Omani tourism currently relies on visitors, to the south west coast, many of them from other Gulfcountries. The authorities believe that Salalah, which has a much more temperate climate than most other cities within the Gulf Cooperation Council (GCC), is the key to attracting tourists to this once completely closed state. This area catches the Indian Ocean monsoon between June and September. While most of the Gulf region suffers from extreme dry heat during that time, the Dhofar province has a cool and misty summer, although travellers from outside the Gulf may not see the attraction of a cool, damp 25C summer holiday.

Although still a tiny industry there, tourism is being heavily promoted and, according to a study by Standard Chartered published in August 2009, the country's tourism industry has shown resilience during the global slowdown and flu pandemic. According to the report, the number of tourist arrivals over the first five months of 2009 rose by 17.5% year-on-year (y-o-y) and revenues rose by 3.9%. Unlike other GCC states, Oman has relatively minor oil and gas reserves and so has needed to find other sources of revenue. The most recent initiative is a regional one: Iran and Oman have agreed to promote tourism between the two countries and undertake joint promotions to third countries. Oman's image has been helped by the completion of two new major projects, The Wave and The Muscat Hills Golf & Country Club, and by another vote of confidence in the sector, when Swiss-Belhotel International signed a memorandum of understanding to build a four-star business hotel in Al Khuwair in Muscat in August 2009.

Oman plans to attract 12mn visitors annually by 2020, an almost sixfold increase on the current level. The focus of discussion is how this can be achieved while maintaining the ‘authentic' character of the country. The director of sales and marketing at the Chedi Hotel in Muscat, Lore Koenig, said that tourists come to Oman for its culture and history, not because there is a cheap deal going or for guaranteed sunshine. Political Risk July 23 2009 was the 39th anniversary of Sultan Qaboos' accession to the throne, an occasion known as Renaissance Day. The Omani media celebrated with a predictable series of tributes and glowing praise about the sultan's achievements in turning Oman into a modern nation. Generally speaking, Qaboos appears to be fairly popular and there is scant evidence of opposition or dissent. Qaboos is 69 years old so this situation should continue over the coming years, although his sudden incapacitation would pose a risk. He has not named a successor publicly, but his preference has reportedly been stated in a sealed letter which is to be opened in the event of his death.

Economic Risk Bolstered by an expansionary spending policy, Oman is looking to mitigate the sharp drop in crude oil revenues experienced in H109 with the addition of an injection of state investment in order to underpin flagging private-sector economic activity. The 13% real GDP growth in 2008 will clearly not be matched, but Oman should still manage positive real GDP growth of 0.4% in 2009 (upwardly revised on the back of 2008 data and the uptick in oil prices), rising to a respectable 2.5% in 2010. Business Environment The Oman Tender Board has allocated tenders for contracts worth US$139.8mn in the areas of transport and energy. The largest single tender includes construction of a power plant worth US$29.4mn, which will serve the Yitti region in the Muscat governorate. Other tenders include designing and construction of internal roads in the Al Sharqiya region at the cost of US$23.3mn. Although government involvement in projects is on the low by GCC standards – 33%, compared with an average regional figure of over 60% from the Kuwait Finance House – we expect the public sector's role to increase as financing remains hard to come by. This could be negative for the business environment.

Oman Tourism Report Q1 2010: http://www.companiesandmarkets.com/r.ashx?id=CW21X23B0191821