projects are in the pipeline in Oman accounting for an additional 4,299 rooms as of October 2013. The Ministry of Tourism has tasked THR, a Spanish consultancy company to prepare a tourism strategy for the country for the next 20 years, Oommen John P reports on the tourism related initiatives in Oman

Tourism is regarded as a modern-day engine of economic growth. Over the past year or so, the tourism sector has been witness to phenomenal growth with a slew of hotel and residential projects being set up in line with Oman’s Vision 2020 that aims at significantly increasing the tourism sector’s contribution to Oman’s gross domestic product.

According to a report published by the World Travel and Tourism Council (WTTC), travel and tourism in Oman attracted capital investment of RO254.6mn in 2013. This is expected to rise by 11.7 per cent in 2014, and further rise by 6.7 per cent per annum over the next ten years to RO545.9mn in 2024. The 2014 WTTC report stated that total contribution of travel and tourism sector to Oman’s GDP was at 6.4 per cent in 2013 and thus is expected to reach 8.2 per cent by 2024. The report goes on to forecast that the sector will offer 79,500 jobs in 2014. These strong growth figures are a reflection of where Oman is headed based on the government’s strong support to sustainable tourism development. The sector’s growth has opened better employment opportunities to a large number of nationals.

Over 25 hotel projects are in the pipeline in Oman accounting for an additional 4,299 rooms as of October 2013 and the market is expected to have around 14,400 rooms by 2017, up from 8,000 rooms in 2013, according to STR Global. With the new airport terminals in Muscat and Salalah in various stages of completion, Oman’s tourist arrivals is expected to grow by 24 per cent between 2014-2018 to 1.35mn, according to The Business Monitor International. Additionally, the Port Sultan Qaboos is being developed as a cruise only port to attract cruise passengers from all over the globe.

Spending in Oman’s real estate sector rose by 45 per cent in 2013, as supply caught up to meet the demand for property. The rental market has also grown to match job creation initiatives and infrastructure investments, and tenants are seeking a higher standard of property. Positive economic forecasts have illustrated that the real estate market in Oman is enjoying a resurgence and is seen as a safe sustainable investment, which in turn has encouraged developers to progress with projects while recognising the need to be more creative in an increasingly-competitive market. This shift in real estate trends has seen integrated tourism complexes (ITCs) in Oman enter the market and introduce a new concept for integrated living.

Future roadmap

Says Salim Al Mammari, director general of tourism promotion department at the Ministry of Tourism, “Many new hotel properties are coming up in the Sultanate, which will significantly boost the tourism sector. We have asked THR, a Spanish consultancy company to prepare a tourism strategy for the country for the next 20-years. The company is expected to submit the strategy report by next year. The strategy will enable us to chart for the future and also ways to tap the new markets. It will tell us what should be our focus, services and regulations that are needed to further develop the tourism sector to make Oman an attractive tourism destination.”

Eng. Abdul Wahid Al Farsi, acting chief communications Officer, Omran says “As the tourism development arm of the country, Omran is spearheading a number of projects and engages with many other private and public developers through joint ventures to effectively maintain a degree of involvement with most tourism related developments in the country. In addition to five major tourism projects, which are owned and developed by Omran, there are numerous other large tourism projects that we are involved in some way or the other.”

ITCs have shown that home buyers and property investors are interested in the concept of integrated community living. Says Hawazen Esber, CEO, The Wave Muscat, “The Wave, Muscat has pioneered the ITC concept in Oman and has become the model for others to follow. As the first ITC in the country, the development is transforming a six kilometer stretch of coastline into a thriving waterfront neighbourhood that will comprise over 4,000 properties, four hotels, and a multitude of commercial office and retail space.” In total, 35 per cent of residents are Omani nationals, which show there is a demand from the local population and that ITCs can become home to Omani families for generations to come. And property releases have been met with a positive reaction as more investors and families embrace the idea and benefits of community living, he says.

Recently the tourism sector took a big step forward and launched the Oman Real Estate Association (ORA) to promote and regulate the growing market. As more projects come to fruition, such regulatory body will be essential in maintaining property standards and driving the market forward, he adds.

Omran’s projects boost job creation

Omran’s key projects include Oman Convention and Exhibition Centre (OCEC), which is scheduled to open in 2016. This is a landmark project that will form the centrepiece of Oman’s regional business development programme. The OCEC will firmly establish the Sultanate as a major regional venue for regional and international events and will include four hotels, a business park, retail shopping areas and residential districts. The project is expected to contribute RO295 million to strengthen the local supply chain and create and stimulate thousands of jobs by 2030. Around 4,000 to 6,000 jobs are expected to be created directly and 15,000 to 18,000 indirectly.

Other projects include The W Hotel, located in Muscat’s Shatti Al Qurum District, adjacent to the Royal Opera House and the site of InterContinental Hotel Muscat. It will be operated by Starwood Hotels and Resorts and will feature 290 hotel rooms and suites, including 29 suites, four special suites and one royal villa. Construction is scheduled to begin in Q4 2014, with a soft opening anticipated in Q4 2016 and a public opening in Q1 2017; Atana Musandam, a 110 room waterfront in Khasab was initiated in 2012 and was completed on schedule in Q1 2014. Once officially opened, it will provide quality, affordable accommodation for visitors; Alila JabalAkhdar resort project has been completed and handed over for soft opening in Q2 2014. In addition, Omran is involved in numerous other joint venture projects such as Jebel Sifah, Salalah Beach, Al Baleed Resort, Duqm Frontier Town and more.

“Alila JabalAkhdar resort will draw visitors from around the world to one of Oman’s most breath taking natural attractions and open the way for increased private sector tourism investment in Al Dakhiliya Governorate. Atana Musandam on the other hand will provide visitors with the much needed affordable waterfront accommodation in an area that is already a major tourist destination. Atana is a first of its kind Omani hotel brand that presents Oman’s rich traditions within a completely modern and contemporary hospitality context,” says Al Farsi.

Hotels and residential properties aiding growth

Highlighting new projects at The Wave Muscat, Hawazen says “We have continued to make progress in our master plan, developing community facilities, retail opportunities and commercial office space to offer residents and visitors diversity in leisure, lifestyle and convenience. We are also expanding the retail and commercial office space in the master plan with the new retail centre in Marsa Village, ‘The Walk’, scheduled to open in the coming months. The Walk is a 10,850 sqm contemporary retail and commercial hub which will provide residents with everyday shopping, specialty retailers, food and beverage venues, as well as home for the country’s largest Spinney’s store, alongside commercial offices, and many new retailers and outlets available for the first time in Oman. With this addition, the total retail and commercial area at The Wave, Muscat will reach close to 14,000 sqm, enhancing the retail experience nine-fold.” In response to the growing demand for office space in Muscat, plans are on the anvil to construct a new 24,000sqm office park. Construction is likely to begin by the end of 2014 with an expected completion timeframe of two years.

“The latest addition of homes in Reehan Residences was released ahead of schedule, adding a further 99 properties in three distinct styles of contemporary, traditional and the new courtyard homes, a unique option in the Omani market. Sales have been very successful so far already and construction of 50 properties in the first phase will start within three months, taking 12 months to complete,” says Hawazen. The first hotel in the master plan is due to be completed in 2015.

“We recently signed an agreement with a local company to construct a new four-star business hotel with views across the marina. We have also launched a new outdoor venue space at Almouj Golf, the PGA Standard 18-hole links golf course at The Wave, Muscat. The large marquee area provides additional seating within the landscaped area as well as a 600m2 oceanfront venue for weddings, team building exercises and corporate retreats.”

“The first of four hotels at The Wave, Muscat is due to open towards the end of 2015 as we welcome the Kempinski, The Wave, Muscat which will be situated in a beachfront location adjacent to Almouj Marina. It will comprise a five-star hotel with 309 rooms and suites as well as 77 branded hotel apartments, fine dining options, food and beverage outlets, conferencing facilities, swimming pools and spa options as well as other leisure facilities. We have also signed with local development company Taameer to construct a four-star business hotel which will be operated by Shaza Hotels. The hotel will consist of 190 rooms located adjacent to the marina promenade and piazza. Two further four and five-star hotels are in the planning stages and more details will be announced later this year.”

Says Hamza Selim, CEO of Muriya, “Muriya’s plans in Oman revolve around three elements. The first one is to bring Integrated Tourism Complexes into the tourism and real estate sectors highlighting them as the future of a thriving mix of the two. The second is to position ITCs as key differentiators that attract regional and international tourists and investors. The third one is to introduce destinations that will transform into bustling towns and offer an exclusive experience of Muriya’s ‘life as it should be’ concept. These plans are closely related to creating direct and indirect job opportunities, as well as providing a platform for private sector businesses to establish themselves and grow.”

Muriya currently is developing two destinations; Jebel Sifah and Salalah Beach. The Phase-I in both projects was completed in late 2013 and phase II construction began early this year. Coming up in the pipeline is the development at As Sodah Island which includes a luxury resort in addition to thirty two private villas, each with its own beach and swimming pool.

In Salalah Beach, Muriya recently opened Salalah Rotana Resort, the largest single hotel in Oman following the Juweira Boutique Hotel opened in 2012. “We are set to make headway on our next hotel project which will comprise of 220-rooms. As for Jebel Sifah, the first hotel we introduced is Sifawy Boutique Hotel, which features 55 suites and rooms in addition to a number of amenities tailored for both business and leisure. We brought a charming marina town to the centre of the development, built around Oman’s first inland marina. With a 84-berth capacity, Muriya also added a floating fuel station to encourage more stop over boat traffic. Development of the golf course is going at full throttle and we expect to have the first five holes completed by the end of 2014.”

Yet another key project, which has changed the tourism landscape in Oman is the RO7 million The Cave Restaurant in Muscat, which was opened recently. A project by Falcon Tourism Company in cooperation with the Ministry of Tourism, The Cave Muscat has eight restaurants. According to Falcon Tourism Company chairman Salim Nasser al Siyabi, the restaurant is part of a development project spread over 50,000 sqm involving an investment of RO80 million. “A resort is planned to be built next to The Cave.” The mega resort will feature a seven-star hotel with 350 keys, he says.

Tourism sector grows

The Sultanate is set to lead the Middle East in terms of tourism growth, recording one of the strongest growth rates worldwide in 2014, according to the World Travel and Tourism Council. The Ministry of Tourism has also announced that the sector grew by 10 per cent last year, with over two million people visiting the Sultanate. Four- and five-star hotels have also recorded an 11 per cent increase in revenue over the last two years.

“The tourism sector is witnessing exponential growth during the past few years. Around 2.1 million tourists visited Oman in 2013. We expect the tourism sector to grow by five per cent in 2014. Currently, the tourism sector’s contribution to the gross domestic product (GDP) is 2.31 per cent,” says Salim.

The Ministry of Tourism is taking earnest steps to promote tourism through exhibitions such as ITB Berlin and Arabian Travel Market (ATM) in Dubai besides workshops and roadshows. “Roadshows are being conducted through 10 overseas tourism representative offices in GCC and European countries. We are concentrating on new markets such as India and other countries as well.”

“GCC tourists constitute around 40 per cent of visitors to Oman followed by European tourists from United Kingdom, Germany and France. India is an emerging market and the tourism ministry is working out plans to promote Oman in India in a big way targeting the movie industry, business and incentive groups and also as a wedding destination. With Oman Air connecting to various Indian cities, we are having a number of visitors from India. At this rate, India is certain to emerge as the number one market in 10 years,” Salim says.

“With its varied climate, tourist activities, distinct attractions and above all its unique culture, the Sultanate is poised to cater for every tourism niche. Whether it is leisure, business, cultural or eco-tourism, we are confident that Oman has what it takes to attract a diverse pool of visitors. We also see strong prospects for sports’ tourism through the ongoing infrastructure development, as well as investment opportunities in real estate,” says Hamza.

“We know there is a potential of success in our ITC business in Jebel Sifah and Salalah Beach. These two offer the community experience where visitors and residents come together to form this unique proposition. This in itself is a strong positioning statement for Oman tourism’s growth.”

Sunil Prabhakar, CEO, Travel Point, says “Tourism can be very important to a country’s economy, particularly in less developed regions, where it can drive growth but need to prosper and grow in a sustainable way.” On Travel Point’s initiatives to promote Oman as a tourism destination, he says TourOman, being a standalone inbound tourism division of Travel Point LLC, has expanded its visibility globally in all markets. With its multi-lingual team, TourOman is fully equipped to handle Leisure Groups, and other special interest tours. “We are launching Adventure Tourism in Oman in the coming season,” he says. The Big Bus service had a successful year and it is growing. “We are looking at extending the same services in other towns and looking at launching in different cities in the Sultanate,” he says.

The increase in tourism has also been mirrored by the growth in real estate spending. The sustained growth suggests that private sector investment and government policy, backed by financial policies set by the Central Bank of Oman (CBO), has also increased demand, creating an environment for the ITC markets to thrive.

Hotel occupancy registers rise

Hotel occupancy rates are growing. Says Garry Friend, general manager, Grand Hyatt, “Occupancy rates tend to fluctuate with the busier periods being at 90-100 per cent occupancy whereas during slower periods, usually in summer, occupancy tends to vary between 45-50 per cent. Oman is still growing in the hospitality sector and having more hotels in the country will certainly cater to more tourists that have been adding Oman as a unique holiday destination. Also local businesses can benefit from increased hotels because of an increase in event space.”

“We have always been a part of the roadshows and tradeshows that have been organised by the Ministry of Tourism and try to represent not only Grand Hyatt as a brand but also Muscat as a beautiful tourism destination. Hyatt also promotes the brand where we are always present to ensure Grand Hyatt Muscat receives exposure in countries like Germany, UK and the Gulf.”

Salim says “The hotel occupancy rate is around 48 per cent during the year, while it is 80 to 90 per cent during peak season. “We are confident that the hotel rooms will double and reach around 30,000 in the near future from the existing 14,000. In the next five years, around 5,000 hotel rooms are expected to be added,” he says. Additionally, several international airlines are expected to launch flights out of Muscat once the new Muscat International Airport is completed. The new airport will significantly boost the tourism sector, he adds.

Choice of hotels necessary

The Ministry of Tourism is playing its role in bringing all the possible initiatives to attract tourism in the country. Having said that, the country is lacking in infrastructure, says Sunil. “The country needs more choices of hotels, outdoor and indoor venues, and various kinds of tourism activities to attract all segments of International tourists. Additionally, the tourist visa procedures has to be eased out to certain nationalities to increase the volume of tourists. The new initiative in the pipeline- the common GCC visa for tourists should be rolled out by end 2014.”

Sunil says shortage of foreign language guides is the biggest issue facing the destination management companies in Oman, which hampers quality service. The Sultanate should rehabilitate all of its beautiful heritage places such as forts & castles and open up as a ‘museum concept’ for tourists to learn about its history.

“We feel the Ministry of Tourism should launch a robust marketing and direct campaign to end customer – ‘visual marketing’ on the international TV channels in select countries rather than the current traditional way of marketing the destination. The Ministry of Tourism must engage with the private sector for tourism investment more aggressively. This will successfully attract capital investment and allow the business to grow and develop,” he says. Additionally, the government should look at a more efficient way of clearing tourism projects through ‘Single Window Concept.’ Tourism is a thriving global industry with the power to shape developing countries in both positive and negative ways. This sector has remained robust despite the challenges. Ultimately, the success of the tourism sector depends on successful tourism enterprises’ with strong and collectively single vision,” he adds.

Traditionally reliant on oil revenues, the Sultanate is earnestly making tourism as a key sector for growth, bolstering economic diversification efforts, increasing demand for goods and services, which ultimately means more jobs and most importantly driving the growth of private sector and local outsourcing. Studies and reports have illustrated that the tourism industry offers six times more direct jobs than the automotive manufacturing industry worldwide; this speaks volumes on the potential to tap in such a fast-paced growing industry on the global arena and work towards putting Oman as a destination on the world travel map.

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