Oman's tourism sector gaining attention from investors

With Muscat having been named the Arab Tourism Capital for 2012 and the country becoming increasingly popular with visitors from around the globe, Oman's tourism sector is gaining more attention from local and international investors who are building new hotel and property developments. To go along with the accommodation offerings, though, there is also a need for additional entertainment and leisure facilities to fill niche markets and create demand.
Global investment giant Qatari Diar is the latest investor to enter the sector. A memorandum of understanding (MoU) signed July 9 between Qatari Diar, the property arm of Qatar's sovereign wealth fund, and Oman's Ministry of Tourism, established a 70%-30% partnership in the construction of three developments throughout the country.
The first of the developments in Oman will be a mixed-use property at Ras Al Hadd in the far east of the country. This will include a five-star hotel and spa, along with a variety of residences, souks and a marina. The second project will also include a five-star resort hotel and residences, while the third will have a yacht club and marina, a sports academy and three boutique hotels.
The company's MoU follows a March announcement from Oman's tourism-related state investment firm Omran that more than $2bn in development projects in the sector were under way. At the time, these included 12 joint venture projects and nine properties under the company's management, including two new hotels under construction at Duqm, set for completion this year.
Muriya Tourism, Oman's biggest developer of mixed-use projects, created in a 70%-30% joint venture between Egypt's Orascom Development Holdings and Omran, is also spearheading four projects.
These include Jebel Sifah, a development that includes a marina, residences, retail shops, a golf course and a boutique hotel, among other attractions. The hotel was opened in September 2011, and the marina was ready to receive boats in the first quarter of this year. Construction on three additional hotels, the Banyan Tree, the Missoni and the Four Seasons, will begin in early 2013.
Among Muriya's other projects are Salalah Beach, which will include seven five-star hotels, two golf courses, a large marina, apartments, restaurants and retail outlets. Currently, the marina is nearing completion, and the first hotel, Juweira, held its soft opening in May.
Another resort at As Sodah, an island off the southern coast of the Sultanate, will include 1m sq metres of developed land, including a luxury hotel with guest villas and pavilions, as well as private beaches. The development is currently around 60% complete.
Due to land damage caused by Cyclone Gonu, and the consequent need for another plot to be reallocated by the government, work has not yet begun on Muriya's last major project, CityWalk, a development in central Muscat that will include a luxury hotel and a number of restaurants and entertainment and retail outlets. Construction is expected to begin in the first quarter of 2014.
But with all of these new accommodation facilities in the works, Oman is in need of more options for entertainment that appeal to a variety of travellers, particularly to allow the Sultanate to compete with its GCC neighbours, according to Chandra Lahiri, the CEO of Muriya.
"There is a great need to create attractions within Muscat and around the country," he told OBG. "On any given weekend, half the local population travels to Dubai. We must create more cultural tourism, such as local bed and breakfasts, which will promote small and medium-sized enterprise growth, entrepreneurship and, in turn, boost the real estate market."
Indeed, as the Sultanate continues to record increasing numbers of tourist arrivals – 2.4m passengers arrived at Muscat International Airport in 2011, a 14% increase over 2010, according to the International Air Transport Association – the need for more entertainment and luxury options is becoming apparent.
In addition to cultural tourism, Lahiri said that other, more high-end niches, such as golf tourism, have great potential in Oman. "This type of tourism attracts those that will spend a lot of money and with golf infrastructure being put in place, so too will come luxury lodging and hotels," he told OBG.
Muscat's increasing appeal to tourists has already encouraged the construction of a number of high-profile developments in the sector. Given the recent involvement of major global players, tourism looks set to continue offering opportunities for investors, particularly in the development of attractions and leisure offerings.
Oxford Business Group
Jul 18