Muscat – Oman: The sector of tourism plays a major role in the economy of the Sultanate of Oman, a country in the Gulf Cooperation Council (GCC) that aims to diversify its economy and depend less on oil, similar to the direction adopted other GCC countries.
In 2015, Oman welcomed a record number of tourists, which encouraged the government to invest further in the improvement of the tourism industry, attracting tourists from all over the world through an accurately developed strategy, according to Oxford Business. The country is expected to witness a surge in tourism inflow as a result of the state’s focus on the tourism development strategy.
Market Overview
The Omani tourism sector contributes directly to the gross domestic product (GDP) only 2%, according to Times of Oman. The Omani government has an ambitious plan, though, to bring the percentage up to 5% by 2020.
The total number of rooms available for tourists reached 18,825 by the end of 2016, distributed across the Sultanate. These rooms include ones in hotels, resorts, hotel apartments, tourist camps, rest houses, guest houses, heritage hotels and green hotels, according to the Omani Ministry of Tourism,
The number of inbound tourists to Oman increased by more than double during the period between 2005 and 2015, according to Oxford Business. It reported that the number of tourists jumped from 1.1 million to 2.6 million annually. "Inbound tourism expenditure reached OR 288.2 million in 2015, up 10% from OR 250.9 million in the previous year, with average visitor expenditure decreasing from OR 112.70 in 2014 to OR 110.10 in 2015," Oxford Business said. Adding to the number of tourists those who stayed for at least one night, the information provided by the National Centre for Statistics and Information (NCSI) showed that the number of inbound tourists even increase from 891,000 in 2005, to 1.9 million in 2015.
In March 2017, tourist arrivals to Oman increased to reach 299,000, compared to 263,000 in February, according to Trading Economics. "Tourist arrivals in Oman averaged 244.770 from 2015 until 2017, reaching an all time high of 436,000 in August 2016, and a record low of 123,000 in June 2016," it reported.
In terms of nationalities, the number of foreign tourists who visited Oman from other GCC countries represented 45.8% out of the total number of inbound tourists in 2014. Tourists from Asian countries represented 22.6%, while tourists from European countries represented 19.2%, according to Oxford Business.
Oman's 2040 Tourism Development Strategy
The state has set a plan to significantly improve and enhance tourism by 2040 on three stages. They include the preparation phase, extending from 2016 to 2020; growth from 2021 to 2030; and stability from 2031 to 2040. The Ministry of Tourism in Oman has recently unveiled its strategy which aims to witness investments worth nearly OR 20 billion, and provide over 500,000 million jobs, according to the Oman Consulate General in Australia.
The majority of the investments, nearly 86-89%, will be provided through the private sector, where 50 private entities will take part in the strategy, in addition to 30 public entities. The Omani Ministry of Tourism plans to create 80,000 rooms for accommodation through 33,373 hotel rooms, 29,287 vacation home rooms, in addition to 17,262 integrated tourism complex rooms. The strategy is expected to bring 11.7 million international and local tourists by 2040.
Muscat, the capital of Oman, is expected to have its share of accommodation decline from 53% to 30.8% by 2040 as hotel rooms spread into other parts of Oman.
It is worth mentioning that this strategy will create 535,574 direct and indirect jobs by 2030 compared to a present number of 89,413 jobs. Over 700 people have contributed to developing this strategy after a 12-week preparation period to draft it, according to the Oman Consulate General website.
Challenges to Growth
As much as opportunities in the tourism sector in Oman seem to be promising, there are constant concerns about the challenges that could possibly hinder the growth of tourism in Oman. Oman's Ministry of Tourism has stated that the tourism challenges, if properly addressed, can easily be turned into opportunities, according to ETurbo News.
Some of these challenges include the lack of interest among nationals to work in the tourism industry. Moreover, there is a non-availability of skilled Omani staff for certain positions in tourism. Statistics for the manpower in the tourism sector in December 2013 showed that a total of 18,531 employees worked in the tourism sector, with only 7,324 of them being Omanis, representing only 39.5%, compared to 11,207 of the employees being expatriates.
Another challenge in the tourism sector is the need for promotions and marketing for tourist destinations, ETurbo News reported. In addition, the budget allocated for international tourism exhibitions are required to increase over the upcoming period.
Immigration falls on a similar note; the process was stated to be lengthy and difficult, especially in terms of the obtainment of visas for certain nationalities.
The last challenge deemed major for tourism is public transportation. Unprofessional taxi drivers are considered a challenge. They require better training to improve the quality of the services they offer to tourists. The taxi fees also represent a challenge and are considered a difficulty for tourists.
Sector Outlook
13 new hotels started their operation in Oman during the first five months of 2017, and the number is expected to rise to 81 hotels in 2017-2018, Times of Oman reported. The Tourism Ministry has granted approvals for nearly 81 new hotels to be established. They are expected to add to the sector 5279 hotel rooms. The areas with the newest hotels are Muscat with 38 new hotels, Dhofar with three new hotels, North Batinah with seven hotels, and South Batinah with five hotels, in addition to several others throughout the rest of the country.
The number of inbound tourists in Oman is expected to reach 261,280 by the end of this quarter, According to Trading Economics. "We estimate tourist arrivals in Oman to stand at 262,670 in two months. In the long-term, the Oman tourist arrivals is projected to trend around 262 thousand in 2020," Trading Economics stated.
According to experts, travel and tourism in Oman are expected to create 116,000 jobs in Oman by 2024, representing for 8.4% of the total employment in the sultanate, Times of Oman reported.
As for the total contribution of travel and tourism to the GDP, it is expected to increase to OR 3,886.3 million by 2024.
While the country seems to be far behind in terms of tourism contribution to the country’s growth, Oman, a country known for remarkable nature, is more likely to meet its targeted 5% GDP contribution. This is due to many factors besides the state’s efforts; one example would be the turbulent oil industry and the diminishing of its contribution to the national economy, further pressing the growth of other sectors.
By Reem Hosam El-dein
