Introduction:

Sultanate of Oman has witnessed a rapid progress in the tourism sector for the last few years. The objective of this research is to establish a critical study of tourism investments in the Sultanate of Oman. The aim of the research is to analyze the factors encouraging tourism investments and impacts of tourism investments in Oman's economy and society. In addition, it aims to investigate some of the challenges that face the tourism investments in Oman. It has been argued that the tourism sector will be a major contributor in the government new strategy of diversifying the sources of national income which will move the country's economy from largely dependent on oil and gas investments to a diverse economy of different resources (Al-Badi, 2004, p11). The annual statistics performed by the Ministry of National Economy (2006) reveals a steady growth of tourism investments in the country and an increase in the GDP of the tourism sector. The Minister of Tourism, Dr. Rajiha Abdul-Ameer, stated in an interview with Times of Oman Newspaper (2004, Volume: 554) that the annual growth of the sector's GDP has been over 3% and the added value has increased by 7.4 per cent. The government of Oman encourages foreign investments in the tourism sector. However, it is argued that the foreign investments might have negative effects besides the apparent positive effects (Al-Rajhi, 2005, p33). The aim of the research is to study both the positive and negative effects of foreign investments in the tourism sector and analyze them critically. The researcher attempts to draw a conclusion on the major effects of tourism investments in the country's economy and assess critically the impacts of these investments on the Omani society.

Literature Review:
Al- Siyabi (2001, p.23) stated that Oman's natural beauty combined with rich history is making it a unique place for tourists to relax, discover and enjoy. Many international tourists seek for this distinctive environment which is missed in many parts of the modern world today because of pollution and rapid disappearance of natural features beyond the thrust of building spreading. Al-Siyabi (2001, p.24) argues that the beauty of Oman and its peaceful nature are major factors that encourage tourism and hence induce investors to invest in this sector. This is true since the success of tourism investments requires the country to be attractive to reasonable numbers of tourists. Investors prefer tourism investments in Oman because of the attractive tourism climate. According to Abdul-Rahman (2004, p.67) the government of Oman offers a number of incentives and facilities to create a favorable investment climate for investors. This is another factor that encourages tourism investments in Oman. The evidence was that the government has set a number of laws and regulations that facilitate easy investments. In fact, this argument is obvious in the government calls inviting the private sector to be a partner in developing the tourism sector and participating in many big tourism investment projects in Oman. Government statistics performed by the Ministry of National Economy (2005) (www.moneoman.gov.om) reveals that the tourism sector has achieved considerable growth in different aspects in 2004 compared to 2003. The hotels earnings have increased from RO. 44 million in 2003 to RO. 58.6 million in 2004. the researcher suggests that the reason was the new government regulations that encourage investments and organize tourism activities. According to Al-Siyabi (2001, p.100), the development of tourism investments in Oman is a consequence of the favorable location of Oman in the Arabian Peninsula and its farness from the natural disasters. However, this argument is not up-to-date since Oman has witnessed a natural disaster, Guno, in 2007 which led to destructions of many buildings and infrastructure of tourism places. 2

According to World Tourism Organization (2008) (http://www.menafn.com/qn_news_story) , the tourist traffic will go up to 5 billion tourists per day and the Middle East is expected to have a high growth rate of 7.6 per cent by 2010. Moreover, the Middle East is expected to become the only region to double its growth rate in the tourism sector from 2.2 per cent to 4.4 per cent by 2020. Oman's share of tourists from the Middle East is expected to reach 70 million by 2020. These statistics would have an impact on the willingness of investors to participate in tourism projects and lead to an increase in the number of these projects. Al-Riyami (2007, p.44) stated that the new tourism projects in Oman such as the Wave, Muscat and the Blue City in Barka are expected to attract international tourists from Europe and America because of its grandeur-style. They are prepared to accommodate the tourists in high quality hotels. This statement is true since many Western tourists seek for perfection in their tourism experiences. Pike (2008, http://www.omaninfo.com/cgi-bin/journal/DocView ) stated that the growth of leisure guest arrivals to Oman should surely continue over the next few years. Awareness of Oman, new resort hotel supply and destination activity development will surely go hand in hand with the growth in demand. Oman, having boundless natural resources and quality, emerging new hotel and resort facilities should ensure that that tourism will be of higher spend variety avoiding the pitfalls of high volume low rated mass tourism. The researcher supports this statement since the leisure tourism investments are essential for successful tourism development and developing hotels to accommodate tourists is an important task. The evidence to Pike's statement is that the government statistics of the number of hotels' guests indicates a regular increase as shown in figure 1.

Figure 1: The Number of Guests in Hotels and Motels in the years 1990-2005

Source: Annual Statistical Report (Ministry of National Economy, 2006)

The Sultanate of Oman is a leading example of a country that has used its capital from oil and injected it into building of the country's infrastructure to provide for its flourishing leisure and business tourism (Renzo, 2008, http://www.omaninfo.com/cgibin/journal/DocView). This argument is supported by the evidence of the Ministry of Tourism efforts to increase the international exposure in order to attract a large number of tourists. Related to the efforts of the government to roll up the tourism investments in the country, the Minister of Tourism, Dr. Rajiha Abdul-Ameer, outlined the main issues related to tourism investments the government has concentrated on. Abdul-Ameer (2004, https://www.menafn.com/qn_news_story_s.asp) stated that the ministry has updated the tourism strategy, formulated a new tourism marketing strategy, promoted tourism projects and drove what is referred to as the country's "transition" through relaxed visa regulations that make it easy for travelers from 76 nations to visit the country. These announcements are indicators of the high speed evolution of tourism sector which will lead to speeding the investments in this sector. 4

The impacts of tourism investment in the country's economy have been studied and inspected by several authors in tourism investment in Oman. Al-Tobi (2006, p.54) viewed the tourism investments as an accelerating power for economical growth in the Sultanate of Oman and inspected that tourism activities will be an integral motivator of the economy. Actually, the tourism investments' contribution to the national economy has increased in the last few years as the Ministry of National Economy reported in the Statistical Report (2006) by 7.4 per cent. However, AlTobi's inspection describing the tourism activities as an integral motivator of the national economy is exaggerating in some extent to the range of contribution of the tourism sector. There is no evidence that the tourism sector will contribute as much as the other economical activities of the Sultanate of Oman such as the oil and industrial sectors. Therefore, the importance given to the tourism sector by the investors should not exceed the reasonable returns of tourism to the investments. Al- Yahiai (2003, p.17) saw that the tourism investments provide a lot of job opportunities for Omani youth. These investments involve job opportunities in hotels, resorts, castles and tourist guiders in different tourism locations. The evidence is seen in the new higher education programs introduced in the tourism specializations in the private colleges in Oman which aim to prepare a qualified workforce in hospitality and tourism sector. The graduators from the tourism programs are seen to have proven their qualification in occupying the tourism careers and dealing with different aspects of tourism activities from guiding the tourists to planning for big tourism projects. Al- Riyami (2004, p.32) stated that the tourism sector has supported other economical industries that are indirectly related to the tourism industry such as the real estate industry, agricultural and fish industries, constructions industry and furniture manufacturing. This argument related to the effects of the tourism investments in the economy need more evidence and real statistics indicating the growth in the mentioned industries. There has been little concentration in the social impacts of the tourism investments in the Sultanate of Oman in the writings of many authors. The reason might be that the tourism investments are still young and there were no sufficient studies related to their 5

effects on the Omani society. The researcher investigated some of the changes in the society that were caused by the increase in the tourism establishments in Oman. In fact the rapid increase of these projects attracts increasing numbers of tourists that might contribute in a change of the social structure. Many of the tourists are coming from entirely different cultures that might conflict with the pristine Omani culture. Therefore, Omanis might be upset because of the unaccepted behaviors of some foreign tourists. To limit these social consequences, tourists are expected to be taught the importance of respecting Omani customs and traditions when going through Oman. According to the published economical statistics (Ministry of National Economy, 2006), the volume of foreign investments in the Sultanate of Oman was RO. 5997 millions in 2006 compared to RO. 4007 millions in 2005 with 50 percentage of growth. Because of the appearance of new tourism projects in 2006, the tourism sector gained 20% of the foreign investments. It is argued by the Minister of National Economy, Abd-Nabby Maki, (2007) in an interview with Aram Newspaper ( Volume: 115) that the foreign investments are nourishing the national economy by establishing big projects that the Omani investor does not have the capability to establish and these foreign investments create a lot of job opportunities for Omanis. This argument is true since the foreign investments bring more capital to the country that increases the national GDP. However, the negative effects must be studied and limited as possible. Osman (2007, p.32) stated that the increase in the foreign investments was due to the inflation in many parts of the world especially in the real estate sector while Oman is relatively cheaper. Here, the investor obtained a cheaper and more profitable opportunity of investment. While on the other hand, the citizen faces an increase in the costs due to increase in demand for the real estates. This argument is absolutely correct because of the very obvious increase in the costs of real estates in Oman in the last few years. One of the important problems that might arise from facilitating the foreign investments in the country is the competition that the national investor faces with the foreign investor who might have more power to obtain larger investment projects (AlHarthi, 2007, p.43). This statement was disproved by Al-Hadi (2008, p.34) who stated 6

that the government gives the priority to the national investor and limits some of the areas of the investments opened for foreigners in order to prevent the undesired power of foreign investors. Some authors investigated the challenges that are facing the tourism investments. Said (2007, p.65) argued that the tourism investments face a challenge in maintaining the balance between developing the tourism places and conserving the natural environment. He argued that some of the natural places are being polluted by the tourism traffic. However, the Minister of Tourism stated in an interview with AlKhaleej Newspaper (2007, Volume: 305) that the Ministry is standing in a base of policies that give an importance to the environment conservation and maintenance of the wild and marine lives. In addition, the ministry seeks for sustainable development of tourism sector through the appropriate investments. Kotler (2007, p.54) stated also that the insufficient direct airlines between Oman and the countries exporting the tourists is another challenge that faces the tourism investments since it will reduce the available numbers of tourists. This argument is true. However, there are new plans of establishing new international airports in the Sultanate of Oman.

Conclusion:
This research has investigated the factors encouraging tourism investments in the Sultanate of Oman. It was found that the beauty of Oman and its rich history are major reasons that attract tourism and thus induce investments in this sector (AlSiyabi, 2001, p.24). In addition, the government regulations facilitating tourism investments are essential motivators of tourism investment projects (Abdul-Rahman 2004, p.67). The tourism investments have impacted the country's economy positively. They have contributed to 7.4% of the national GDP in 2006 (Ministry of National Economy, Annual Statistical Report). The tourism investments will be an important part of the new strategy of the government related to diversifying the resources of national income (Al-Badi, 2004, p11). They create new job opportunities for Omani youth who are qualified to work in this sector (Al- Yahiai, 2003, p.17)

Although, there were few studies related to the social effects of the tourism investments in the Omani society, the researcher see that these investments might lead to some changes in the social structure because of the influences of increasing numbers of tourists. Moreover, the different cultures of tourists are expected to have a contradiction with the Omani culture which must be respected by the tourists. The foreign investments in tourism sector are expected to have positive and negative effects (Al-Rajhi, 2005, p33). The positive effects are the development of the national economy and providing job opportunities for Omanis (Abd-Nabby Maki, 2007). The negative effects are the causing of inflation in the real estate market and the higher competition faced by the national investor. The tourism investments are supposed to have some challenges in striking a balance between the tourism activities and conservation of natural environment Osman (2007, p.50). However, the government has set policies that guarantee the conservation of environment and achieve sustainable development (Abdul-Ameer, 2007). This research supports that the tourism investments are effective contributors in the Sultanate's economy and cause various economical and social changes. Moreover, the research supports that the tourism investments face some challenges which are overcome by the government efforts.

Recommendations:
In fact, the investigation of tourism investments in Sultanate of Oman needs to be studied in depth. Although, the governmental sources provide a full description of the amounts and plans of tourism investments, there is a need for a critical analysis to the all effects of those investments in Oman's society, economy and environment. The rapid development of tourism investments must not violate the society's culture and values. The balance is required in order to achieve the goal of sustainable development in the country.

References:
Books:
1p.67 23456789101112Al-Badi W. (2004), Wonderful Nature of Oman, 5th Edition, p.11 Al-Harthi R. (2007), Foreign Investments in Sultanate of Oman, p.43 Al-Hadi S. (2008), Tourism Issues, 1st Edition, p.34 Al-Rajhi K. (2005), Tourism Investments in Oman, 1st Edition, p.33 Al- Riyami S. (2007), Tourism Impact on Oman's Economy, 2nd Al-Siyabi R. (2001), Tourism Projects in Oman, 1st Edition, pp23-24 Al-Tobi M. (2006), Oman: Tourists Destination, 2nd Edition, p.54 Al-Yahiai F. (2003), Tourism in Oman: Development and Effects, 3rd Kotler M. (2007), Developed Oman, 1st Edition, p.54 Osman B., (2007), Tourism Development in Oman , p.32 Said R., (2007), Oman: New Era, 1st Edition, p.65 Abdul-Rahman T. (2004), The Future of Tourism in Oman, 1st Edition,

Edition, p.44

Edition, p.17

Journals:
131415Times of Oman Newspaper, (2005), Foreign Investments in Tourism Al-Khaleej Newspaper, (2007), Development of tourism investments, Aram Newspaper, (2008), Interview with Oman Minister of National Sector, Volume 554 Volume 305 Economy

Websites:
16171819Ministry of Tourism website, www.omantourism.gov.om Ministry of Information website, www.omanet.om Ministry of National Economy, 2006, Annual Statistical Report, Ideal climate to lure tourism investments in Oman

www.moneoman.gov.om, Accessed on 20/05/08 https://www.menafn.com/qn_news_story_s.asp ,Accessed on 12/05/08 9

20-

Pike J. & Renzo O., Hotels in Oman www.omaninfo.com/cgi-

bin/journal/DocView, Accessed on 25/05/08

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