BIG PLANS AHEAD FOR MUSCAT'S TOURISM INDUSTRY

UNCLAS MUSCAT 001509

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, EB/CBA (BBEHRENS)
COMMERCE FOR ITA (COBERG)

E.O. 12958: N/A
TAGS: ECON EINV PREL MU
SUBJECT: BIG PLANS AHEAD FOR MUSCAT'S TOURISM INDUSTRY

REF: MUSCAT 1379

This message contains sensitive business information. Please
protect accordingly.

--------------
SUMMARY
--------------


1. (U) The Ministry of Tourism and government-owned Oman
Tourism Development Company (OTDC) are moving forward on
ambitious plans to develop tourism-related projects in the
Muscat metropolitan area. The government envisions the
construction of 16 hotels and a convention center within the
next five years. Opportunities for U.S. firms to participate
in the design and construction of these facilities abound.
End Summary.

--------------
PROJECTS ON TAP
--------------


2. (U) On September 23, Econoff and POLE Assistant met with
Mohammed al-Sinani, Director General of Planning at the
Ministry of Tourism, to discuss the government's plans to
develop Muscat's tourism infrastructure. Noting the
government's intention to boost tourism's share of the gross
national product from 1% to 5% by 2020, Sinani remarked that
the government was working with private developers on four
major tourism projects in the capital area. The first of
these projects, the Wave, has already broken ground, with
U.S.-based Turner Construction serving as the project
manager. To be completed over the next four years, the Wave
will feature a mix of hotels, private residences, and
commercial properties stretched along 7 kilometers of
beachfront property. The project will represent the first
opportunity for non-GCC residents to purchase freehold
property.


3. (U) Sinani also highlighted plans to develop a three-hotel
resort complex on Yiti beach, adjacent to the
recently-completed Barr al-Jissah resort complex. The $1
billion project, complete with residential housing and a golf
course, will break ground in 2007. Sinani further commented
that the government is in discussions with Egyptian company
ORASCOM to develop a three-hotel resort complex, including a
marina and residential units, at Sifah. Sinani finally
highlighted the government's intent to develop a three-hotel
convention center complex in the Seeb district of the
capital, where the airport is currently located. Sinani
stated that the government, which hopes to have the center
completed by 2010, has selected an Australian firm to serve
as the project's consultant.

--------------
CENTER TO COMPLEMENT DEVELOPMENT
--------------


4. (U) According to Sinani, the Omani government established
the OTDC to direct the conversion of government-owned assets
into tourism projects. On October 15, Econoff and POLE
Assistant met with OTDC Chief Operating Officer Tim Redman to
discuss the company's role in developing Oman's tourism
infrastructure. Redman stated that the company - which will
change its name to OMRAN ("prosperity building") once it is
officially launched on December 17 - primarily serves as the
government's investor in tourism projects, either as the sole
investor in projects such as the development of a Muscat
beachfront resort and convention center complex, or in
partnership with the private sector, in which it takes a 30%
stake in a silent capacity. The company also advises private
investors on tourism-related projects.


5. (U) Redman noted that the company had a full plate of
work, including monitoring the construction of 16 hotels over
the next five years. He commented that finding contractors,
such as plumbers, electricians, and plasterers, to complete
the finishing traits of the hotels would be challenging,
given the construction boom in neighboring Dubai. The
company would also begin looking to associate hotel operators
for the various projects, attempting to ensure that the right
matches were found.


6. (SBU) Of primary importance to the company was the mandate
to develop a world-class convention center that would serve
as an architectural landmark in Muscat. The convention
complex, set to cost between $250-$300 million, would include
three hotels and a shopping center. Redman expressed concern
about constructing a "white elephant," and thus was
evaluating ways to make it stand out from its competitors,
such as developing a "secure" convention center and hotel
complex that would attract high-value participants. Redman
further expressed concern that an architecturally-striking
design may be difficult to achieve, given the Tender Board's
track record of selecting the lowest-price bid, irrespective
of aesthetic considerations.

--------------
JOURNEY OF LIGHT UPDATE
--------------


7. (SBU) Redman also provided an update on the proposed
Journey of Light project (reftel). He commented that the
Ministry and his company were doing due diligence on the
proposed U.S.-based investor, Frank Drohan of Contact
Sports.net. Under the current project proposal, Drohan would
enter into a long-term lease with the Ministry of Tourism to
develop a theme park complex on a parcel of beachfront
property just north of the Wave development. Redman remarked
that while government officials like the concept, they
question whether the assumptions provided by Drohan in terms
of gate receipts and hotel rack rates would support the
investment. Redman also pointed to the low share price of
Drohan's company and his recent business dealings with the
Qataris, who bought him out of an investment for $1 million,
as potential concerns.

--------------
OPPORTUNITIES FOR U.S. BUSINESSES
--------------


8. (U) Comment. The upcoming push by the Omani government to
fully develop Muscat as a business/leisure destination
presents ample opportunities for U.S. companies. Redman
noted his hope that U.S. firms would participate in the
competition for designing a secure convention center facility
and constructing the proposed hotel complexes. Redman also
expressed interest in meeting with U.S. hotel operators to
gain a better feel for how they could participate in the
management of the proposed properties. End Comment.
FONTENEAU