Tourism and Hospitality Sector

The tourism and hospitality sector are distinguished by its broad and strong interaction with other sectors, such as Industry, Agriculture and services. The development of the tourism and hospitality sector leads to the activation of other sectors and consequently, the development of this sector is considered as one of the effective mechanisms for the growth of the national economy. Many countries seek the attraction of foreign investment in tourism areas through furnishing the suitable environment.

The tourism and hospitality sector in the sultanate is characterized by solid components that qualified it to take a distinctive role in accelerating of diversification of the production base of national economy and its activation.

The vision for the tourism and hospitality sector is related to the fourth dimension of the vision for Oman’s Economy: Oman 2020 involves setting up of the appropriate conditions for economic diversification, the optimal utilization of the available natural resources and the distinguished location of the Sultanate. The long term objectives for the sectors vision is as follows:

1. Making Oman as a major and starting point for tourists coming to the region and the neighboring countries.
2. Raising the relative contribution of the sector up to 5% of the GDP.
3. The private sector should undertake a leading rate in tourism activities and to raise the Omani workforce participation up to 80% of the total workforce in the tourism sector.

The table below shows the number of hotels and the guest houses from 1996 to the year 2000.

Year Number of hotels Total No. Foreign Residents No. of tourism nights
1996 44 349.207 1.088.972
1997 47 375.753 1.157.875
1998 69 423.953 1.385.814
1999 73 502.788 1.340.551
2000 77 571.110 1.405.042
Table1

1.1 View from the fifth five-year developing plan (1996-2000)

The plan laid lot of emphasis on the development of the tourism activities, promote tourism with active participation of the private sector. A draft law for regulating tourism was prepared for encouraging the private sector to invest in tourism sector. Some important incentives offered were the government soft loan to tourism projects and allocation of land areas in different Wilayats of the sultanate of Oman for tourism purposes.

The main projects which have been implemented in this sector are firstly Al filaj Castle theater, at cost of about OR. 1.2million, Secondly promoting and marketing some special program for tourism, at cost OR. 0.5million. The table below shows the public investment in the tourism sector during the fifth five-year development plan (1996-2000).

Detail Revised Allocation Mn. R.O Commitments
Mn. R.O Actual Expenditure
Mn. R.O Expenditure as % of revised Allocation
Ongoing Projects 11.6 8.6 6.8 58.6%
New Projects 4.2 2.2 2.0 47.6%
Total 15.8 10.8 8.8 55.7%
Table 2

This table shows the annual public investment which is directed by the government in the fifth five-year plan concerning the hospitality sector – affecting the increase in number of hotels, Occupancy rates, revenue, share of GDP etc.

Detail
Fifth Five-Year plan Average Annual Growth %
Year 1995 1996 1997 1998 1999 2000
Value Added of sector (Mn. R.O) 46.9 54.1 53.1 52.1 52.0 52.7 2.4
Share of sector in GDP % 0.9 0.9 1.0 1.0 0.9 0.7 0.9
Hotel Revenue (Mn. R.O) 35 40 42 43 40 46 5.4
Number of hotels 39 52 69 89 102 100 20.7
Number of rooms 2855 3065 3476 4657 5138 5312 13.2
Number of Occupants (thousands) 352 435 463 529 627 710 15.1
Number of nights spent (thousands) 880 1089 1158 1386 1341 1405 9.8
Occupancy Rate % 52 49 51 47 41 42 4.2
Total employment in tourism sector: 2339 3054 3133 3849 3790 4093 11.8
Omani 730 896 998 1377 1385 1509 15.6
Expatriate 1609 2158 2135 2472 2405 2584 9.9
Omanization ( % ) 31.2 29.3 31.9 35.8 36.5 36.9 3.4
Table 2

1.1.2 Challenges and the difficulties facing the tourism and hospitality sector during the Sixth five-year development plan period (2001- 2005)

This plan include the evaluation result of the tourism sector performance in the fifth five-year development plan, with the expectations which is refers to the improvement of the tourism and hospitality sector internationally, specially countries which can be compared with Sultanate of Oman. The Sixth five-year development plan has identified some of the problems and difficulties faced by the tourism and hospitality sector as under:

• Shortage in tourism infrastructure services especially roads, electricity and communication services.

• Lacks of Educational establishments specialized in the tourism field in order to train Omani workforce.

• Limited foreign and local investors in the tourism and hospitality sector.

• Higher costs for tourists compared to other countries in Africa and Asia.

• Lack of entertainment facilities for tourists like night clubs, casinos etc.

• The private sector is lacking an effective professional workforce to promote tourism.

• The losses suffered by the hospitality industry due to wastages (foodstuff) and employment of expensive foreign workforce.

The government through the ministry of Commerce is trying to address these issues to encourage increased private sector investment in tourism and hospitality industry.

1.1.3 The objective of the tourism sector in the sixth five-year Development plan

Comparing with the vision for Oman’s Economy: Oman 2020, and its long term objectives concerning tourism sector, and depending on the abilities that is based on the analysis of the expectations from the international tourism market. Some objectives have been formulated to improve the tourism sector in the sixth five-year development plan:

• Rising of the average annual growth rate up to 6.1%.

• Activating the private sector role to increase its contribution to the sector development.

• Maintaining the main factors such as social, environmental and cultural in order to raise the growth of tourism sector.

• Rich regional balance in the tourism development growth.

• Improving Omani workforce to meet the increasing in the demand of labors in this sector up to 50% in this sector of the total workforce.

• Managing self-funding resources for tourism projects in order to improve the development of tourism and hospitality sector.

1.1.4 The government programmed for the investment in the tourism and hospitality sector

Tourism and Hospitality play a large part of the Omani development plan in the present and also in the near future which is help to raise the economy growth of the country and also raising the income for the local people. Here are some of the best investment projects either already or planed in the near future in the tourism and hospitality sector in the Sultanate:

1. the wave projects:
This project include Golf course, jetty for boats, five star hotels, hyper market, club, diving center and long beaches one for the ladies and the other for the public.

Investment volume
Stage 1:
Total investment of $82 million to cover land reclamation, infrastructure development and site improvement including Course and Marina

Stage 2:
Another investment of 485$ to develop individual elements

Business opportunities:

– 11% growth in tourism to the region
– Legal changes will allow foreign ownership of real state in Oman
– Political stability, WTO membership of Oman
– New resort projects are currently built in Muscat capital region

Zone 1A:
– international standard golf course (18 holes) and golf club house
– Five star spa and beachfront hotel (200 rooms)
– Golf and conference resort(300 rooms)
– Luxury beach and golf villas (505 units)
– Exclusive Condo Tower ( 24 condos)

Zone 1B:
– Marina and yacht club
– Marina tower boutique hotel (150 rooms)
– Tow luxury residential towers(25 flats each)
– Marina village with 850 apartments
– Mixed used shopping and restaurant area (15000 sqm)
– World Bazaar

Zone 1C:
– Public Beach

Zone 2:
– Beach residential community (230 villas)
– Beach and sports resorts (250 rooms) including scuba diving and water sports centre
– Retail area ( 5000 sqm)

2. Khasab hotel:
This hotel is located in Mousandam region and it is three star hotels with 60 rooms and high quality. The hotel has high quality facilities and provides the best services. The amount of money spent by the government in this hotel is about 1.5 million O.R. and it was opened in the year 2000.

3. Masirah hotel:
It is located in Masirah Island, this project include 24 rooms and 8 chalets. Also has big restaurant and accommodation for the staff. This project will be opened on December 2004. The amount of money spent by the government is about 1.5million.

4. Youth hostel (Al Ashkhrah) the location of the hostel is in Al Sharqiyah region in jalan bani bu Ali, its 350 KM from Muscat. It is near the beach and has a beautiful climate especially in the summer. It has 40 chalets each one have a single room, living room, kitchen and toilets. Also a restaurant which is enough for 12 tables with high quality services also has Mini Market and accommodations for the staff. The goal of this project is to offer rooms for the tourists with good prices and also to push the internal and the external tourism to grow up and introduce new tourism areas in this region.

5. Youth hostel ( Sahnoot ):
This hostel located in Salalah region in sahnoot area on the road Salalah-Muscat. It about 10 KM from Salalah, it has great view especially in Al Khreef (Monsoon). It has 40 chalets each one has single room, living room, kitchen and toilets. Also has high quality restaurant with Mini Market and Accommodations for the staff. The goal of this project is to offer rooms with great atmosphere for the tourists and raising the number of tourists. The Omanization will be up to 75%. The amount of money spent in this project are about 750 thousands O.R. with high facilities. This project was opened in December 2003.

6. Wadi Al Kabeer tourism project:
It is located in Muscat region on the mountains of the wadi al kabeer. It is in the high mountain area which is near Mattrah. It is 5 KM long, also it has great restaurant. It include 8 chalets with places for camping, also has accommodation for the guide and gig store. The goal for this project is to offer a nice places and areas for the tourists. The amount of money spend in this project are about 1 million O.R. this project was opened in December 2003.

7. Bar Al Jissah tourism project:
This project includes:

 Five star hotel with 200 rooms, suite and 30 flats.

 Four star hotel with 300 rooms and suite.

 High star hotel with 175 rooms and suite.

 Buildings for V.I.P. suite, two royal suites, two deluxe suite, 25 rooms and a number of chalets.

 High quality market.

 Generating stations for water and electricity.

The target of this project is for:

 Put Oman in the map of the world market. The project will be managed by Shangri-La international company.

 Make job opportunities for the citizen, which is about 900 direct opportunities and also raising the Omanization up to 50% in the first year of directing the project.

1.1.5 The advantages of tourism investment projects

These entire projects have many advantages which are like bellow:

1. Improve and developed the internal tourism.

2. Raising the Omanization in the tourism and hospitality sector.

3. Promote the tourism inside and outside Oman especially with festivals and also through exhibitions.

4. Raising the number of the local and foreigner investors in the tourism sector.

5. Increasing in number of the investment by the private sector in the tourism and hospitality sector.

6. Increasing in the GDP of the country and raising the income of the local people.

7. The government will raise the loan time period from short term to long term.

8. The government will increase the lease period from 50 years to 99 years for this

Swoft Secondary subject

Tourism:
After several years tourism sector start to increase step by step which is good for the country to be as a major point for the tourists in the Gulf countries.

The investment by the government and the private sector help the tourism sector to improve and to develop by opening and build hotels. Also let the foreigner to invest in big tourism projects like the wave projects and bar Al jissah tourism project. This opens the filed to the tourists and pushes them to visit Oman.

Business Administration:
The investing by the government, private sector and foreign investors which is open the filed to share with each one in every side not just in tourism sector. For example the foreigner can deal and share with local investors in such ways like trading, Exhibitions, companies etc.

But the business in tourism sector becomes more profitable because the government give good offers for the foreign investors to do their businesses inside the country.