Tucked into a distant corner of the Arabian Peninsula, Oman doesn’t have the iconic monuments of Egypt, the glitz of Dubai or the proximity to the European market of Tunisia. But the sultanate hasn’t suffered political turmoil wracking much of the Middle East, and new hotels, airports and attractions are going up at a breakneck pace.

And, the tourists are coming. While top Middle East tourism destinations, like Egypt, Lebanon and Tunisia, reported double-digit drops in arrivals last year, Oman enjoyed growth. Muscat International Airport, the country’s biggest, recorded a 14% increase in passengers last year to reach 2.4 million, according to the International Air Transport Association (IATA). 

A survey of room rates by Hotels.com found that prices in Oman rose by nearly a fifth to 217 pounds ($345), which the travel website attributed to the growing number of visitors and the opening of high-end hotels. The sultanate was the most expensive destination on the list, it said.

“Oman has an opportunity to position itself as a super luxury destination in the Middle East,” Diego J. Lofuedo , Hotel.com’s senior director market management for the Eastern Mediterranean, Africa, Middle East and Indian Ocean, told The Media Line. “Many of the countries around Oman can feature the same levels of luxury and futuristic landscape however very few can compete with Oman when it gets to historic heritage.”

Oman saw some protests in the first few months of last year, but Sultan Qaboos bin Said Al Said, who has run the country since he expelled his father from the royal palace more than 40 years ago, bought calm with promises of reform and pay raises. The country has fewer energy assets than its neighbors, but Qaboos has invested in health and education over the years.

Although Muscat, the country’s capital, has a long way to go to catch up with Dubai, it is making progress. The Royal Opera House Muscat, a massive edifice sporting inlaid marble, crystal chandeliers and hand-carved wood, officially opened last October with a production of Turandot.  Next door, a new luxury shopping mall with 60 stories and restaurants, The Opera Galleria, is going up.

The Wave, Muscat Hills and Muriya, tourism complexes featuring hotels, apartments marina and golf courses, have been developed in recent years. In 2011, some 1,400 new hotel rooms were added to the country’s inventory, Euromonitor, a London-based market research firm, said in a March 9 report.

Muscat has been designated the Capital of Arab Tourism for 2012. The Lonely Planet travel guide named Muscat the second-best city on Earth to visit in 2012 after London (which is hosting this year’s Olympics). “This city historically hasn’t garnered much traveler attention but it has everything an active vacation calls for: markets, beaches, diving, turtle/dolphin watching, caving, kite surfing, trekking, desert safaris, rock climbing, all in one place,” Lonely Planet said about the Omani capital.

For 2012, another market researcher, Business Monitor International (BMI), forecasts an 8% increase in tourist arrivals to over 1.7 million people who spend $1.28 billion while they visit. “After 2012, we remain confident tourist arrivals can continue to show steady growth of around 6% per annum over the remainder of the forecast period. This means we would expect tourist arrivals to total just over two million by 2015,” it said in a report last month.

The sultanate has even bigger plans going forward. Under a national development plan called Vision 2020, Oman plans to boost the number of tourist arrivals by four fold to 12 million annually. That would be close to number Egypt gets in a good year and a third more than the United Arab Emirates attracted in 2011.

To do that, Oman is investing in upgrading the Muscat and Salalah Airports and airports in Sohar and Duqm. Omran, the government tourism-investment agency, says it has some $2 billion of tourism-related projects in the works, including more than 12 joint venture investments and nine properties under its management.  Among the projects set for completion this year are the three-star Duqm City Hotel and the four-star Duqm Crowne Plaza.

But three- and four-stars aren’t going to be the norm for Oman, which is aiming for high-end tourist as well as the conventions business, according to Euromonitor.

“Muscat has an array of super luxury hotels pretty new … Even more luxury brands will soon disembark in the country so we expect more of the same to keep happening,” said Hotel.com’s Lofuedo.

That could put it on a collision course with Dubai and other Gulf states like Abu Dhabi and Qatar addressing the same markets. But BMI says Oman is eschewing the “commercialism” and skyscraper cities of its rivals in favor of promoting its indigenous local culture and heritage.

Thus when the international hotel chain Ritz-Carlton opens an outlet under its luxury resort brand Reserve in Muscat it will employ a design that harkens back to Oman’s past rather than its future. “In Oman we are doing a reproduction of an Arabian fort,” Chief Executive Herve Humler told Hoteliermideast.com. “They want to make sure it is authentic, that is where we are bringing the old Arabian amenities, which can be the falconry.”

Oman’s short-term problem is Europe. Last year, according to IATA figures, European arrivals in Muscat’s airport jumped by double-digit figures. But mindful of Europe’s continued economic troubles and Western concerns about security throughout the Middle East, the government began targeting places like Russia, China and India where there is a surfeit of newly wealthy as well as Gulf Arabs.

Russians, who were flocking in droves to Egypt before the revolution that toppled President Hosni Mubarak, are now flying to Turkey and Oman instead, according to Euromonitor. Last year the number of Russians traveling through Muscat jumped 50%, the IATA said.

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