Identifier
Created
Classification
Origin
08MUSCAT255
2008-04-02 13:23:00
CONFIDENTIAL
Embassy Muscat
Cable title:  

OMANI MINISTER REAFFIRMS AMBITIOUS TOURISM PLANS

Tags:  ECON EINV MU 
pdf how-to read a cable
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RR RUEHWEB

DE RUEHMS #0255/01 0931323
ZNY CCCCC ZZH
R 021323Z APR 08
FM AMEMBASSY MUSCAT
TO RUEHC/SECSTATE WASHDC 9439
INFO RUCPDOC/DEPT OF COMMERCE WASHDC
C O N F I D E N T I A L MUSCAT 000255 

SIPDIS

SIPDIS

STATE FOR NEA/ARP, EEB/CBA
COMMERCE FOR ITA THOFFMAN

E.O. 12958: DECL: 04/01/2018
TAGS: ECON EINV MU
SUBJECT: OMANI MINISTER REAFFIRMS AMBITIOUS TOURISM PLANS

REF: MUSCAT 188

Classified By: Ambassador Gary A, Grappo, reasons 1.4 (b and d)

-------
Summary
-------

C O N F I D E N T I A L MUSCAT 000255

SIPDIS

SIPDIS

STATE FOR NEA/ARP, EEB/CBA
COMMERCE FOR ITA THOFFMAN

E.O. 12958: DECL: 04/01/2018
TAGS: ECON EINV MU
SUBJECT: OMANI MINISTER REAFFIRMS AMBITIOUS TOURISM PLANS

REF: MUSCAT 188

Classified By: Ambassador Gary A, Grappo, reasons 1.4 (b and d)

--------------
Summary
--------------


1. (C) Oman's Minister of Tourism affirmed that the
Sultanate's ambitious tourism development plans remain on
track, despite the rapid escalation of construction and labor
costs. Completion of several integrated tourism projects
along greater Muscat's waterfront, along with the
construction of a convention center complex, will
significantly add to the capital's woefully inadequate hotel
room supply. Coupled with this expected rise in facilities,
Oman has begun to advertise itself internationally, albeit
cautiously. The same pace extends to tourism development
outside of Muscat, which is being carefully evaluated in
light of its potential appeal to foreign travelers. End
Summary.

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Development on Track
--------------


2. (C) On March 23, the Ambassador discussed the status of
Oman's various tourism initiatives with Minister of Tourism
Rajiha bint Abdulameer bin Ali. Rajiha noted that Oman's
visitor volume would double from current levels once the
first phase of the Ministry's development plan is completed
in 2010. She stated that, "Oman should have quite a number
of new hotels open by then," including two hotels in the Yiti
complex and one hotel in the Wave development. The Minister
raised the possibility of Marriott building a 5-star property
in an exclusive area of Muscat, but noted that there was "no
deal yet."


3. (C) Of particular concern to Rajiha in meeting this
timeline was the construction supply shortage affecting the
Gulf region. She said that individual companies were doing
what they could to procure materials, but that two major
Muscat hotels currently under renovation, the Sheraton and
the al-Bustan, have faced significant delays due to
skyrocketing building costs. The Minister predicted that the
two should now open by November and September, respectively,
after being closed for over a year each.


4. (C) Rajiha also voiced concerns over plans by some
companies to develop projects well outside of Muscat. "We

need to be careful," she cautioned, as visitors may not want
to go to far flung parts of Oman without tourist services or
infrastructure. "Conceiving and building a project is easy,"
she mused, "but running the project is a different matter."
The Minister continued that before developers build in other
areas of Oman, the Ministry would need to confirm that there
was a unique tourist draw to generate sufficient demand.

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Center to Anchor Commercial Development
--------------


5. (C) Rajiha reaffirmed to the Ambassador that the
government's tourism investment company, OMRAN, was funding
the entire convention center project, a multi-use facility to
include hotels and office space. The complex, located near
the Muscat Hills country club and golf course, will anchor a
commercial district containing a shopping center and offices.
In building the complex without private sector investment,
the government hopes that the anticipated revenue stream will
cover the expenses of the convention center in the long run.
Rajiha added that the Ministry has completed the center's
feasibility study, which is now before the Ministry of
Finance for review. Once the plan has been approved,
according to the Minister, OMRAN would then proceed to select
a contractor specializing in convention center design and
management. The Ministry has set a projected completion date
of 2012 to coincide with the opening of Muscat's new airport.

--------------
Upbeat on Blue City
--------------


6. (C) Turning to the ambitious Blue City project, located
approximately 60 miles northwest of Muscat, Rajiha stated
that several financiers, led by Bear Sterns, had provided
$900 million in capital for the first phase of the project.
She noted that the first offerings were sold out, and in
spite of the recent turmoil surrounding capital markets in
general and Bear Stearns in particular, the project retains
sufficient capital to continue. (Note: Recent court action in
Oman concerning the resolution of a dispute between the two
equity partners of Blue City is reported septel. End Note.)


7. (C) The Minister further confirmed that the government was
working with Kuwaiti investor Bait al Istithmaar al Khaliji
(Gulf Investment House) on developing a healthcare "city"
within Blue City, but added, "I don't know why they announced
it (in the media). I don't foresee any problems with the
project, but I would have preferred to wait." She explained
that a market study for building a post-operative recovery
center aimed primarily at Europeans was under review. The
center would co-exist with Dubai's new medical city, since,
according to Rajiha, "This service is not readily available."
The Ministry plans to also conduct a feasibility study, to
include the possibility of adding a hospital and medical
college.

--------------
Still "Omagining" the Possibilities
--------------


8. (C) On the proposed Omagine project, led by U.S. promoter
Frank Drohan, Rajiha said that the plans were taking a "long
time" to formulate. "We wanted to be sure that the project
is going in the right direction," remarked the Minister. She
also noted that the envisioned Omani-oriented theme park,
centered on seven "pearls," has been the biggest stumbling
block, as the Ministry wanted to ensure that it met the
"highest standards."


9. (C) Another problem facing Omagine has been efforts to
attract at least 30% Omani participation, which would make
the project "more secure," according to Rajiha. So far,
Omagine has attracted interest from the owners of a prominent
shopping center in Muscat, who have provided a cash
investment equivalent to 12% of the total equity. The
Minister relayed to the Ambassador that other Omani investors
had been identified, but that she did not know their
identities. The Minister continued that the government
previously considered being a 30% investor in Omagine, but
ultimately decided not to participate. The government has
insisted, however, that the project cover its costs first --
income from all of the project's components (hotel,
residences, entertainment, etc.) will go to one account and
only be shared with investors once the operating costs have
been met.

--------------
Selling Oman Overseas
--------------


10. (C) Rajiha informed the Ambassador that the Tourism
Ministry was keen on promoting its "brand" to the
international community. The Ministry has developed a new
logo for Oman, which it intends to unveil soon. It is also
marketing Oman as a "different destination," and wants
development to mirror traditional Omani customs. In
Musandam, for instance, developers have built an upscale
resort in the style of a traditional Omani village. In
selling Oman's distinct culture, the Ministry has opened
offices in the UK, Germany, France, Australia and the UAE.
It is further looking to open offices in Singapore and China,
and is just starting its marketing efforts in the U.S.
Rajiha cautioned, however, that, "We don't want to go too
fast and get ahead of ourselves."
GRAPPO