While the focus on preserving Oman’s natural surroundings and cultural traditions has allowed the sultanate to retain much of the spirit of historic Arabia, the arrival of modern infrastructure and an emphasis on new sectors like activity-based tourism and ecotourism suggest that the country is firmly adapting to the needs of the modern global travel market. Oman has some of the most diverse offerings in the Gulf region, including several UNESCO World Heritage sites, contemporary urban centres, and natural and coastal areas, yet it continues to rely on a few specific destinations and times of the year.
While the country welcomed a record number of visitors in 2015 and 2016, the ultimate goal of transforming it into a year-round destination that appeals to a broader set of travellers continues apace. With the addition of the Oman Convention and Exhibition Centre (OCEC), infrastructure initiatives, new hotels and other flagship developments, the country is well on track.
STRATEGIC PLANNING: Another key aim is to boost annual international arrival numbers from 2.6m in 2015, to 5m in 2020 and 11.7m by 2040. In early 2016 the government released its 25-year National Tourism Strategy (NTS) to help develop travel-related infrastructure across the country. Being implemented by the Ministry of Tourism (MoT) and Spanish consultancy THR, the NTS targets an increase in the sector’s contribution to GDP from 2.6% in 2015 to over 6% in 2040. It is expected that upwards of 500,000 direct jobs will be added over that period, with 75% of those to be taken by locals.
To help achieve these ambitions, the authorities have pledged to invest OR20bn ($51.9bn) in the industry, with media reports suggesting that government is also seeking strong input from the private sector. In 2016, for example, it was reported that the MoT was hoping to attract more than 88% of the estimated $3bn required investment from private funding. In 2016, 82% of the financing channelled into the country’s tourism industry came from private sources, according to local media reports. In October 2017 there were signs the country’s strategy was beginning to have an effect, with visitor numbers up 21% year-on-year (y-o-y), and likely to hit 4m in 2017 – an increase of 1.4m in just two years.
CLUSTERS: Central to the NTS is the development of 14 tourism clusters aimed at boosting the number of visitors and encouraging longer stays in the country. The targeted sites run the gamut of being already well known, like the old cultural areas within the capital Muscat, to others that will be built from the ground up. The complete list of sites is not set in stone, and development of the clusters will not be launched simultaneously, as the MoT views some sites as more ripe for development and critical to the success of the NTS than others. Each cluster will target a specific experience and type of visitor.
The first five-year phase, which runs up to 2021, will include cultural, natural and urban sites such as the historic Frankincense Trail in the Dhofar region, the rugged coastal areas of the Musandam Governorate on the Straight of Hormuz, the forts and mountainous villages in Al Dakhiliyah, and the coast of Al Sharqiyah South Governorate.
Later phases of development will comprise Bedouin areas in the Al Sharqiyah North Governorate, parts of Al Batinah South and Masirah Island. Three additional clusters in the Al Dhahirah, Al Wusta and Al Batinah North governorates are also targeted for development starting from 2026. While from 2031 the MoT plans to invest in the dunes near the UAE border and other desert areas.
In late 2017 the MoT and the state-run Oman Tourism Development Company (Omran) signed an agreement for the maintenance and promotion of Nizwa Fort, one of Oman’s oldest and best-preserved examples of local architecture, with parts dating back to the 12th century. “This collaboration marks a new era for one of Oman’s treasured sites and demonstrates the sultanate’s commitment to finding innovative ways to promote Oman’s unique tourism offering,” Mohammed Al Mahruqi, a board member for Omran, told local media in September 2017. “The management and rejuvenation of historical sites such as Nizwa Fort will create a unique experience in the region,” Al Mahruqi added.
INVESTMENT OPPORTUNITIES: With the authorities seeking stronger private sector involvement in the NTS – citing an investment expectation of approximately $30.8bn by 2040 – there are likely to be plenty of opportunities for collaboration between the private and public sector.
Some sites selected as clusters for later stages of the NTS have not served as traditional tourist destinations, and the existing transport infrastructure in and around those areas is significantly lacking. Upgrades to the country’s road systems would certainly benefit from public-private partnerships going forward, and the construction of hotels, restaurants and entertainment facilities – as well as the training of employees – should also create opportunities for new partnerships and other types of private sector involvement in the coming years.
BY THE NUMBERS: According to the World Travel & Tourism Council (WTTC) “Travel and Tourism Economic Impact 2017” report for Oman, the direct contribution of travel and tourism to the economy reached OR841.3m ($2.2bn) in 2016, or 3.2% of total GDP. This was forecast to grow by 8.1% over 2017 and to continue by an average of 6% per year between 2017 and 2027, by which time the sector will be worth OR1.63bn ($4.2bn), or 3.9% of GDP. Indirectly, the travel and tourism sector was estimated to have contributed OR1.93bn ($5bn), or 7.3% of total GDP in 2017, with this predicted to increase to OR3.72bn ($9.7bn) by 2027 to hit 9% of overall GDP. The WTTC reported that the sector’s direct contribution to GDP placed it 110th out of 185 surveyed countries in 2016 in terms of overall percentage. However, Oman’s estimated real growth of 8.1% in 2017 placed it 15th overall in terms of direct contribution to GDP, almost double the Middle East average of 4.6%, and 9th overall in terms of total contribution.
Investment in 2016 hit OR273.3m ($709.7m), accounting for 3% of total funding, and was predicted to rise by 10.5% in 2017, and by an average of 5% per year over the next decade to reach OR492.8m ($1.3bn) in 2027, according to the report.
While the official data had not been released at the time of publishing, the predicted growth for 2017 means Oman would have had the third-fastest rate of tourism investment growth among the countries listed that year. This is against international and Middle East averages of 4.1% and 7.3%, respectively.
TOURISTS: Oman’s National Centre for Statistics and Information (NCSI) supported these findings, reporting that tourism will rank among the sultanate’s main growth drivers for economic development in the near future, alongside manufacturing and wholesale and retail trade.
According to the NCSI, the number of inbound tourists to Oman has nearly tripled, from 1.1m in 2005 to 2.6m in 2015 and 3m in 2016. In the first nine months of 2017, 2.7m people visited the sultanate, with the highest number of people coming from the GCC (1.39m), India (253,000), the UK (142,000), Germany (119,000) and Pakistan (72,000).
However, it was also noted that numbers during the khareef (monsoon) season fell slightly y-o-y in 2017. The event is usually a high point for both domestic and inbound tourists, when the mountains around Salalah turn into a rich green landscape. Between June 21 and September 21 total khareef season visitor arrivals were down from 640,775 in 2016 to 638,119. Visitors from the GCC, including domestic travellers, accounted for 89.7% of the total.
PROMOTING OMAN: While foreign demand has been increasing over the last few years, industry insiders feel that more still needs to be done to market Oman abroad. “The promotion of Oman’s tourist offering must be done through a unified approach to make sure stakeholders don’t pursue independent promotion efforts, which could potentially flood the market resulting in oversupply,” Nasser Al Sheibani, CEO of Al Mouj Muscat, a waterfront residential, leisure and retail community, told OBG.
In 2010 the sultanate launched its first global branding campaign. Since then, it has continued to invest in promoting itself, primarily as a premium destination but also targeting other segments of the sector. While the MoT experienced some budget cuts in 2016 due to reduced government revenues caused by low global oil prices, it still managed to launch several major initiatives. Most notable was a digital and social media strategy aimed at increasing the country’s online presence, which led to the ministry winning the “Best Usage of Social Media” award at the Arabian Travel Market expo in Dubai in April 2017. The ministry has since continued to pursue its digital strategy, with a particular focus on large markets like Europe, China and India.
SAFETY & EASE: The sultanate’s image also benefits from the fact that many observant Muslims find travel in the country to be easier than in Europe or the US. In 2017, and for the second year in a row, Oman made the list for the top-10 countries on the Global Muslim Travel Index, issued by MasterCard and halal travel and tourism ratings agency CrescentRating, placing 7th in 2016 and 9th in 2017. Oman ranked highly for safety, airport facilities, ease of access to prayer spaces and halal dining options. This is increasingly important, with the Muslim travel market expanding rapidly and expected to be worth approximately $220bn in 2020, up from $155bn in 2016, according to the index.
The sultanate has also benefited from its stability in a volatile region, with travellers – especially those from the GCC – coming to Oman ahead of places that have been caught up in civil unrest. “Oman’s tourism sector has flourished despite the instability of other tourist destinations in the region. It has consolidated its position as an attractive tourist destination by leveraging its diverse landscape and tourist-friendly local culture,” Ahmed Dabbous, CEO of Muriya, an integrated tourism project developer, told OBG.
VISA REFORMS: In recent years Oman has eased visa restrictions in an attempt to opened up visitation rights to more nationalities. In October 2017 the sultanate expanded the list of countries whose citizens qualify for unsponsored e-visas. Indians, Russians and Chinese joined citizens of 25 other countries, including Azerbaijan, Iran, Bosnia, Peru, Turkmenistan, Vietnam and Mexico, recently added to the list of those who are now able to travel to Oman as long as they have a passport valid for six months, round-trip flight tickets, a confirmed hotel reservation and an entry visa to the US, Canada, Australia, the UK or Schengen zone. Certain family members, such as spouses or children, are also able to enter the country while accompanying them.
“I think this [was] a move many people in the hospitality sector were waiting for,” Firas Rashid, director of sales and marketing at Anantara Al Jabal Al Akhdar Resort, told local media in October 2017. “The MoT has made this one of the areas for Oman to expand its economy, and if you look at Russia, India and China, these are three of the countries with the largest growing portion of travellers,” he added.
Officials also issued new regulations on one-year multiple entry visas in 2017, allowing visitors to spend a full month in the country, rather than the previous three weeks. At the same time, it increased the price of short-stay visas, removing the OR5 ($13), 10-day visa and replacing it with a one-month visa that costs OR20 ($52). According to Firas Matraji, CEO of Barr Al Jissah resort development, this is unlikely to have a negative impact on foreign tourist arrivals. “This reform was actually very positive,” he told OBG. “Because the visas are for 30 days instead of 10, it can encourage tourists to spend more time in the country. There has been a major improvement in the visa situation in recent years. While there is still significant room for growth, if you compare it to two years ago, it is a large change.”
TAKING TO THE SKIES: Located 32 km from the old city centre, Muscat International Airport (MIA) is the main gateway into the country for most international visitors. The airport, which first opened its runways in 1973, has recently undergone a major expansion with the addition of an international terminal completed in late 2017 and set to open by the end of 2018. The new terminal, under construction since 2010, will have the capacity to handle 12m passengers per year, with the airport able to accommodate up to four times that amount after a series of scheduled future expansions. The project has been billed as the largest civil construction undertaking in the sultanate’s modern history.
MIA now covers an area of 580,000 sq metres, has 86 check-in counters, 20 self-service check-in kiosks, 12 transfer desks, 56 arrival counters, 10 baggage carousels, a 90-room airport hotel and car parking for up to 8000 vehicles. The airport’s previous runway was extended in 2014, and is now 4 km long, with a new 4-km runway added as part of the most recent slate of upgrades. This means that MIA now administers two runways each capable of handling up to 40 flights per hour, including Airbus A380s, the largest passenger plane currently in operation.
Additional airports link Oman to the outside world. Located in the Dhofar Governorate, Salalah International Airport (SIA) is the second-largest airport in the country. SIA began operations in June 2015 after an investment of around OR300m ($779m) replaced an older 500,000-capacity airport. SIA spans roughly 65,000 sq metres and can accommodate around 2m passengers per year, with future expansion plans aiming to increase this to 6m. Like MIA, SIA is managed and operated by the government-owned Oman Airports Management Company.
A new airport in Sohar, 220 km north-west of Muscat, saw its first commercial landing in November 2014, despite incomplete construction on its terminal building. In 2015 Larsen & Toubro (Oman) was awarded the OR36m ($93.5m) contract for the third phase of construction on the airport to build a passenger terminal building and a dedicated cargo terminal capable of handling around 50,000 tonnes of air freight per year. The airport is set to have a capacity of 250,000 passengers per year. In July 2017 Sohar International airport became the third hub for global airlines, after MIA and SIA, following the launch of flights by the UAE’s Air Arabia between Sharjah and Sohar. A month later Qatar Airways started its own international service, between Doha and Sohar, with three weekly flights (see analysis).
FLY HERE, NOT THERE: Several other regional airports have also been established in recent years, including one in the central-eastern city of Duqm, where an entirely new port city is being constructed.
Duqm Jaaluni Airport, which has been up and running since 2014, has four weekly flights to and from Muscat, a capacity of 500,000 passengers per year, and a 4-km runway capable of handling wide-bodied jets, paving the way for the airport to receive international flights in the future. Until now the airport has been using a temporary terminal, but according to media reports, a new terminal is estimated to be completed by January 2018.
Located in the Al Sharqiyah South Governorate, in early 2016 construction on the first stage of the OR250m ($649.2m) Ras Al Hadd tourism project began. The joint venture between Omran and the Qatari Diar Real Estate Investment Company will see construction of the new airport as part of the development and will include a 4000-metre-long, 60-metre-wide runway, in addition to a 500,000-capacity passenger terminal.
ARRIVALS: During the first half of 2017, total passenger numbers at MIA and SIA reached 8.7m, up 19% y-o-y, according to figures released by the NCSI.
Flights, both domestic and international, at MIA grew 10% y-o-y to reach 64,879, with the number of passengers at the airport reaching 7.9m. Transit passenger numbers, meanwhile, grew by 144.9% to reach 19,679, up from 8036 in the first half of 2016, pointing to the growth of the airport as a transit hub. At the same time, the total number of domestic flights increased by 29%, with domestic passenger numbers up 20.3% y-o-y, from 549,111 to 660,798.
Over the same period, SIA saw a 51.6% y-o-y growth in flights, from 5512 to 8358, with the number of international and domestic flights up 34.3% and 65.3%, respectively. International passenger numbers, meanwhile, grew 46.8% y-o-y over the same period, from 224,803 to 329,926.
NATIONAL CARRIERS: Also contributing to rising numbers of passengers is the national flagship airline Oman Air. Established in 1993, Oman Air has been enlarging its global reach, including launching its first flights to China and new services to Najaf in Iraq and Mashhad in Iran in 2016, as well as a second daily flight to London’s Heathrow Airport in 2017. These are in addition to daily flights to Paris and new routes to Singapore, Manila, Jakarta, Goa in India and Dhaka in Bangladesh. Over 2016 and 2017 Oman Air increased the size of its fleet to 48 aircraft, with the introduction of four new Boeing 737s. This coincided with a growth in capacity, with the number of flights increasing from 30,978 in 2016 to 68,457 in 2017, and total passenger numbers rising from 7.7m to 8.5m.
Meanwhile, the country’s first budget airline, SalamAir, launched its maiden flight in early 2017. The low-cost carrier currently links Oman with nine destinations, including airports in Saudi Arabia, Qatar, Pakistan and the UAE, with four new routes expected to be added in 2018. The growth of the domestic low-cost carrier is part of concerted efforts to connect to other destinations with affordable air travel, opening the country up to different segments of the tourism market (see analysis).
HOTELS: Despite its drive to attract broader tourism segments, the local hotel landscape continues to be heavily weighted towards internationally branded four- and five-star hotels.
According to a February 2017 report on Oman’s hospitality market by commercial real estate company Colliers International, a respective 17% and 26% of hotels in Muscat are in the internationally branded four- and five-star categories. The report added that corporate demand is the main driver for hotels in Muscat (54%); followed by leisure (16%); and meetings, incentives, conferences and exhibitions, whose limited contribution is expected to rise with the recent opening of the OCEC (see analysis).
The NTS is expected to have a significant impact on the hotel sector, with room numbers set to increase heavily over the next two decades. The first stage of the strategy, which runs from 2016 to 2020, is targeting an additional 5620 hotel rooms, with the second phase, running from 2020 to 2030, raising the total number of rooms to 15,400 and the third, between 2030 and 2040 seeing supply hitting 30,000. In the first five months of 2017 alone, thirteen additional hotels opened in the Oman, with this number expected to increase to 81 throughout the whole of 2017 and 2018. This includes 38 in Muscat, seven in Al Batinah North Governorate, five in Al Batinah South Governorate and three in Dhofar. As of June 2017 the total number of hotel establishments in Oman had reached 352.
Industry insiders see strong potential in the lower star range. “In the past, we were promoting mainly five-star experiences, but there is also a huge demand for other categories,” Srinith De Silva, CEO of Aitken Spence Resorts (Middle East), told OBG. “If you look at the last few years, the new hotels in the pipelines are often in the four- and three-star category. There is huge potential here,” he added.
As more hotel rooms of various budget classes come on-line, it is estimated that Muscat’s share of the sultanate’s total accommodation options will decrease from 53% to around 31% by 2040. By comparison, Dhofar is set to see its share of accommodation options increase from 12.6% to 23.8%.
According to the NCSI, guest numbers at three- to five-star hotels rose by 7% y-o-y in the first half of 2017, hitting 758,601, with occupancy rates growing 0.8% to reach 57.3%. Meanwhile, revenue from three-to five-star establishments was up 3.3% y-o-y, from OR94.1m ($244.3m) to OR97.2m ($252.4m). However, as of October 2017, total occupancy rates were at 61.3%, down 3.2% y-o-y, with Europeans making up the largest number of guests: 58,652 out of a total of 135,000 during the month.
KEY PROJECTS: In April 2017 there were 11 tourism-related mega-projects that were either ongoing or had received approvals for construction. These included the development of the Salalah Beach project, which aims to build eight hotels, 2000 rooms and 3000 real estate properties by 2035; and the Ras Al Hadd eco-themed resort with more than 700 hotel rooms, 700 residential properties, 23,000 sq metres of retail space, a marine life park and a dedicated heritage village. The resort village at Muscat Bay – a planned integrated tourism complex (ITC) located at the foot of the Al Hajar mountains and a short drive from downtown Muscat. In the first quarter of 2018, 260 properties are set to be completed, of which half will be occupied by end users and half set aside for vacation housing. Muscat Bay will also feature two five-star Jumeirah hotels, with a combined 280 rooms, 50,000 sq metres of parkland, and a village square with community amenities to support the needs of the residents, including a school, supermarket, gym and restaurants.
INTEGRATED PLANS: Other ITCs include Naseem A’Sabah, a 400,000-sq-metre waterfront project located in the Muscat Governorate, which will include over 1200 residential units, a five-star hotel, various retail and leisure zones, office suites and a yacht club. In March 2017 the MoT signed an agreement with Amouage Hotels and Resorts to develop the OR400m ($1bn) project.
One of the largest ongoing projects in Oman, however, is the OR500m ($1.3bn) redevelopment of Muscat’s traditional port and harbour area into a waterfront tourism, leisure and commercial centre. The flagship project, called the Mina Sultan Qaboos Waterfront, is expected to provide 12,000 direct jobs and 7000 indirect jobs across the food and beverage, hotels, maintenance and retail management industries upon completion. The site will feature a leisure boat marina, a fisherman’s wharf, a fish souq, four- and five-star hotels, cafes, offices and waterfront restaurants. The first phase of development is set to be finished by 2020, with three subsequent phases continuing until 2027. In June 2017 it was announced that Omran had partnered with the UAE’s DAMAC International for the redevelopment project. Much of the investment for these projects is coming from private sources. “More than 80% of investments in tourism come from the private sector, which reveals the attractiveness of Oman as a competitive destination in the region,” Maitha Al Mahrouqi, undersecretary of the MoT, told OBG. However, she added, “keeping Omanis involved in the development of the sector is a must in order to preserve the incomparable mix of traditions and modernity that characterise the country.”
WORKFORCE: According to the WTTC, both tourism and travel directly supported 75,000 jobs in 2016, representing 3.4% of total employment in the country. This number is expected to grow by 3.8% per year to hit 106,000, or 4.5% of total employment, by 2027.
Including indirect jobs, the WTTC estimates that the sector accounted for 7.2% of all employment in 2016. By 2027 total job numbers are forecast to grow from 157,500 to 216,000, accounting for 9.2% of the total. The government’s tourism strategy aims to significantly increase the number of jobs in the sector, generating 76,384 direct jobs between 2016 and 2020, 126,900 between 2021 and 2030, and direct employment for another 243,000 people by 2040. Officials are also looking to train 800 tour guides by 2020, with prospective guides required to obtain a licence before operating as part of new regulations issued by the MoT. Traditionally, however, Omanis have not always been attracted to hospitality services, even though the burgeoning sector currently offers plenty of career opportunities. The MoT is attempting to change the mindset of its citizens in this regard, by promoting the industry as an attractive career option. Some feel that as the sector grows more nationals will consider a career in the business. “If more tourism comes to Oman soon, the industry will develop and more students will think of a career in this field,” Jasim Al Balushi, the deputy head of education and professional development at Oman’s Caledonian College of Engineering, told local media in September 2017.
EXPANDING OUT: Industry insiders see it as crucial that the country moves towards becoming a year-round travel destination. This will involve growing the sultanate’s cultural offerings, as well as adventure tourism, ecotourism and the number of visitors arriving on cruise ships, among other segments.
Between January and October 2017, 168,000 people arrived on cruise liners at one of the sultanate’s various seaports, up from 144,000 in the corresponding period of 2016. German passenger numbers alone grew by approximately 14,000 y-o-y in the first four months of 2017.
Other activities are in the pipeline. In 2016 Oman became the first country in the Middle East to host the Louis Vuitton America’s Cup World Series event, firmly placing the sultanate on the international sailing map, while the addition of a number of top-tier hotels with golf courses in and around Muscat has made the capital city a regional golfing destination. “Athletic tourism in Oman is poised for exponential growth within the next five years,” David Graham, CEO of Oman Sail, told OBG, adding that Oman’s governorates are safe enough and have the necessary infrastructure to support activities including sailing, running, cycling, mountain biking and triathlons. “To ensure the development of sports and adventure tourism, however, the sultanate will need more three-star hotels at the service of athletes. Developing this area will have the double benefit of attracting more visitors and of contributing to public health and wellness goals,” he added.
The opening of the Royal Opera House Muscat in 2011 has also helped to further place the country on the cultural map of the region, while the launch of the Hawana Aqua Park, the sultanate’s first water-park, in late 2017 should bring in a more family-orientated demographic of visitors (see analysis).
It is clear stakeholders in tourism-related activities have adapted to a development philosophy appealing to a new set of travellers, and over time Oman’s offerings have become more varied. It should be noted that authorities will need to provide guidance for such advancement at the heart of the industry to ensure a smooth transition. The promotion of Oman’s tourist offering must be done through a unified approach. Stakeholders of the sultanate’s tourism sector pursue independent promotion efforts that are sometimes redundant,” Nasser Al Sheibani, CEO of Al Mouj Muscat, a waterfront residential, leisure and retail community, told OBG.
OUTLOOK: Promoting Oman’s tourism offering to new international markets and altering the perception of the country as a seasonal – not a year-round – destination are challenges that will take time to overcome. However, recent growth figures suggest the sector is on an upward trajectory.
Major infrastructure upgrades and projects set to come on-line in both the near and medium term are ample evidence that the government is accumulating the tools needed to fulfil the broad goals of the NTS and boost tourism’s contribution to total employment and national income.
Furthermore, the 25-year timescale of the tourism strategy means there will be plenty of opportunity for more players to get involved, particularly if the initial cluster developments are a success. With growing engagement from the MoT, investment bankers, trade partners, global travel and hospitality providers, and international travellers and organisations, positioning the country as a global brand is becoming more feasible.
While some issues persist in raising awareness of the sultanate as an inviting destination, ongoing developments such as the airports and hotel infrastructure, suggest that the next few years are going to be important ones for the tourism sector.
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