Orascom Hotels & Development sign agreements for Oman development

Waleed Khalil Rasromani
14 Min Read

CAIRO: Orascom Hotels & Development (OHD) signed a series of agreements with the Omani government for the construction of tourism destinations in four locations in Oman, one in Muscat, another in Sifah close to Muscat, a third in the scenic city of Salalah in the south and a fourth on Al Soda Island.

The agreements will govern rights and responsibilities of each party in a number of matters, including construction, service commitments, utilities and land concessions, for the next 50 years.

We will start the construction as soon as we finish all the detailed drawings and get approval on the drawings, OHD Chairman and CEO Samih Sawiris tells The Daily Star Egypt on the sidelines of his company s annual general meeting yesterday.

The projects in Oman are amongst OHD s most ambitious ongoing developments. The company nearly doubled its capital, from LE 590 million to LE 1 billion, last year to fund its Omani venture, of which it owns 70 percent with the balance owned by the government of Oman.

The project in Wadi Al Qurum in Muscat is intended to address the city s lack of a central area, according to Sawiris. It will therefore provide entertainment, restaurants and other amenities to the city s residents and visitors.

Sawiris takes a positive stance on the lack of tourism development in Oman relative to other Gulf destinations.

I think that Oman is the only country in the area that has not evolved to an extent where you start worrying about overcapacity says Sawiris. All of Oman s rooms are less than the rooms we have as a single company put together.

Oman s image amongst travelers is also encouraging. The acknowledgement of Oman as being a premium Gulf state, in terms of the image it has amongst travelers, is uncontested, says Sawiris. Ask anybody what his conception of Oman [is] versus anything else on the peninsula [and] he will rank Oman as number one. It has culture, it has history, it has an amazing nature, it s on the Indian Ocean, not just some locked-up sea. And it has one of the beautiful deserts [and] mountains.

Although the projects were first envisaged nearly two years ago, Sawiris is satisfied with the pace of progress.

For a country to give up custody of a full island, 20 million square meters in two very sensitive and important sites, and 40,000 [square] meters [in] the heart of the capital, if they don t take two years to prepare documentation and prepare permits internally for this kind of development, they would be quite reckless and careless, says Sawiris.

Elsewhere in the Arabian Peninsula, OHD is in the process of negotiating the development of Kamaran Island in Yemen.

We ve advanced a lot [but it s] still very slow, but again understandably, says Sawiris. We re talking about giving up literally every single right of a normal government. We are negotiating rights for an airport, a harbor, utilities and infrastructure, and all of this combined with a space and a surface of 130 million square meters. Again, it s prudent to assume that this will take a long time.

Sawiris explains that OHD sought an island in Yemen because it s safer, it s easier and it s much better to control and have an oversight of what s happening there.

OHD generally applies the model of its debut destination El-Gouna for all its projects. El-Gouna is essentially a full town with a population of more than 10,000 people as well as hotels, nightclubs, restaurants, shopping centers and a golf course.

Sawiris explains that OHD can invest in such long-term projects because it is supported by existing established operations.

The beauty of our business is that we can afford to take a long time, says Sawiris, because we are doing so many other things at the same time that are creating turnover, profitability and are already in established areas that we can have the patience to go to places that will not evolve for another five to 10 years.

The success of El-Gouna and other projects also gives OHD credibility in pitching for similar initiatives.

It s a model that has been amazingly well perceived, says Sawiris. It has been amazingly profitable. It is very difficult to copy. The fact that it takes so much time makes copying it practically impossible … This also gives us a credibility that allows us access to big tracts of land by governments that would otherwise shy away from giving such big pieces of land to anybody else.

In addition to real estate, OHD recently created two joint ventures with a Tunisian company, Cartago, to provide domestic and international charter flight services.

Sawiris has no plans to broaden these joint ventures into a full airline business. The airline business is very tricky [and] very dangerous, says Sawiris, adding that the charter flights are intended to increase the number of visitors to OHD s destinations and to improve the company s bargaining power with tour operators.

It s just a complementary service and it should stay as a complementary service, not a full-fledged big booming business, says Sawiris, and that s why we are not even getting too involved in the management; we ve left it to our partners who are professionals and who have done this for a living all their lives.

With regard to the ongoing threat from terrorism, Sawiris describes the diminishing impact of attacks.

Every terrorist act that takes place is a smaller dent than the one before, says Sawiris. Luxor kept us two years without a single visitor; Sharm El-Sheikh kept us two weeks [with] half the number of visitors and we were back in business a month later … It s just become one of these travel risks that people have learned to live with ever since it became a worldwide phenomena and not an Egyptian phenomena.

The project in Wadi Al Qurum in Muscat is intended to address the city s lack of a central area, according to Sawiris. It will therefore provide entertainment, restaurants and other amenities to the city s residents and visitors.

Sawiris takes a positive stance on the lack of tourism development in Oman relative to other Gulf destinations.

I think that Oman is the only country in the area that has not evolved to an extent where you start worrying about overcapacity says Sawiris. All of Oman s rooms are less than the rooms we have as a single company put together.

Oman s image amongst travelers is also encouraging. The acknowledgement of Oman as being a premium Gulf state, in terms of the image it has amongst travelers, is uncontested, says Sawiris. Ask anybody what his conception of Oman [is] versus anything else on the peninsula [and] he will rank Oman as number one. It has culture, it has history, it has an amazing nature, it s on the Indian Ocean, not just some locked-up sea. And it has one of the beautiful deserts [and] mountains.

Although the projects were first envisaged nearly two years ago, Sawiris is satisfied with the pace of progress.

For a country to give up custody of a full island, 20 million square meters in two very sensitive and important sites, and 40,000 [square] meters [in] the heart of the capital, if they don t take two years to prepare documentation and prepare permits internally for this kind of development, they would be quite reckless and careless, says Sawiris.

Elsewhere in the Arabian Peninsula, OHD is in the process of negotiating the development of Kamaran Island in Yemen.

We ve advanced a lot [but it s] still very slow, but again understandably, says Sawiris. We re talking about giving up literally every single right of a normal government. We are negotiating rights for an airport, a harbor, utilities and infrastructure, and all of this combined with a space and a surface of 130 million square meters. Again, it s prudent to assume that this will take a long time.

Sawiris explains that OHD sought an island in Yemen because it s safer, it s easier and it s much better to control and have an oversight of what s happening there.

OHD generally applies the model of its debut destination El-Gouna for all its projects. El-Gouna is essentially a full town with a p
opulation of more than 10,000 people as well as hotels, nightclubs, restaurants, shopping centers and a golf course.

Sawiris explains that OHD can invest in such long-term projects because it is supported by existing established operations.

The beauty of our business is that we can afford to take a long time, says Sawiris, because we are doing so many other things at the same time that are creating turnover, profitability and are already in established areas that we can have the patience to go to places that will not evolve for another five to 10 years.

The success of El-Gouna and other projects also gives OHD credibility in pitching for similar initiatives.

It s a model that has been amazingly well perceived, says Sawiris. It has been amazingly profitable. It is very difficult to copy. The fact that it takes so much time makes copying it practically impossible … This also gives us a credibility that allows us access to big tracts of land by governments that would otherwise shy away from giving such big pieces of land to anybody else.

In addition to real estate, OHD recently created two joint ventures with a Tunisian company, Cartago, to provide domestic and international charter flight services.

Sawiris has no plans to broaden these joint ventures into a full airline business. The airline business is very tricky [and] very dangerous, says Sawiris, adding that the charter flights are intended to increase the number of visitors to OHD s destinations and to improve the company s bargaining power with tour operators.

It s just a complementary service and it should stay as a complementary service, not a full-fledged big booming business, says Sawiris, and that s why we are not even getting too involved in the management; we ve left it to our partners who are professionals and who have done this for a living all their lives.

With regard to the ongoing threat from terrorism, Sawiris describes the diminishing impact of attacks.

Every terrorist act that takes place is a smaller dent than the one before, says Sawiris. Luxor kept us two years without a single visitor; Sharm El-Sheikh kept us two weeks [with] half the number of visitors and we were back in business a month later … It s just become one of these travel risks that people have learned to live with ever since it became a worldwide phenomena and not an Egyptian phenomena.

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