May 2015 / A

publication by Om

an Tourism D

evelopment Com

pany

Developing new horizons for a sustainable tomorrow

6 Currenteconomic indicators

10Tourism growth in Oman

14Case study: Oman Convention & Exhibition Centre

1

In line with Omran’s sustainability policy, the paper we have used for this publication is Lenza Top Recycling Super. It is recycled paper produced of 100 % recovered fibre. Manufactured without optical brightening agents and chlorine bleaching. High whiteness is achieved thanks to a special converting process for recovered fibre.

Developing new horizons for a sustainable tomorrow CONTENTS

4 Why is tourism the future?

6 What are the economic indicators?

8 What does the WTTC say about Oman?

10 Tourism growth

12 What are the challenges that we face?

13 What is Omran’s role to meet the challenge?

14 Case study: Oman Convention & Exhibition Centre

omran.omKNOW HOW . RESPECT . BEYOND 3

Issue 01

May 2015

Why is tourism the future?

Tourism has a real power to change the world by providing opportunities for a better future for everyone it touches. The United Nations World Tourism Organization (UNWTO) pegs the global number of annual tourists as one billion, while the value of the tourism sector exceeds One Trillion Dollars, accounting for 9% of the global Gross Domestic Product (GDP). The sector provides one out of every 11 new job opportunities in the world, and is considered as one of the leading job and export revenue generators by the World Travel & Tourism Council (WTTC) with the sector accounting for some 30% of services exports worldwide.

With recent oil prices moving under USD $50 per barrel, which is the lowest closing price since May 2009, economic challenges are shared by nations in the region. Given the economic exposure due to price volatility on the international energy market, the focus is increasingly shifting towards tourism sector investments and giving them development priority in the move towards a more diversified and stable economic future.

Rapid growth in travel and tourism industry is even more significant given the impressive performance of the sector during the last few years, as well as the positive growth forecast for Oman by the WTTC. It is estimated that by 2023, the earnings contribution from the travel and tourism industry in the Sultanate will total 3.7 billion OMR annually. These impressive numbers outline a positive climate in Oman for growth in the tourism sector and position the sector ideally for further project development. This, combined with the upward trend of the buoyant real estate market in the Sultanate, which grew by 55.7% at the end of Q3 2014, sets the stage for promising development opportunities in the years ahead.

Eng. Wael Al-LawatiGroup CEO, Omran

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Issue 1

May 2015

USD per barrel

13.1%

What are the economic indicators?

1

17.5% 13.1%

85.6% OFGOVERNMENTREVENUE GENERATEDFROM THE OIL AND GAS SECTOR

THE CONTRIBUTION OF SERVICES ACTIVITIES (INCLUDING TOURISM) TO THE GDP INCREASED BY 13.1% FROM 2013 – 2014

17.5% OF EXPORT REVENUE WAS CREDITED TO COMMODITY EXPORTS FROM NON-OIL ORIGINS

GROWTH 2013 - 2014 2

OIL PRICES 2014 3

Source 2 NCSI Statistics Bulletin December 2014 3 http://sa.investing.com/commodities/crude-oilSource 1 National Centre for Statistics & Information (NCSI)

OMR in 4-5 star hotel revenues

Jan JulFeb AugMar SeptMay Nov

Guests

Apr Oct

Occupancy

Jun Dec

1,500,000

1,000,000

500,000

0

120

100

80

60

40

20

0

1,482,470

701,630 599,000

89.74

104.08101.1493.06

78.6

53.31

1,342,190

559,509574000

10.5% revenue growth

25.4% guest growth

10.4% occupancy rate

November 2013 November 2014

85.6%

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May 2015

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Long term growth forecast ranks Oman at number 17 worldwide in terms of travel and tourism’s total contribution to GDP (2015 – 2025 growth forecast)

By 2025, travel and tourism will directly are forecast to account for

72,000 jobs in the Sultanate

Ranked number 15 worldwide in

terms of growth in travel and tourism

investment

2015 growth forecast ranks Oman at number

48 globally in terms of travel and tourism’s direct contribution

to GDP

What does the WTTC say about Oman? 4

Source 4 WTTC - Oman - 2015 - Travel & Tourism All values are in constant 2014 prices & exchange rates

GDP: DIRECT CONTRIBUTION2.6% direct contribution to Oman’s GDP in 2014 at OMR 765.1 million, and forecast to rise by 5.2% in 2015.Forecast growth of 6.1% pa by 2025.

GDP: TOTAL CONTRIBUTION5.7% Total contribution to Oman’s GDP in 2014 at OMR 1,697.5 million, and forecast to rise by 3.8 % in 2015.Forecast growth of 6.2% pa from 2015 to 2025.

EMPLOYMENT: DIRECT CONTRIBUTION44,500 jobs (2.8% of total employment) in Oman directly supported by travel and tourism sector, and forecast to rise by 11% in 2015.Forecast job growth of 3.8% pa from 2015 to 2025, totaling 72,000 jobs.

EMPLOYMENT: TOTAL CONTRIBUTION90, 500 jobs (5.7% of total employment) in Oman supported by travel and tourism sector, and forecast to rise by 9.4% in 2015.Forecast job growth of 3.8% pa from 2015 to 2025, totaling 143,000 jobs (7.5 of total employment).

VISITOR EXPORTSGenerated OMR743.8mn (3.6% of total exports) in 2014. Forecast to growth by 6.0% in 2015, and grow by 7.1% pa, from 2015-2025, to OMR 1,565mn in 2025 (5.6% of total).

INVESTMENTIn 2014 was OMR 267mn, or 3.6% of total investment. It should rise by 10.3% in 2015, and rise by 6.3% pa over the next ten years to OMR 541mn in 2025.

Highlights from 2015 World Travel & Tourism Council report

Oman is ranked number 2worldwide in terms of growth

of travel and tourism’s direct and total contribution to employment

(2015 forecast)

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8

2

Tourism growth 5

Oman experienced a 12% increase in visitor numbers through the first 9 months of 2014, with the Sultanate welcoming 1.58 million visitors during this time. New hotels in the Sultanate has also been rising at a steady rate, with room numbers forecast to further increase by 32% by 2017.

Oman travel – International Recognition

BREAKDOWN OF TRAVEL & TOURISM’S TOTAL CONTRIBUTION TO GDP AND EMPLOYMENT 2014

GDP (2014 OMRmn)

= Total contribution of Travel & Tourism

Empl

oym

ent (

‘000

)

2014 OMRmn

Direct

765 44 30 16

626

306

+ Indirect

+ Induced

3,500

3,000

2,500

2,000

1,500

1,000

500

0

2005

2006

2007

2008

2009

2010

2011

2012

2013

2014

2015

2025

Direct Indirect Induced

TOTAL CONTRIBUTION OF TRAVEL & TOURISM TO GDP

st1Source 5 NCSI & centreforaviation.com Source 6 WTTC - Oman - 2015 - Travel & Tourism

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67

The Sultanate was voted number 6 in the top travel destinations for 2015 by the Wanderlust Travel Magazine

Oman was named 7th out of 100 countries in the MasterCard-Crescent Rating Global Muslim Travel Index (GMTI) 2015, the most comprehensive research on the sector

th

th

Oman named number 1 travel destination for 2015 by the global travel industry website skift.com

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On a global scale, it is estimated that each direct employment in the travel and tourism sector creates three indirect employment opportunities, which in turn benefits the local community and economy.

Omran’s Local Development Investment (LDI) Policy ensures that the Company’s contracting favors local businesses and suppliers while prioritizing training and recruitment of nationals within the growing tourism and hospitality industry. Omran’s LDI goes beyond the short-term goal of immediate returns such as buying locally and training nationals. We invest in the development of local companies and the communities in which we operate. In doing so we are not only investing and transferring ourknowledge, but also shaping the future of the nation on its path towards prosperity and sustainability.

What are the challengesthat we face? 7

What is Omran’s role to meet the challenge?

OMRAN’S COMMITMENT TO LOCAL DEVELOPMENT

The increased growth of outgoing tourism expenditure compared with the growth of inbound tourism expenditure during the period of 2009-2013, indicates the market’s requirement to create more tourism-friendly, recreational and retail facilities to be able to keep local spending within the country.

INBOUND Vs OUTBOUND TOURISM EXPENDITURE

2009 2010 2011 2012 2013

Inbound tourism expenditure

Outbound tourism expenditure

450,000

400,000

350,000

300,000

250,000

200,000

150,000

100,000

50,000

0

It is estimated that more than 1 billion USD are spent annually by

outbound tourists, a quarter of which is dedicated to shopping

Enhancing the infrastructure, scope and capacity of the tourism sector in Oman

Developing additional hospitality projects that help manage the boom in hotel prices and cater for the growing inbound

tourism in Oman

Muscat is in the top three for having the most expensive hotels

according to study by hotels.com

Developing premium malls, and international brand exposure

to residents and visitors

The average night stay for inbound visitors is 7 nights - the average stay

for outbound tourists is 22 nights

Creating new destinations and attractions to increase average

expenditure and nights spent by international tourists in Oman

The Sultanate witnessed 1,916 million foreign tourists to the country versus

4,301 million outbound tourists, as on the end of 2013

Investing in local talent, capitalise on Omran’s vision of developing capacity and capabilities within

the tourism sector

Source 7 Ministry of Tourism / Tourism Statistics Bulletin 2005-2013

For each OMR spent by an international tourist inside the Sultanate, there is 1.8 OMR spent by a departing tourist outside Oman

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Case study

A LANDMARK BUSINESS DEVELOPMENTScheduled to open in 2017, this landmark project is the centrepiece of Oman’s business development programme aimed at establishing the Sultanate as a major regional venue for regional and international events. OCEC complex will include four hotels, a business park, retail shopping areas and residential districts, surrounded by a nature reserve which will be a haven for Oman’s exotic birdlife, parklands and wadi (valley) park are also part of this picturesque precinct.

In March 2013 Omran released a study on the OCEC project conducted by Booz & Co., which projected the project will generate 295 million Omani Riyals in local spending and estimated that OCEC will create up to 24,000 direct and indirect jobs and contribute 200-240 million Omani Riyals to the national economy by 2030. The study also included that by 2030 the OCEC will contribute 140-170 million Omani Riyals to GDP, 30% of this amount from tourism revenues. The Booz & Co. socio-economic impact assessment study on OCEC concluded that a far-reaching and positive impact is expected for Oman’s economy and for job creation for citizens within the OCEC and surrounding the development.

Images / a. A world class venue b. Concourse c. Auditorium d. Grand Ballroom

the project will generate 295,000,000 OMR

in local spending

a

b

c

d

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Issue 01

April 2015

A publication by Omran

Potential opportunities for SMEs 8

The development will provide various opportunities to Oman’s SMEs in the areas of operations, services, retail, F&B and transport.

“SMEs represent a fundamental part of the economic fabric in the Sultanate and we are working together to add value to their operations. Omran’s local development Investment (LDI) policy ensures consulting, contracting, procurement and supply chain processes are directed towards Omani businesses. We hope that forging successful partnerships between OCEC and potential local suppliers will generate higher, faster and stronger returns for both their businesses and Oman.” Eng. Wael Al-LawatiGroup CEO, Omran

Note: Potential is measured by assessing the opportunity size, number of jobs and quality of jobs. Source 8 Booz & Company

BUSINESS PARK

CONVENTIO

N CENTRE

HOSPITALITY OCEC MALL

Retail shopsRetail shops

Adventure centers

Tourism/Sightseeing

Retail shops

Retail shops

Car rental

Car rental

Low POTENTIAL High

IT servicesIT services

IT services

Equipment rental (e.g. A/V)

IT services

Fitness centre

Legal firm

Facility management

Facility management

Facility management

Facility management

Maintenance & operationsMaintenance &

operations

Maintenance & operations

Maintenance & operations

Printers

Printers Printers

F&B

F&B

Food supplycompanies

F&B

F&B

Convenienceservices

Convenienceservices

Convenienceservices

Cateringservices

Cateringservices

Marketing firm

Marketing firm

Event management

Event management

Entertainmentservices Taxi & limo

services

Taxi & limoservices

Taxi & limoservices

Logistic services

Travel agent

Travel agent

Travel agent

Travel agent

Travel agent

Postage & courier

Postage & courier

Shop design

SecuritySecurity

Security

Stand design Security

Shop fit-out

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omran.omKNOW HOW, RESPECT & BEYOND