Oman’s annual international tourism revenue exceeds $1bn mark

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With solid growth in arrivals projected for the next few years, Oman is preparing to accommodate an increase in demand with new hotel developments.

According to a report issued in mid-August by the UN World Tourism Organisation (WTO), Oman’s tourism sector performed well in 2012, in part due to a challenging environment for some other regional destinations. While some countries in the MENA region lost ground or posted only minimal growth, the strong demand cited in the report pushed Oman’s international tourism revenue through the $1bn mark for the first time last year, having added $100m to its 2011 receipts of $996m and more than $300m on its 2010 performance.

The tourism sector is already an important part of the economy. In its report on the economic impact of tourism for this year, the World Travel and Tourism Council (WTTC) said the industry accounted for 7% of GDP in 2012, once indirect effects such as sector-related construction, services and state spending to support tourism were factored in. Tourism’s total contribution amounted to $5.2bn last year, a figure that the WTTC said would increase by 8% in 2013 and by 5.5% annually through to 2023.

The report also found that there was near parity between the impact of domestic and foreign tourism, with just over half of spending in 2012 coming from locals, a split the WTTC said would be maintained over the next 10 years. By contrast, regional leader the UAE relies on foreign visitors for almost 80% of its tourism income.

This high domestic spend could be an indicator of the success that Omani tourism agencies have had in promoting the country’s holiday potential to nationals and expatriates, and also of the broader range of tourism options within Oman compared to other Gulf states. The forecast increase in spending also points to growth within the local economy, with more Omanis now able to afford leisure travel.

Supply is ramping up to meet demand, with a number of hotels under development. According to STR Global’s “Construction Pipeline Report”, published in July, Oman has the highest expected growth rate for hotels in the region. The report said nearly 4600 rooms are in the planning, final planning or construction stages, which upon completion would boost capacity by nearly 60%. A report carried by local media in late July said more than 3000 new rooms are due to be added to hotel stocks by the end of next year.

Much of this additional capacity will be in resort-style complexes outside the capital, both on the Arabian Sea and Gulf of Oman coasts, or in some of the Sultanate’s more remote and rugged regions; the latter are smaller establishments catering to ecotourism, a niche Oman is working to develop.

The new hotel developments, especially those aimed at specialised tourism segments, will help put the sector on a new footing, the minister of tourism, Ahmed bin Nasser bin Hamad al Mehrzi, said in late July.

“These ‘next generation’ developments take into account community and environmental values,” he said. “We are looking to boost our competitiveness and provide sustainable jobs across the country.”

Among the source markets to which Oman will be looking to fill these new developments is India, which accounted for more than 220,000 visitors last year, a 35% increase on 2011, according to government figures from early August. Oman Tourism, the state agency tasked with promoting the Sultanate as a holiday destination, recently announced a strategy to position Oman as a wedding destination, offering honeymoon packages for Indian couples. Oman is investing strongly in the Indian market, conducting promotions in more than a dozen cities and even providing assistance to an Indian film company to shoot part of a Bollywood romance in Oman, a move officials said they hope will boost the country’s appeal.

By targeting growing markets such as India, and by providing niche offerings, Oman should be able to broaden its appeal as a destination and build on its solid results from recent years to develop a stronger tourism industry with a wider range of products.

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