hospitality industry in Oman map graphic

A Brief Overview of the Hospitality Industry in Oman

Bordering Saudi Arabia, the United Arab Emirates and Yemen, Oman boasts an economy flush with potential. How does the hospitality industry in Oman stack up?

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Oman, the Middle Eastern nation on the southeastern side of the Arabian peninsula, has about 3 million people, is roughly the size of Kansas, and sees 40 percent of the world’s oil shipments pass through its borders.

Oman has a long history of self-rule dating back to the expulsion of Portuguese colonial rulers in the late 1600s. It’s one of the earliest continuously independent Middle Eastern nations and one of the most stable.

In 2010, the United Nations’ Human Development Report ranked Oman as the top Middle East country for improvements in health, education and income since 1970. And while it did see some protests during the Arab Spring, Oman emerged from the regional political upheaval with positive reforms coming down from its sultanate and the first municipal council elections in 2012.

Omanis are also known for their natural hospitality. Where does this put the country as far as the restaurant and hotel industry? In a pretty good place.

Growth for the Hospitality Industry in Oman

Life changed for Omanis after commercial discovery oil in the 1960s. But unlike the neighboring UAE and other Gulf Cooperation Council countries, change hasn’t come as quickly to the nation. A February 2013 New York Times article lauded Oman’s friendly and relatively non-touristy nature.

This leaves the market relatively open to new businesses. The 2013 Index of Economic Freedom ranked Oman fifth out of 15 Middle East/African nations. Its economy grew five percent in 2012, buoyed by an oil surplus.

Muscat, the capital city on the Gulf of Oman, is another major destination for tourists and where most of the country’s major hotels and restaurants are situated. Salalah, in southern Oman near the Yemen border, has gotten a reputation among Middle Easterners as a great summer destination, in part due to its annual festival.

Oman is even getting a movie shout-out with the August 2013 release of Bollywood film “Once Upon a Time in Mumbai Again” that was shot in Oman, which could boost tourism.

Challenges to Growth in Oman

Some of the Arab Spring protests in Oman were over the disproportionate hiring of expat workers in the country. Unemployment remains high – somewhere between 15 and 24 percent depending on the source – in this country with a young population. Inflation has also affected food prices and the cost of living.

In 2012 the Omani government said it would put $1 billion from its recent oil windfall towards job creation. It is also emphasizing Omanization, or using local over foreign workers to reduce unemployment, as is happening in Saudi Arabia with Saudization. New hospitality businesses could find a ready job force in Omani workers if they’re willing to pay a fair wage.

Because 80 percent of Oman’s food needs are imported, the restaurant industry is equally reliant on outside suppliers. Only 0.1 percent of the country’s land is arable and the country’s economy is very dependent on its oil supply. The government is trying to grow other industries including tourism with its 2011-2015 Five-Year Plan.

Open Market in Oman Restaurant Industry

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A common complaint among Omanis and expats is about the lack of restaurant choices in the country. A Muscat Daily columnist wrote in April, “I asked family and friends this week to describe the restaurant scene in Salalah in one word. Answers ranged from ‘non-existent’, ‘cheap’, ‘dirty’, and ‘greasy’ to ‘pitiful’.” The opening of a McDonald’s in Salalah was a welcome event and brought in huge crowds. It was the 13th McDonald’s to open in Oman.

Many other franchises see the Middle East as prime expansion territory. Franchise development company Francorp said that food and beverage franchises top the inquiries list it gets for businesses looking to expand in and into the region.

Pizza Hut is thriving in Oman and was recently awarded the Yum Restaurants International People’s Award for 2012. The restaurant chain got the award for doing well in training and providing jobs for Omani nationals throughout its 32 locations in the country.

American franchises are doing well overall. Coffee Bean & Tea Leaf won in the Best Café category at the 2012 Oman Today Restaurant Awards in February and Steak Escape will open its first restaurant in Oman in late 2013.

Other chains like Thailand’s The Pizza Company and Dubai’s Jumeirah Restaurants are also starting up restaurants in Oman.

Like in other Middle East countries, mall culture in Oman is not just about shopping but also about going out to eat. For instance, the Muscat Grand Mall, which opened in March and is still expanding, comes up repeatedly in the news for the latest restaurant openings and suggested places to eat.

Luxury Hotels Rule Hospitality Industry in Oman

Million and billion dollar hotel projects are cropping up in the country, most of them near Muscat or Salalah. The country’s tourism ministry said in March that it expected 2,000 new hotel rooms to be added by the end of 2013. Hotel room capacity is also forecast to expand at a compound annual growth rate of 5.3 percent by 2016.

Projects like the new $80 million Azaiba Hotel and the planned Oman Convention Center, which will include a Crown Plaza hotel, all pointed towards a growing hotel market.

The Four Seasons plans for a hotel in Oman as part of its expansion into the Middle East luxury market. Dubai-based Gloria Hotels and Resorts says it will open one of its hotels in Oman in 2015 and Six Senses Spa in Oman won the Best Hotel award at the Middle East Hotel Awards 2013 in May.

Hotels are the major sources of upscale dining in the country and also the main place to find bars since Oman is a Muslim country and has restrictions on drinking, though not as much as some other Middle Eastern countries.

Don’t forget about coffee. More European and Western style cafés have come into Oman and September 2013 will bring the first ever Oman Barista Competition.

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