Will Oman dry out, and gas prices set to double next year

There's a lot of discussions going on all over the country at the moment on the topic of alcohol licensing laws, and whether the Majlis al Shura are going to vote in favour of banning alcohol outright, or at the very least further restricting it.

This is obviously a highly sensitive subject, and with me being non-Muslim and in favour of alcohol in Oman it's pretty easy to say I'm bias on this particular issue, but let me try and put forward my thoughts on this anyway....

Oman's income is largely from oil and gas exports, about 82% of it's 2014 budget revenues are from O&G. This means 18% of Oman's revenues come from other sources, of which Tourism is a growing segment of this %. That's the income side of things, but what people seem to easily forget is the number of jobs in the tourism sector is significant and growing as Oman has more tourism related businesses opening - there are approximately 40,000 direct jobs in Oman's tourism industry before you count the support industry jobs too.

People come to Oman for a holiday - thats the plan. When you look at who comes here for a holiday, here are the numbers for 2014 up until the end of September (source):

Omani's - 5.39%
GCC residents - 44.50%
Other Arabs - 5.99%
Asians - 21.07%
Europeans - 17.25%
Others - 5.79%

The lions share of Oman's tourists are visiting from other GCC countries. Given that the UAE just tightened it's visa-run rules, I imagine this number will drop slightly as there won't be quite so many people running around the flag pole at Hatta anymore. But still - Oman's far and away biggest market is it's neighbours and those resident in those countries.

That does not mean Arabs, nor does it explicitly mean Muslims, it could be a British person who lives in Qatar who's come for a visit - or it could be a Kuwaiti person. I don't understand how 5.39% of tourists can be Omani, unless these numbers are based on traffic through borders and not specifically tourist visa's.

Anyway, my point is that a large chunk of Oman's tourists come from parts of the world where alcohol is not restricted - I'm not commenting that there's no Muslims in Europe, or that there's only Muslims in Asia - I'm just working with generalizations here. People like to have a drink. In fact if you check this document which details 4 and 5 star hotels guests for 2014 up until September, you can see that Omani's represent nearly 30% of 4 and 5 star hotel guests. Europe/North America/Oceania represent about 37% of guests.

If Oman votes to stop allowing its own people to consume alcohol, I suspect you'll see this 30% of 4 & 5 star hotel guests drop - by how much I don't know - but I think you'll see it drop. Along with that, it's fairly safe to assume that a very large majority of the 37% of "Western" tourists may not visit either.

If Oman were to ban alcohol it would be seriously jeopardizing it's tourism revenues for one, but perhaps more importantly, the 40,000 jobs of those in the hospitality sector, which is heavily Omanized. It's that simple.

Given these tough economic times, and persistent rumours that are going around town that the wholesale price of gas to industrial consumers (eg power & water plants, smelters and cement producers) is doubling to $3 per MMBTU, it only shows how much pressure Oman has on it's finances right now. We're likely going to see our electricity, water and sewage (because it's calculated as a ratio of water costs) bills rise as a result of this gas price increase next year. And that's before we even look at the price of petrol at the pump.

Does Oman really want to walk the gauntlet of budget deficits, public unhappiness at increased costs of living and the inevitable shedding of Omani jobs in the hospitality sector? Even restricting Omani's from it is going to have a significant impact on revenues at hotels, and by extension, the tourism sector.

I guess we'll find out soon.

le fin.