US embassy cable - 05MUSCAT1199

UNCLAS SECTION 01 OF 02 MUSCAT 001199 
 
SIPDIS 
 
SENSITIVE 
 
DEPT FOR NEA/ARPI (RSMYTH), EB/CBA 
STATE PASS USTR (JBUNTIN) 
USDOC FOR 4520/ITA/MAC/AMESA/OME/MTALAAT 
 
E.O. 12958: N/A 
TAGS: EINV, ECON, EIND, MU, Tourism 
SUBJECT: TOURISM PROJECTS PROLIFERATE 
 
REF: MUSCAT 1191 
 
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SUMMARY AND COMMENT 
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1. (U) With Oman aggressively marketing itself as an 
environmentally conscious tourist destination, international 
investors are taking advantage of significant improvements in 
local infrastructure to develop ambitious new tourist 
projects.  U.S. construction and financial firms are joining 
a slew of regional and international consortiums that seek to 
capitalize on the region's annual 6.5 percent growth as a 
tourist destination.  Investors hope to lure 3 million 
visitors annually with resorts like the $800 million Wave, 
the $160 million Bar al-Jissah Resort and Spa, and the 
massive $15 billion Blue City development just north of 
Muscat. 
 
2. (SBU) One of the Sultan's economic advisors has told us of 
HM's encouragement of GCC investment in Oman's fledgling 
tourism industry.  Eyeing the explosive economic activity in 
neighboring Dubai, the Omanis feel a need to tap into, on 
their own terms, some of the monies flowing into the region. 
Concurrent with declining oil production, a demographic 
profile that commands more employment opportunities for Omani 
youth, the massive industrial investment (led by the U.S.) in 
Sohar and the expansion and development of Salalah port in 
the south, this focus on tourism underscores Oman's desire 
and pressing need to invest in a non-petroleum-based industry 
in order to continue its development and modernization.  End 
summary and comment. 
 
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Why Oman? 
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3. (U) Oman, the "hidden gem" of Arabia, is well positioned 
to assume a larger share of the $72 billion tourism industry 
in the Middle East.  While Oman has neither the strong 
archeological draw of Egypt or Jordan, nor the Hong Kong-like 
buzz of Dubai, Arabia's third largest country's comparative 
advantage is its spectacular and varied scenery, its relaxed 
atmosphere, strong tradition of hospitality, and a leg up on 
environmental tourism, from turtle and whale watching to 
mountain hiking and caving.  In 2004, Oman welcomed 1.5 
million tourists, generating revenues of $284 million. 
Through aggressive marketing campaigns and improved 
infrastructure, Oman hopes to increase the industry's meager 
1 percent contribution to GDP to 3 percent, and to welcome 
over 3 million visitors annually by 2010.  The Omani 
government estimates that the tourism sector could eventually 
create over 114,000 jobs.  To achieve these ambitious 
figures, the Ministry of Tourism has allocated $30 million 
for internationally marketing the country through 2005. 
 
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Projects in the Works 
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4. (U) Capitalizing on the region's emergence as a popular 
tourist destination (6.5 percent annual growth rate), 
investors have embarked on the following: 
 
-- Bar al-Jissah Resort and Spa:  Slated to open this 
December and aimed at groups that want an all-inclusive 
facility, this complex is part of the Hong Kong-based 
Shangri-La Hotels and Resorts chain with local investment 
from the Zubair Corporation and the Omani government. 
US-based Turner Construction International managed the 
construction phase.  The secluded $160 million resort, 
straddling unspoiled coastline just east of Muscat's 5-star 
Al-Bustan Hotel, will offer 680 rooms in 3 hotels on 124 
acres with a private beach, spa, swimming pools, 5 tennis 
courts, and a dive center. 
 
-- The Wave: The initial installation of utilities and roads 
is just beginning for this a $800 million tourism and 
residential development project near Seeb International 
Airport.  A joint venture between local, regional, and 
international private investors and the Omani government, the 
Wave will stretch 7.3 kilometers along the beach and will 
include 1,200 rooms in four hotels, restaurants, shops, and 
Oman's first world-class golf course.  Residential units to 
be constructed in this project are slated to become the first 
properties open to foreign (non-GCC) free-hold purchase in 
the Sultanate, with this project having been designated a 
special tourist zone under a law enacted in 2004.  US-based 
Turner Construction International is the project and 
construction manager for Phase I. 
 
--Al Madina al-Zarqa (The Blue City):  The Omanis announced 
this $15 billion new urban development with great fanfare  in 
June 2005.  The al-Sawadi Investment and Tourism Company 
ASIT) is in charge of this massive tourism project. ASIT 
appointed Swiss-based financing firm Oppenheimer & Co. to 
raise the $12-$15 billion construction costs; Oppenheimer in 
turn appointed US-based investment bank Bear Stearns to act 
as the bond placement agent.  Other investors include the 
Omani company Cyclone LLC, an investor from Bahrain, and 
Middle East Holdings.  To be developed over several phases in 
the next 10-15 years, the Blue City will become home to more 
than 200,000 people and will include education, healthcare, 
sports and other necessary infrastructure.  The first phase 
is projected to cost $1.8 billion and will cover an 8-square 
kilometer area of beach that will include 3 beach hotels, 600 
luxury villas, an Arabian-style tourist village, an aquarium, 
and an amphitheater.  Anticipated to be completed by 2009, 
the resort is expected to generate around 7,000 direct jobs 
and over 25,000 indirect jobs in its first phase alone. 
 
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More to Come 
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5. (U) While The Wave, Bar al-Jissah, and the Blue City are 
all expected to have a significant impact both on tourism and 
on the U.S. commercial presence in Oman, other significant 
projects that are also underway include: a $822-million 
Dubai-financed Yiti Luxury Resort near Muscat, a locally 
funded Mirbat Tourism Village in Dhofar, the Qatari-backed 
Ras al-Hadd Resort near the coastal town of Sur, and the 
Thailand-based Evason Hideaway Resort at Zighi Bay in the 
Musandam Peninsula. 
BALTIMORE