Interview with Mr. Peter Walichnowski, CEO of OMRAN, Oman

The Government is making great efforts to enhance the ease of doing business and to improve Oman’s competitiveness. Foreign Direct Investment (FDI) in the Sultanate rose by more than 13% in the first three quarters of last year over the previous year’s level, according to latest government data. How would you describe today’s investment and business environment which is helping to achieve these remarkable figures?

From a tourism and infrastructure point of view, the environment for investment and tourism is thriving. Economic diversification is a key priority for Oman, and tourism is a vital pillar of this focus away from the country’s reliance on oil-based revenues. According to the World Travel & Tourism Council (WTTC), in 2017 Oman had the highest percentage growth rate for tourism as a contributor to GDP in the Middle East. Not in absolute dollar terms but in terms of growth, Oman is number one in the region for its potential growth for tourism.

Looking at income and expenditure, most informed investors in the region and beyond will be looking at the tourism sector in Oman as a place to invest. The market is very safe, transparent and has a new international airport in a prime location. It is no exaggeration to say that Oman’s tourism and the considerable development opportunities associated with it, has made the Sultanate one of the most attractive places to invest in the Middle East today.

At OMRAN, our role is to support the 2040 National Tourism Strategy, which aims to increase the number of people coming to Oman and spending money in the country, both for national and international tourists. More than 3 million tourists visited Oman in 2017, and we are committed to having over 5 million international arrivals by 2040, as well as to increase national tourism; encourage people to stay in the country and spend money here as opposed to going overseas.

We are building up a platform of hotels and accommodation, tourism attractions and destinations, and we are looking at foreign investors to come in and invest in that category. For example, in addition to the recent agreement with DAMAC Properties to develop the Mina Sultan Qaboos Waterfront in Muscat, we also have joint ventures with other foreign investors: • Abu-Dhabi-based Eagle Hills to develop a project called Muscat Bay • Qatari Diar is working with us on Ras Al Hadd Tourism Development • Majid Al Futtaim in the Al Mouj project • Orascom from Egypt is working with us on Jebel Sifah in Muscat and Hawana Salalah in Dhofar region

The door is open, certainly. Regional investors are becoming more familiar with the Sultanate, and international investors may begin to look more closely at tourism in this country because of the increasingly sophisticated tourism offering and infrastructure and exposure this is now receiving. For example, one of the hotels we developed in Oman (Alila Jabal Akhdar) was placed in the top five hotels in the Middle East by Condé Nast for two years running. This is the sort of exposure Oman is getting, strengthened even more with the recently opened new Muscat International Airport winning Middle East’s Leading New Tourism Development Project 2018.

OMRAN has indeed formed strategic partnerships with some of the world’s most renowned brands, such as InterContinental Hotels Group or most recently DAMAC and is always open for new joint ventures and will even be exploring ways to share the value of its hotel portfolio with investors. What is OMRAN’s value proposition?

We have access to government land, so we typically invite foreign investors to bring their know-how and capital to develop mixed-use projects and attractions – it’s a win-win situation and a partnership approach. We are also looking at some new products that will make things easier for foreign investors, such as the new Real Estate Investment Trust (REIT) laws across the securities market which will allow companies here to float REITs. We are looking to put our hotels into a hotel hospitality REIT which will be one of the most important REIT’s in the region for hospitality. This will open up the country to investors who do not want to go directly into real estate but, instead, indirectly through securities. Investors will be able to buy shares in our listed entity to get exposure to the tourism market here.

The country is open for business - Oman is providing all sorts of direct and indirect opportunities for people to invest in this country’s tourism sector, as well as other sectors such as the Duqm Special Economic Zone.

GI : The Sultanate is diversifying its economy, being tourism one of the key priority sectors. What is the tourism industry’s diversification potential into other niches such as MICE?

The country has a multi-target strategy but MICE and business travelers are an important sub-sector of the tourism market and the government has invested 200 million riyals in building the new Oman Convention & Exhibition Centre (OCEC). The first part of it (Exhibition Centre) opened two years ago and now the second part (Convention Centre) will open by the end of this year. This is a massive investment by the government, which is just down the road from the new airport, and will provide the MICE market with another state-of-the-art venue in the Middle East.

We are also building a few hotels up there: Crowne Plaza was opened last year and the JW Marriot is set to open this year with plans for the construction of a new 3-star hotel in the next 6 months. That whole venue is a critical mass for MICE, and people can then stay on and explore the country after they finish their convention, for example.

We have also identified the importance of and have planned accordingly - the number of 4 and 5-star hotels will be doubling in number of rooms over the next five years, which means that soon the country will be reaching approximately 8,000 four and five star rooms in the country, which is double what it used to be. Oman is also home to a host of international brands such as Starwood, Marriott, InterContinental, with many more on the way.

GI : The OCEC is also the first tourism development in Oman to achieve a LEED Gold certification. How important is it to have sustainable projects in the country?

One of the strategic anchors of the tourism sector in Oman is that it should be sustainable. Oman is a unique environment and one of the criteria for growing the tourism industry is to maintain it in its current state. We are very protective of Oman’s environment, as well as the impact on local communities. Therefore, everything we do is taking into account the economic, social and environmental sustainability, with the LEED Gold certification for the OCEC being just one example of that.

GI : When we interviewed H.E. Dr. Ali bin Masoud al Sunaidy, Minister of Commerce and Industry and OMRAN’s Chairman, he spoke about the strategic importance of the private sector in order to further develop the economy as a whole including the tourism sector. What investment and PPP opportunities would you like to highlight to The Japan Times’ high profile audience?

We have numerous Japanese investors wanting to develop real estate in Oman and it’s clear why - we have access to government land for the purpose of developers who want to do a hospitality project, hotel or mixed-use development which includes hospitality, residential and retail. We provide the infrastructure, however the execution of the experience comes down to small companies that deal with the customer doing desert safaris, camping, etc.

H.E. Minister Sunaidy was referring to the role of SMEs in supporting the tourism strategy, by giving visitors a unique experience at the local level. The opportunity for Japanese entrepreneurs here is to come and bring their know-how in specific experiences, which could take the form of a zip-lining company, for example, since we have high mountains and wonderful places to do extreme sports. We have cable cars that could be built across canyons. I can imagine fast trains running up and down the country just like in Japan, which would be useful for a country like this to connect the cities up and down the coast. The Japanese investors and entrepreneurs would find as much to do here as they would in any country. Just as investments were taken in Dubai, Oman too can be a successful location for Japanese capital. The experiences learned in the UAE can be applied to Oman.

GI : The Middle East is a region that unfortunately is experiencing turmoil, and people tend to place Oman under the same umbrella. If a tourist or an investor would ask you, why Oman?

Most people describe Oman as the Switzerland of the Middle East. It is neutral and, therefore, safe. The country’s attraction is the authentic, unspoiled nature. You get the beautiful contrast between the ocean, islands, beaches, deserts, mountains, etc. We have a tremendous variety of destinations which give you plenty to do over a long period of time. For example, weekend trips to Musandam, which is easy to get to, or longer trips to Dhofar or Salalah. The key attractions include: accessibility, safety, good weather, and friendly people. We have everything here.

GI : Another element investors look at is the state of infrastructure of a country before they invest in it. How would you describe the infrastructure in Oman?

It is in a constant state of improvement. The main infrastructure is here: there are two major airports in Salalah and Muscat, which are world-class and there are smaller regional airports too which are quite good. The roads are good; they have just opened up the freeway to Dubai. They put a lot of money into roads and airports to try and make a big country easier to navigate and have also increased spending on water taxis and ferries. There is also a new, low-cost airline called SalamAir which is flying to and from more remote locations, making Oman more accessible than ever before.

GI : The tourism industry is an industry that traditionally employs many women and young people. What is the trend you are seeing here in Oman?

As we open up more hotels, naturally, we employ more people. We have a training college called the Oman Tourism College that gives training courses for the hospitality and tourism sectors, so they train people like tour guides and give them programs. They also train chefs in vocational programs and give degree courses for senior management in the tourism sector. Looking at direct contribution of employment, travel and tourism supported 75,000 jobs in 2016 which is 3.4% of total employment and it will rise to 106,000, 4.5% of total employment by 2027. All the metrics are up for employing more Omanis. As more visitors come, more SMEs are forming so we hope that a large part of the increase in employment will be these entrepreneurs that seek to operate their local and regional SMEs. In percentage terms, Oman is the number one country in the Middle East for its growth of the tourism sector.

GI : You have over 35 years of experience in tourism, real estate and mixed-use developments all around the world, and were appointed OMRAN’s CEO in April 2017. What would you say is the added value you are bringing with you?

It is the global perspective I have, being able to bring to the table global experiences from having worked in other countries and also the experience of what it takes to create a destination. I have personally been involved in creating two of the most important destinations of the last 20 years: Bluewater in the UK and Mall of the Emirates for Majid Al Futtaim in the UAE. These are mixed-use destinations of retail, leisure and hospitality. What I bring to the table is the experience of creating unique destinations; how to take land with nothing on it to and create something special and different, thereby creating opportunities for economic and social development.

I also have the experience of working with institutional investors and entrepreneurs in different parts of the world. Helping to package up the deals and opportunities for them, speaking the language they speak and being able to manage the risk in these sorts of things. However, it is only a temporary responsibility because my role is to impart knowledge and experience to bring Omanis through to take over. Therefore, it is only a time-related period that I am here doing this. I am sure that I will not be here in 2040, but there will be Omanis taking the plane from 2040 to 2060.

GI : Peter Drucker once said: “the best way to predict the future is to create it.” With this statement in mind, what future would you like to create for the industry in Oman?

With the 2040 National Tourism Strategy in mind, we predict a very busy future for Oman ahead - hitting all the KPIs that the strategy is targeting in terms of foreign visitations, increasing national tourism, foreign investment, employment, etc. It is not one, but a combination of these elements. The country is on the road to making the 2040 strategy a reality and achieving those goals, with tremendous support from the government and its fiscal investments.

You only have to talk to people like DAMAC Properties, which is one of the most successful private investors in the Middle East in terms of the business created. You can talk to Majid Al Futtaim, which is also one of the most successful businesses in the Middle East and has been here since the late 90s. These high-quality business entrepreneurs and companies saw the potential many years ago and are still here investing and riding the wave up. Many have come already. It is not something new and on that basis we do have the experience of working with investors.

GI : How smooth is the dialogue between the different stakeholders in the industry; the government, private sector and civil society?

OMRAN is a government-owned company; therefore there is constant dialogue between the government and the company. OMRAN has five ministers on its board so we have a great relationship with all their ministries as well as the ministers in other sectors.

We also have a very transparent relationship with companies in the private sector - here in Oman, there are no secrets. Everyone knows what the tourism strategy is and what OMRAN is doing and we have an open door policy for local and international investors who want to talk about the opportunities and where they can fit in . We have a specific division here that is dealing with investors to give them information and provide follow-through on the deals.