Fabio Scacciavillani

Muscat 15 December 2014

Placing Oman In The Global Tourism Map

• Tourism has become one of the most thriving and competitive sectors globally

• The success has resulted from the constant upgrade of a complex global network and the improvement of a sophisticated value chain

• Internet has had a disruptive effect completely transforming the links between the providers and the clientele commoditizing the supply

• Expedia, Trip Advisor, kayak, ebooking, AirBnB

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Profound Transformation

• Tourism contributed $2.5bn to GDP in 2013, equivalent to 3% of total, according to the World Travel and Tourism Council

• The council’s Travel and Tourism Economic Impact 2014 report on Oman said it expected that figure to rise by 10.2% this year, after which it forecasts an average annual increase of 5.4% throughout the following decade

• Once investment, the supply chain and indirect income effects were included, tourism’s overall contribution to Oman’s GDP last year reached $5bn, and is forecast to amount to $10.1bn by 2024 and 4.4% of employment

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Stylized facts

• The Omani economy could probably hinge predominantly on tourism

• Oman has a superb offering with more than 3,000 km of pristine coastline, rugged high mountains, islands, wildlife and history

• The high season in Oman could last 6 to 8 months a year

• In Salalah and on the mountains the season could last virtually all year round

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The Offer

• “Malaysia truly Asia”, “Incredible India”• Sharm El Sheik => diving• Ibiza => dance, transgression• Rome => art, history• Dubai => shopping, extravagance• In the global competition one needs to find a theme that makes it unique

• Oman => ?????

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Positioning

Aggressive Approach• Oman should pursue an aggressive approach to reap

the benefits of its manifold opportunities in tourism

• At the current growth pace, the flow of tourists in the Sultanate would triple in 15 years from 1.5 million to 4.5m-5m by 2030

• Considering that the current Omani population is roughly 4 million, hitting this target requires a holistic approach in marketing, facilities development, transport, entertainment,

• It must always be kept in mind that tourist destinations (excluding top cities such as New York, London, Paris, Rome, Beijing) usually last 25 years and fail totally in 40 years, because they are often unable to keep up with changing tastes and demands.

• Success never comes without change• First of all it would be desirable to have a single

authority in charge. Shared responsibility and decision making by committees are rarely receipts for success. The national strategy must be implemented at regional level with directives clearly spelled out

• Tourism is labor intensive: catering to 4.5 to 5 million tourists could generate 50,000 jobs. However labor skills and professional competences must be formed in school and University, nurtured and trained

• Hotels and transport facilities are just the first step. Critical ingredients are entertainment and side activities, such as diving, sailing, hiking, rock climbing, museums

• Private sector involvement must be guided and planned by professionals. Improvising is not an option

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Great Opportunities, Policy Challenges

• Oman has 282 hotels of all types mostly small and family-owned hotels and residences. Occupancy for 4 and 5 star hotels is over 70%. The average room rate rose by 7.6% in the year ending September to $200.

• A total of 24 new hotels opened in 2013, bringing the number to 282, while room supply stood at 14,400, with a 12.3% year-on-year increase, the ministry said in June.

• Hotel census reveals that 6,000 new hotel rooms are planned to be built in the Sultanate.

• Anecdotal evidence suggests that top end hotels have occupancy of as low as 15% during low season and yet they charge 90 OMR per night. This rigid pricing policy hampers both hotels profitability and Oman attractiveness.

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Hotel Supply

• Hosting 5 million tourists require 40,000 new hotel beds which in turn implies the construction of 400 – 500 hotels. Investors will take such challenge only if the overall regulatory and business environment is favorable

• In addition to hotels basic facilities like water, electricity and transport, must be provided and therefore must be planned. The water consumption per person per day in Oman is 300 liters

• Public transport needs to be brought up to standards now available in the UAE or Qatar

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Forecasts

• Oman Air aims to increase its fleet to 70 aircraft in its present 10-year plan from the current 40 that it will receive 13 new aircraft in 2015 alone. The number of passengers using Oman Air is projected to rise to about 4.8m in 2014 from 4.7 million in 2013, but Oman is the final destination for less than 20%.

• Oman Air has launched a stopover program that offer affordable room rates, but not many hotels have joined the program.

• Investments in the tourism industry are in the order of USD2 bn, spread between projects in various governorates

• As part of an effort to boost overall capacity and add to the sultanate’s supply of hotel rooms and visitors, the government has launched a number of large ITC developments that encompass hospitality, retail and recreational activities.

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Near Term Plans