OMANI TOURISM PROJECTS MOVING FORWARD

UNCLAS MUSCAT 000747

SIPDIS

SENSITIVE
SIPDIS

STATE FOR NEA/ARP, NEA/PI, EEB/CBA
COMMERCE FOR COBERG

E.O. 12958: N/A
TAGS: ECON EINV KMPI MU
SUBJECT: OMANI TOURISM PROJECTS MOVING FORWARD

REF: A. MUSCAT 439


B. 06 MUSCAT 1509

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Summary
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1. (U) The Omani government continues to press forward on
elaborate plans to develop its tourism industry through the
construction of a convention center and a number of
multi-billion dollar integrated resort complexes. OMRAN, the
government's tourism development company, expressed
appreciation for a MEPI-sponsored study on its proposed
convention center, and is working to approve new theme-based
projects. End summary.

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Convention Center Moving Forward
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2. (U) On July 30, Econoff discussed the status of the
Sultanate's tourism-related initiatives with OMRAN Chief
Financial Officer Prakash Gabra. Gabra noted that OMRAN
remained fully committed to developing Oman's tourism
industry through its investment in several high-profile
projects.


3. (SBU) On the convention center, OMRAN's most prestigious
project, Gabra thanked the USG for funding an initial
feasibility study, which was completed by Booz Allen Hamilton
with funding provided by the Middle East Partnership
Initiative (MEPI). He noted in particular the study's
finding that showed a planned convention center of 5,000
seats may be too costly for the government to subsidize,
given the report's estimation that a facility of no more than
2,000 seats would be the most economically feasible for Oman.
Gabra also took onboard the study's conclusion that OMRAN
had not planned for a sufficient amount of hotel rooms in the
immediate vicinity of the facility to support a large center.
Gabra stated his intention of continuing to work with Booz
Allen Hamilton to develop projected profit/loss figures for
both a larger and smaller facility so that the Ministers of
Tourism, National Economy, and Commerce and Industry can
decide on final design plans.

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Omagine This
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4. (SBU) Gabra confirmed press reports that the government
was close to approving a contract with Omagine, Inc., headed
by U.S.-based developer Frank Drohan, to construct a $1.6
billion, 1.2 million square meter integrated tourism project
in Muscat. The complex, to include a theme park highlighting
Omani culture, two five-star hotels, and 4,000 residential
units, would take an estimated four years to complete. Gabra
said that the final approvals from the Ministry of Finance
would take "some time," but he believed that the project
would eventually come to fruition, with considerable credit
going to Drohan's persistence in pursuing the venture. Under
the terms being considered, Omagine would develop the hotels
and freehold residential neighborhoods, while the theme park
would be built by the company via a leasehold arrangement.
Gabra mentioned his enthusiasm for the project in becoming an
"attraction" destination, as opposed to being simply a beach
resort.

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New Projects in the Pipeline
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5. (U) Gabra commented that OMRAN was also working on new
projects in addition to those already announced or underway
in Yiti, Seifa, and Salalah. Plans are now set for a $2
billion integrated resort development at Yenkit, about 15
miles southeast of Muscat. The project, backed by UAE-based
Majid al-Futtaim Developments, calls for four five-star
hotels and 3,300 residential apartments and villas. In
addition, Gabra noted that OMRAN was evaluating a proposal
from a Malaysian company to construct a $500 million, 2
million square meter theme park entitled "Green Acres."
Plans call for the project to include a water theme park,
large indoor playground for children, equestrian facilities,
and residential areas.

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Gonu's Impact
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6. (SBU) Gabra stated that since many of the upcoming
projects are in the initial phases of development, the impact
of tropical cyclone Gonu on tourism complexes along the Gulf
of Oman has not been substantial. Of primary concern to
OMRAN was the damage inflicted by the storm to
infrastructure. For example, Gabra stated that the new
Quriyat to Sur road, which will link several new beachfront
developments with Muscat, suffered serious damage as a result
of Gonu. Initially slated for a November 2007 opening, the
road now requires substantial repairs, which, according to
Gabra, have not yet commenced.

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Comment
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7. (SBU) OMRAN continues to lead the government's ambitious
plans to develop tourism-based resort developments throughout
the Sultanate in efforts to diversify the economy away from
oil and gas revenues. With the Wave project completely sold
out of residential units, sales in these upcoming communities
could be brisk. Hotel inventory remains a concern,
especially if the government hopes to capture a portion of
the large-convention market with its 5,000 seat facility, and
Oman Air needs to ramp up quickly to cover the loss of Gulf
Air's routes out of Muscat. End Comment.
GRAPPO