Building up: A long list of hotel and infrastructure projects is set to boost capacity

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As the authorities in Oman ramp up efforts to expand the country’s tourism sector, a combination of government and private investment is flowing in to build necessities like accommodation and infrastructure. There were $2bn worth of tourism projects in the pipeline in March 2012, according to the state-backed tourism investment firm Omran, with projects ranging from five-star hotels to sky trains.

Hotels

Growing options are a part of Oman’s tourism infrastructure expansion. The industry has seen rapid growth in recent years. Total hotel rooms and apartments went from 14,665 to 19,265 between 2007 and 2011, according to the Ministry of Tourism.

This growth does not seem set to slow, either. According to the Dubai-based magazine Hotelier Middle East, 17 hotels will become operational in Oman between 2012 and 2016, six of which are set to open in 2012. In 2012 and 2013 alone, new construction will add an expected 2000 rooms to capacity. Of these, just seven are set to be in Muscat, with the rest built in other areas like Duqm, Salalah and Khasab. The majority of this new capacity is set to be aimed at the luxury market, with 10 of the 17 hotels listed as five-star projects.

To make sure hotels can serve a larger pool of customers, authorities say they are also working to encourage construction of one-, two-, and three-star hotels. “We are supporting these types of projects,” Amina Abdullah Al Balushi, the director of statistics and geographical information at the Ministry of Tourism, told OBG. “We expect by 2015 more than 2000 rooms will be available in different types of accommodations, which will let the sector cater to a range of budgets.”

New hotel investments are also flowing into a wide range of geographic locales across Oman. In Muscat, several multinational brands, including Golden Tulip, the UK-based InterContinental Hotels Group, and the US-based Starwood Hotels and Resorts are working on projects set to open in 2012-14.

Regional Draw

Outside Muscat, Dhofar has also seen growing hospitality-driven construction. In May 2012, Dubai-based Shaza Hotels announced Shaza Salalah, a beach resort in Dhofar. The complex, which faces the Indian Ocean, is set to include 130 rooms, 80 hotel apartments and 80 villas, as well as retail and dining outlets. The resort’s opening is scheduled for 2016.

Another project in Dhofar, the Rotana Salalah, was delayed until 2013 due to construction issues, Selim El Zyr, the firm’s CEO, said in early 2012. Construction of the hotel is scheduled to reach completion in 2013. “We are waiting now on the project managers, who have told us that there are some material delays,” El Zyr said.

Other provinces in the sultanate have hotel projects under way as well. In 2012, UAE-based Hospitality Management Holdings opened its Ewa Hotel Mahda in the inland Al Buraimi Governorate. The hotel is in the mountains about 20 km from the town of Buraimi and 25 km from the city of Al Ain in the neighbouring UAE. In the city of Sohar, located just north of Muscat in Al Batinah Province, Singapore-based Frasers Hospitality is making progress on its Fraser Place serviced residences.

The company operates properties in 39 cities across Europe, Asia and the Middle East.

The spread of hotels across many of the sultanate’s urban areas demonstrates investors’ growing interest in places outside of Muscat. With its many areas of geographical and historical interest, Oman’s regions have the potential to attract a variety of visitors. These investment patterns fit well within the authorities’ broader goal of ensuring that the benefits of tourism development are spread across the country.

All The Trappings

In addition to free-standing hotels, a number of areas are combining hotels, retail, dining and other tourist attractions in the same location to create integrated tourism complexes (ITCs). Several of these projects are being spearheaded by the Oman-based Muriya Tourism Development. The firm, a partnership between Egypt’s Orascom Development Holdings (which owns 70%) and the state-backed tourism developer Omran (30%), has projects in progress in Muscat, the Dhofar region and elsewhere in Oman.

Jebel Sifah, a development outside of the capital, aims to create an area that includes all the necessities for a visitor in one place: hotels, residences, retail, dining, a marina and an 18-hole golf course designed by architect Peter Harradine. The project was about 60% complete as of July 2012, but some parts are already fully operational. The Sifawy Boutique Hotel opened its doors in September 2011, and the complex’s 100-berth marina was prepared to receive boats in March 2012. Work is set to begin on the Banyan Tree, the Missoni and the Four Seasons hotels in early 2013. The project represents an investment of more than $400m, according to Muriya. The firm is also working on projects of similar magnitude at Salalah Beach Resort and As Sodah Island, both mixed-use developments located in Dhofar, the sultanate’s southern-most province.

The growth of larger tourism complexes has also attracted regional investors. Oman’s Ministry of Tourism and Qatari Diar, the property arm of Qatar’s sovereign wealth fund, signed a memorandum of understanding in July 2012 establishing a partnership to construct three mixed-use developments. The ITCs are set to include a mix of hotels, residential villas, shopping, marinas and spas, according to Qatari Diar.

Travel Infrastructure

As the country’s hotel capacity continues to expand, so too does its transport capacity. Its largest airport, Muscat International, is undergoing an expansion project which will include a new terminal. Upon completion of the first new terminal, estimated to take place in 2014, the airport is set to have an annual passenger capacity of 12m, nearly twice the 6.4m passengers it served in 2011. The project also allows for the option of three subsequent terminals, which could boost capacity by a further 12m each, bringing the airport’s capacity to 48m travellers.

Given Oman’s relatively large size, however, the authorities have opted to invest in regional airports in addition to upgrading Muscat International. The country’s second airport, located in Salalah, is also undergoing an expansion project that is expected to lift its annual passenger capacity to 1m; in 2011 it handled 513,278 passengers. These expansions are joined by plans for four new regional airports at Sohar, Ras Al Hadd, Duqm and Adam. Each is set to have an annual passenger capacity of 500,000, excepting Adam, which is set to have a capacity of 250,000. The four facilities are set to be fully operational by 2014. As new airports open and provinces become more connected, these areas will likely find it easier to attract visitors.

Inroads To Nature

Tourism infrastructure investments are also helping to develop Oman’s natural sites, making them more easily accessible for visitors. Officials from the Ministry of Tourism announced plans for an aerial tramway at Jebel Akhdar and four other tourist areas in July 2012, according to local media. Jebel Akhdar (“green mountain” in Arabic) is the highest point in Oman, standing at around 3000 metres. An August 2011 decree placed the mountainous area under special protection to safeguard its natural beauty. The Ministry of Tourism and Omran are now working together to expand tourism infrastructure for the area. A study of aerial tramway logistics was under way in July 2012, with construction set for the end of 2012.

At Al Hoota cave, located inland from Muscat near Jebel Shams, the authorities have been working to make infrastructure improvements as well. The complex is estimated to be 2m years old and stretches 4.5 km into the earth, making it one of the world’s largest and oldest cave complexes. First opened to visitors in November 2006, the cave sees an average of 400 to 750 visitors per day, depending on the time of week. Investments in the 50-storey cave complex have been ongoing. In 2009, the Ministry of Tourism issued a tender for an electric train to transport visitors, while in 2010 and 2011, Bahrain-based environmental engineering consultancy COWI was commissioned to research ways to temper the cave’s seasonal flooding and investigate modifications for the visitors centre.

During the third quarter of 2012, the Ministry of Tourism was in the middle of studies on ways to develop Al Hoota, along with the sultanate’s other caves, such as Majlis Al Jinn Suhoor in Salalah. Work on cave complexes and other natural sites could do much to buoy ecotourism, one of the niche markets that officials are working to expand. Investing in environmentally friendly developments, meanwhile, could help protect the natural beauty that makes these areas visitor destinations in the first place. Coupled with the regional airports that are now in development, the infrastructure for ecotourism could create a potent combination for boosting tourism by making these areas easier to reach.

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The Report: Oman 2013

Tourism chapter from The Report: Oman 2013

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