A broad push: Efforts are under way to expand offerings in segments ranging from MICE to golf

While Doha, Dubai, Kuwait, Manama and other port cities in the Gulf developed on relatively flat, sandy terrain, the ancient port settlement of Muscat grew around several peaks, which continue to define the city’s unique appearance. The country’s interior is ever more rugged. To the north, the Hajjar Mountains, which separate Oman from the UAE, dwarf the peaks of Muscat. To the west, the Rub Al Khali (the “Empty Quarter” desert region), sits on the country’s border with Oman, Yemen, the UAE and Saudi Arabia, creating the world’s largest sand desert. In the sultanate’s centre, mountains and caves mingle with barren scrublands. In the south, coastal areas enjoy rain from seasonal monsoon winds, which leads to a blossoming of greenery each summer. From an economic standpoint, however, the sultanate’s dramatic physical appearance does not come without difficulties. Stubborn rock formations can make construction projects a challenge. But with these drawbacks also come some advantages. The country stands out from its neighbours, with the rugged landscape containing some of the region’s most picturesque views.

Blessing In Disguise 

As authorities push on with their drive to diversify the country’s economy away from hydrocarbons, these mountains are turning out to be a blessing in disguise. Developing tourism is a top priority for the leadership, and in a region where neighbouring governments are also investing billions, Oman’s physical beauty helps it stand out. In recent years, the authorities have been working to harness the power of this beauty with their own investments, banking on a growing pool of visitors to help grow the non-oil economy. So far the progress is promising. In 2012, tourism saw positive indicators across the board. The tourism sector represented 3% of the GDP that year, or OR768.9m ($2bn), according to the London-based World Travel & Tourism Council (WTTC). That was up by 5.8% on 2011, outpacing the 3.1% average growth in the Middle East region. As for job creation, Omani tourism bucked regional trends. The sector contributed to the creation of some 70,000 jobs in 2011 and grew by nearly 4% in 2012. In the broader Middle East region, tourism job creation actually shrank by 0.6%, according to the WTTC.

Top-Down 

The Ministry of Tourism is the government’s principal actor in guiding sector development. Its main objective is to drive sustainable growth in the industry, while also increasing the ratio of Omanis employed in the sector. To achieve this, the ministry is working to promote the sultanate internationally as a tourism destination. Within the country, meanwhile, it forges connections among investors, business owners and the government. Omran, the ministry’s commercial arm, is behind several ongoing tourism projects, including new developments and training programmes.

On the development side, Omran has seen a great deal of activity over the past year. In September 2012, the development organisation announced the Duqm Crowne Plaza hotel would be ready for delivery by the fourth quarter of 2012. The project, a partnership between Omran and the InterContinental Hotels Group, started in August 2008. Located in the city of Duqm, where a massive oil storage facility, dry dock and free trade zone are also being planned, the hotel will likely serve both leisure and business travellers in the area.

Regarding Omran’s training and education goals, progress is being made as well. In September 2012, the development company announced its highest-ever intake of student interns from Omani colleges and universities. Through experiences side-by-side with professionals, the project is intended to provide potential employees the chance to see how the field operates and where they could apply their skills in the market. “The partnership between the Ministry of Tourism and the private sector is extremely important. We need the human resources of this country to drive the tourism and transport sectors and stimulate service-based job creation,” Wayne Pearce, CEO of Oman Air, told OBG.

Making Accomodations 

A growing cohort of Omanis trained in tourism-related fields should serve the country well as hotel capacity continues to climb. Between 2007 and 2011, total guest rooms and guest apartments in the country grew from 14,665 to 19,265, according to data from the Ministry of Tourism. Another 2000 are expected to become available between 2012 and 2013. Many of the hotels are located outside the capital, as well, furthering the government’s development goals by ensuring economic gains are spread throughout Oman’s regions.

Alongside hotels, several integrated tourism complexes (ITCs) are also planned. These areas, which include retail, dining, accommodation and other infrastructure, are meant to provide for all visitor needs in a single area. ITCs are spread across the country, with plans for construction in Muscat, Dhofar and Sur (see analysis).

Quality Control

To ensure consistent quality control for hotels, the Ministry of Tourism’s classifications department inspects and updates star ratings at hotels and hotel apartments biennially. The process is meant to both keep hotel operators aware and encourage them to continue making improvements to their offerings, according to ministry officials. “The bar needs to be raised at every level of service in local hotels. To sell Oman as a product they have to have the service concept down,” David Crickmore, CEO of Amouage, a luxury fragrance line out of Oman, told OBG, Following an inspection, hotels have six months to apply recommendations before a final rating is given. Given steadily increasing hotel capacity, a consistent quality control system is important, providing visitors with a way to compare hotels and giving operators incentives to keep investing in improvements. During the 2010-11 inspection period, two hotels’ ratings increased while eight facilities saw their ratings decrease. “We are definitely stricter than before, and that has encouraged hotel operators to improve dramatically, which can only be beneficial to Oman as a tourism destination,” Khamis Taraif Al Ghazali, one of the ministry’s quality controllers, told local press in August 2012.

A Natural Choice

Building up hotel capacity across the country is set to help the sultanate exploit its geographic potential. Thanks to its unique topography, Oman’s regions exhibit a broad range of climates and geographical forms. Perhaps the most famous is the south-east monsoon, known as the khareef. Each summer, the khareef brings to the southern region of Dhofar rain, cooler weather and visitors from around the world. The number of tourists coming to the region during the monsoon season has been increasing, rising from 23,043 in 2009 to 339,579 in 2011, according to data from the Ministry of Tourism. The number of Omanis visiting the region has also grown. The share of Omanis increased from 56.1% to 67.2% of total visitors during the same period, showing growth potential in the country’s domestic tourism market (see analysis).

Tourism authorities are also keen on taking advantage of Oman’s mountains and valleys to expand the camping and adventure segment. “Oman’s unique geography and culture are its greatest tourism selling points,” Mehdi Al Abduwani, CEO of National Ferries Company, told OBG. “It is paramount to promote and enhance these while developing maritime transportation in to connect the various ITCs and attractions such as Matrah and the Port Sultan Qaboos area.” With the country’s mountains forming an intricate network of caves, cliffs and river valleys (called wadis), the ministry is looking to boost investment in this largely untapped sector. From October 30 to November 1, 2011, Muscat hosted the third annual Geotourism Conference, featuring delegates and speakers from Africa, Asia, Australia and North America. “The ministry is looking to expand its network of geotourism expertise, and we welcome the involvement of relevant companies,” Said K Al Mushrafi, the director of tourism product development at the Ministry of Tourism, said when he announced the event.

Improvements

In January 2012, the Ministry of Tourism announced plans to upgrade the Via Ferrata (VF) hiking and climbing trails snaking through the sultanate’s canyons and wadis. (Via Ferrata, meaning “iron road” in Italian, was a term used for trail networks built to facilitate troop movements through the Italian Alps during the First World War. The Omani government has adopted the term.) Work on the VF trails includes ladders, cables and metal rungs to assist climbers with minimal equipment. The ministry has installed three routes in Oman – one at Jebel Shams (VF1) in Al Batinah Governorate, one at Snake Canyon (VF2) near Bilad Sayt and one at Bandar Khayran (VF3) on the island of Bandar Khayran. Efforts to promote Oman’s geography received a welcome boost in September 2012, when Oman hosted the fourth annual Red Bull Cliff Diving World Series. The contest, founded in 2009, held its final event in Wadi Shab. The event, just under 150 km southeast of Muscat, drew an estimated 5000 visitors. In some cases, non-tourism infrastructure upgrades can also offer a boost to tourism development efforts. In March 2012, the authorities opened Wadi Dayqah Dam, near the city of Quriyat. The structure contains a reservoir with a storage capacity of 100m cu metres, according to officials from the Ministry of Regional Municipalities and Water Resources. While the dam itself will increase drinking water supplies for Quriyat and the surrounding region, it has also created a visitor site for tourists, including a park, picnic area, palm forests and a scenic riverbed. With trail and outdoor recreation upgrades all in the pipeline, adventure tourism is set to enjoy increased investment in coming years. Enlarging the segment’s role in the overall tourism sector holds several potential benefits for Oman. Because its geography is so diverse and different compared to the rest of the region, tapping potential for outdoor activities helps Oman stand out as a unique tourist destination in the GCC. The sprawling locations of natural features also further government efforts to expand rural development by helping regions attract increased tourism revenues.

Golf In The Gulf 

Although authorities are working to improve access to outdoor recreation, they are also promoting efforts to increase opportunities for fitness and sport within the country’s urban areas as well. Through golf, sailing and other developments, the sultanate has been steadily adding to its list of sport activity opportunities. The Almouj Golf Course at The Wave Muscat opened its first nine holes in December 2011, and by June 1, 2012, golfers were able to play all 18 holes. The course, designed by Australian golfer Greg Norman, joins the country’s other two grass courses located at Muscat Hills and Ghala Valley. Oman’s golf development is part of a wider trend in the region, where countries are working to build up their capacities as golf destinations. Given the region’s year-round sunny weather, officials believe the potential exists to attract foreigners looking to play the sport while it is snowing in their usual golf venues.

The development of golf is not strictly geared toward foreigners, however. The newly finished Almouj Golf Course also plays host to the sultanate’s first golf academy. Another golf academy was subsequently opened in May 2012 at the Muscat Hills Golf and Country Club. In addition to adult and family classes, the academy at Oman’s oldest grass course also runs a programme for youth golfers. Authorities hope these efforts can reap dual economic rewards, supporting tourism and sports-related industry by boosting demand from foreign and domestic golfers for training, equipment and club use.

Making Waves 

Although Oman’s cliffs and wadis provide enjoyment for climbers and dramatic landscapes for golfers, these rugged geographical features also meant Omanis have long had to look to the Gulf of Oman and the Arabian Sea for their livelihood. Many of the country’s principal settlements grew up along the coast, and coastal trade helped connect Oman to the region through an array of exchange networks.

To rekindle this heritage, the government created Oman Sail, offering sailing education programmes and training a new generation of Omani sailors to compete internationally. Since its first classes in October 2009 at the Marina Bandar Al Rowdah, the organisation has continued to train young Omanis in the sport. Building on its current operations in Muscat, the organisation plans to expand with new locations. Schools are set to be built in Salalah, Sur, Sohar and Khasab. In February 2012, a new marina and sailing school opened at Mussanah Marina, 85 km north-west of Muscat. “The development of marinas and ports infrastructure is a vital element to diversifying and improving accessibility to Oman’s tourism facilities and attractions,” David Graham, the CEO of Oman Sail, told OBG.

Additionally, increasing maritime activities could offer tangible economic benefits. As sailing grows in popularity, the country could enjoy a heightened international profile and more tourism-based water sports. With 3000 km of coastline on open seas, the sultanate has many locations for sailing. The warm climate, especially in winter months, lets sailors from around the world to avoid the cold at their home ports. The country’s rugged coast, especially along the Musandam Peninsula on the Stait of Hormuz, offers stunning views with deepwater fjords between towering cliffs. For boats with deeper keels, this geography is excellent, allowing sailors to move closer to landscapes than possible in other locations, Bob Looker, general manager of Marina Bandar Al Rowdha, told OBG. Boat racing is gaining momentum. The annual Muscat-Khasab Regatta has grown more than seven-fold, from 20 to over 140 participants between 2009 and 2012, according to Looker. In addition the number of visitors this brings, these races also raise Oman’s profile as a maritime destination.

Culture & Museums 

With access to three different seas and ports located along trade winds, Oman’s strategic location has attracted the attention of global powers throughout history. Local groups, along with the Persian, Portuguese, Ottoman and British empires, fought to gain control of different regions of today’s sultanate. Standing testament to this rich history are over 500 forts, castles and towers, according to the Ministry of Tourism. These include the Bahla Fort, a UNESCO World Heritage Site located in the Ad Dakhiliyah Governorate, about 200 km south-east of the capital.

In 1988, a year after its UNESCO designation, this site was also placed on the UN’s list of sites whose heritage is in danger. Restoration on the 13th-century fort has been under way ever since. The Ministry of History and Culture has worked with UNESCO representatives to ensure restoration takes place using only earthen materials authentic to the building’s original construction. In June 2012, the ministry announced that the fort would be able to be fully open by the end of the year.

The Ministry of Heritage and Culture has also been ramping up its activities in recent years, spearheading efforts to upgrade and expand the sultanate ’s museum network. In September 2012, Jamal Hassan Al Moosawi, director of the National Museum, announced work on its main structure was 95% complete and would finish before the end of 2012. The museum, formerly known as the Museum of Bait Assayed and located in the home of Nadir bin Faisal bin Turki, opened in 1978. In 1988 the museum’s location was moved to Ruwi, near the centre of old Muscat. Its exhibits include Omani handicrafts (silver, copper and others), examples of Omani ships and belongings of the area’s Busaidi dynasty, which ruled an empire that extended all the way to Zanzibar in the late 15th and early 16th centuries. As work on the outer structure of the museum draws to an end, progress on the interior is fast under way.

“[W]e are in the process of launching the fit-out [final decor and furniture], which is the second-largest element of the construction,” Moosawi told local media in September 2012. “The fit-out stage of construction will start towards the first half of next year and include interior designing, creation of showcases and installation of audio-visual systems. This stage is expected to be complete by 2014.” The museum is set to have 17 exhibition halls housing over 6000 archaeological collections, according to construction plans.

Foreign Interest

As work on the National Museum moves forward, the project has also attracted foreign interest in the fields of research and archaeology. A Portuguese conservation team is working to restore 50 of the 1672 artefacts that are set to be included in the museum’s exhibits. Their work, funded by the Portugal-based Calouste Gulbenkian Foundation, demonstrates the growing potential for research partnerships, as the government continues to invest in preserving the artefacts that tell the stories of the country’s past.

Work on the museums is part of a Ministry of Heritage and Culture plan announced in February 2011 to give Oman’s museums and cultural sites a “facelift”. The ministry’s aims are part of a broader push to increase the number of museum visitors, both Omani and international. These investments in museums and conservation, the authorities hope, will have positive effects for both tourism and education in the sultanate. Indeed, boosting the country’s museum offerings can only offer more depth to visitors’ experiences, in addition to creating niche positions in research, archaeology and curation. Once finished, the museums can also offer Omani students a chance to have closer look at their past.

Suiting Up

Although leisure tourism has comprised the majority of tourism revenues, stakeholders are also eyeing the expansion of business tourism offerings. In 2011, the majority of travel and tourism’s contribution to Oman’s GDP came from leisure spending (64.8%) as opposed to business spending (35.2%), according to the WTTC. That ratio is changing. In 2012, the WTTC expects business spending to rise 8.6% to OR463.9m ($1.2bn), or twice as fast as leisure spending, which is expected to grow by 4.3% to OR819.7m ($2.14bn).

Part of these changes are the result of growing investments in Oman’s capacity as a centre for business tourism. The sultanate already has a handful venues currently serving the meetings, incentives, conferences and exhibitions (MICE) segment. The state-owned Oman International Exhibition Centre, located near Muscat International Airport about 35 km outside of the city centre, has been operating since 1985. The facility has two halls with 12,000 sq metres of indoor space, as well as 3000 sq metres of outdoor space. In the first six months of 2012, the venue hosted 22 events that showcased everything from textiles to camels.

Additionally, many of the sultanate’s major hotels include conference rooms and exhibition spaces in Muscat and Salalah. Expanding MICE facilities has been a top priority for the country’s tourism authorities. “We are keen to capitalise on the potential benefits of a thriving MICE segment to further foster the growth of Oman's tourism industry,” Haitham Mohammed Ghasani, director of tourism promotion at the Ministry of Tourism, said during the 2012 Gulf Incentive, Business Travel and Meetings exhibition in Abu Dhabi. “A number of measures are currently being undertaken to build Oman's MICE sector offerings,” he said.

The keystone of these measures is the Oman Convention & Exhibition Centre (OCEC), set to be a 22, 000-sq-metre facility just outside of the capital. In addition to a 3200-person auditorium and 14 theatre-style meeting rooms with capacities ranging from 70 to 360, the OCEC has a ballroom and two dividable exhibition halls. This variety of venue sizes and types, its planners hope, will allow the facility to serve a wider range of events. Construction is set to conclude in 2016.

A new class of visa announced on February 20, 2012, could also boost the MICE sector by making travel to Oman less costly. The Ministry of Tourism announced the new visa class in February 2012. Previously, all tourists were required to purchase a OR20 ($52) visitor’s visa, valid for one month. Under the revised rules, visitors staying for 10 days or fewer can purchase a less costly OR5 ($13) short-term, single-entry visa. Although a reduction of $39 could seem trivial for one member, spreading that amount across foreign attendees could translate to serious savings for businesses looking to host events in the sultanate.

The Rights Connections 

To ensure its infrastructure is able to handle increased visitor numbers from business, leisure and other segments, the authorities have also initiated a number of tourism-related infrastructure projects. A total of four new regional airports are under construction at Sohar, Ras Al Hadd, Duqm and Adam, while Muscat International is in the midst of a major expansion that will see passenger capacity expanded to 12m. In 2011 a total of 6.4m passengers used the airport. The completion of the two airport expansion projects and the four new constructions is expected by 2014 (see analysis).

Upgrades are scheduled for sea connections as well. The construction of a dedicated cruise passenger terminal is under way in Salalah, the capital of Dhofar Governorate. Although the port in Salalah already receives cruise liners, authorities hope to increase the region’s capacity and build on the success of Muscat’s Port Qaboos cruise terminal, which became operational in February 2010 (see analysis).

Outlook

As the sultanate builds up its tourism capabilities through more hotels, conference venues, golf offerings and outdoor activities, the economy as a whole stands to gain. As the sector grows though, several challenges are likely to emerge. While the government is investing heavily in infrastructure development, it will take some time before projects like new roads, signage and other useful developments for visitors have their full effects. In addition, potential economic uncertainty in Europe could put downward pressure on visitor numbers. None of these challenges are insurmountable, however, with a combination of government players, private investors and foreign developers all working to drive the tourism sector forward. Indeed, with developments in progress across the country, the sector seems already on its way towards growth.