STRATEGIES FOR IMPROVING THE PERFORMANCE OF FIRMS OPERATING IN OMAN TOURISM INDUSTRY
Alexandrina Maria PAUCEANU, PhD Department of Marketing and Management College of Commerce and Business Administration Dhofar University, Salalah, Oman E-mail:
[email protected] [email protected]
Abstract The purpose of the research is to analyze the performance of the tourism industry in Oman and identify the problems the sector is facing. To accomplish this purpose, a qualitative research study was done. This was achieved by researching data and information from Oman Ministry of Tourism, Oman Center for Statistics, as well as books and academic articles. Additionally, interviews with 8 executive directors of highly performing firms operating in different sectors of tourism were conducted. The conclusions driven also from SWOT analysis reveals that the government should implement policies to encourage the growth of tourism. Also, short-term trainings related to tourism and foreign languages trainings should be widely available. In order to decrease the high staff turnover, motivational and recognition strategies should be implemented for the workers in the field.
Introduction Tourism sector is a major industry in Oman. The country is popular across the world for its tourist attractions which bring in visitors from different parts of the world every year. Oman is blessed with Wadi’s desserts, beaches and tall mountains that are major sources of tourists’ attraction. For instance, Jebel Shams, which is the tallest mountain in Oman, is one of the most popular camping destinations in Oman as well as in the whole world. The Khareef season in Dhofar region is also a major attraction in Oman. During this season, people from Arabic countries relocate to the region in large numbers to experience the cool weather of the region. The tourism industry contributes more than 7% of the country’s GDP, and this figure is expected to increase to 8.5% by the year 2024 (Subramoniam, Al-Essai, Al-Marashadi & Al-Kindi, 2013). The industry has been developing and growing at an average rate of 15 percent annually from 2003. The tourism industry in Oman is diverse and ranges from the hotel and hospitality sector, travel and tour guide, tourism transport services and hotel and travel booking services. The Oman government has realized the worth and potential of the country’s tourism industry and thus it has been undertaking all the necessary steps and measures in order to boost this industry toward
positive growth and development. Investing in the tourism industry has become a very common economic plan in Oman. According to a report produced by the world travel and tourism, the Oman government also appointed a company known as Omran in 2011 to undertake the planning of the country’s tourism industry and thus ensure the growth of this industry by more than 45 percent by 2015. The focus of Omran is to oversee the allocation and investment plan of more than 14.7 million dollars that the Oman government intends to implement in the expansion of the tourism industry by 2015 (Subramoniam, Al-Essai, Al-Marashadi & Al-Kindi, 2013). The Oman government has plans to create more than 50, 000 employment opportunities for its citizen in the tourism industry by 2015. Through the strategic plans undertaken by Omran, the Oman government hopes to achieve this goal. Currently, Oman receives approximately 2.1 million visitors every year. The government plans to increase the number of visitors to 12 million by 2020.In addition, the government has set plans and strategies to support investors and firms operating in the tourism industry. According to Oman’s ministry of tourism, there is a need for steps/ plans to be undertaken in order to ensure that these goals are achieved. It is clear that the Oman government through its ministry of tourism and tourism promotion is prepared to support the growth and development of the tourism industry. However, it is obvious that the government cannot achieve this alone. There is a need for all firms operating within the industry to come together and focus their efforts and activities towards the general growth and development of the industry. The entire tourism industry is made up of different firms operating in different sectors of the tourism industry. These firms compete with each other and; Therefore they must work towards improving their performance in order for overall tourism industry growth to be achieved. The major objective of this research is to identify the ideal strategies for improving the tourism sector in Oman. The research will determine the problems that the key operators in the industry face and thus make proposals on how the issues can be addressed. From the research, the steps that the government of Oman has undertaken will be assessed to determine how they improved the sector. Potential entrants into the market will get to study the strengths, weaknesses, opportunities and threats are experienced by the existing operators in the market.
Review of the literature Statistics on Oman’s tourism industry show a bright future for firms operating in the industry. This is due to a significant increase in the number of visitors coming into the country. Airport data compiled in April 2014 indicated that the number of tourists who arrived into Oman through airports in the first four month of the year had doubled the number of visitors who arrived in the country as tourists the same period in 2013 (Novelli, 2012). The tourism industry has become one of the most competitive industries in the country. More internal and multinational corporations have invested heavily in this section in order to reap maximum benefits and profits from this sector. In addition, investing in the tourism industry in Oman has over the past five years turned to be among the most profitable and interesting investment options. This is attributable to the immense support that the tourism industry has been receiving from the government. Nevertheless the Oman government is interested supporting and reviving this industry since it has turned out as one of the most essential industries supporting the country’s economy. This is as a result of the reduction of oil revenues that used to contribute to more than 70% of the country’s GDP.
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To support the growth of the government has improved its transport system infrastructure as well as reduce the level of complication for visitors all over the world to access Visa to travel to Oman. Tourist visas are readily granted to foreigners who wish to visit Oman. The visas are valid for a period of one month after issuance, but the holders have the freedom to extend them for a period of six months provided they meet all other conditions. The government has also invested in technology to facilitate electronic visa applications. To minimize bureaucracies and delays the government allows tourists companies and hotels to make submissions for visa applications for foreigners. The ease of application and granting of the visa has raised the number of tourists who visit Oman annually over the last four years as indicated by the table below.
Table 1: Number of arrivals Year 2014 2013 2012 2011
Number of tourists 1,990,000 1,350,000 900,000 600,000
Source: computed Graphic 2 – Progressive increment of the number of tourists in Oman
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The tourist sector of any country cannot exist without accommodation facilities such as restaurants and hotels. The Oman tourism sector operates a variety of hotel classified by region and size. The most luxuries hotels in the country are classified as five-star hotels, and they account for only 12% rooms available in Oman. Approximately 55% of the hotels in the country are one star, and they offer 30% of the rooms available in the country (Neelufer & Al Amri, 2014). The major hotels in the country are in Muscat and Dhofar cities. There is a need for the government and the operators in the industry to invest in starting hotels in other areas outside the major towns so as to open the areas to tourists. The government charges a tax of 17% on the hoteliers who are very high and in turn it increases the costs of the services the hotels offer (Neelufer & Al Amri, 2014). The employees of the hotels enjoy tax-free salary and other facilities to aid in service delivery such as accommodation and food (Neelufer & Al Amri, 2014). The market of the tourist’s sector is European countries followed by countries in Asia and then the US. Tourists from Europe and Asia account for over 80% of total tourists who visit Oman annually. Tourists from the US and other countries in America account for approximately 18% of the total tourists per while tourists from Africa and other parts of the world are almost 2% of the total number per year (International Business Publications, USA, 2012). The government has not invested in marketing the tourism sector to the outside world. A study conducted in 2012 revealed that the government spends only 5% of the national budget on marketing the tourism sector (Subramoniam, Al-Essai, Al-Marashadi & Al-Kindi, 2013). The lack of adequate marketing of the sector has contributed to the lack of full exploitation of the market. Majority of the tourists who visit the country asserted that they heard about the fascinating attractions sites from close friends or relatives who had themselves visited Oman an indicator that enough market is not being done (Subramoniam, Al-Essai, Al-Marashadi & Al-Kindi, 2013). Research method/Technique This paper is a descriptive/ qualitative research study which conducted research on the performance and growth of the tourism industry in Oman. The paper undertook a detailed analysis of the performance of the tourism industry in Oman. This was achieved by researching data and information from the ministry of tourism, the center for statistics as well as from sources such as the internet, books, and articles. Additionally, 8 executive directors of highly-performing firms operating in different sectors of the tourism industry in Oman were interviewed regarding the most appropriate strategies for improving the performance of firms working in Oman tourism industry. Four sectors were considered in selecting the interviewees for this research. These sectors include hotel and hospitality sector, travel and tour guide sector, tourism transport services and hotel and travel booking services. Four sectors were studied in this paper. Two interviewees were selected in each sector giving a total of eight interviewees.
Discussions and Results All the interviewees agreed that tourism is one of the biggest global industries. According to them, the tourism is constantly under change due to changing trends, as well as consumer preferences. Therefore, firms operating in this sector in Oman should align their activities and management strategies to trends and changing consumer preferences. The interviewees pointed
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out that the government plays significant roles in creating an enabling environment for tourism to flourish. They agreed that the government of Oman was not doing enough to market the tourism sector and thus the only way of ensuring growth of the industry is to invest in marketing the industry. The interviewees also agreed that their sector experienced shortage of qualified manpower due to high employee’s turnover and the attitudes of the Omani towards working in the private sector. The government should invest in policies that encourage qualified foreigners to work in the hospitality industry of Oman. The respondents did not only highlight the failures of the government majority of them acknowledged the fact that government efforts in the last five years have boosted tourism. However, they pointed that the government needs to more to enable the industry grow to its full potential. Indicators used for the interview a. Government investments The interviewees pointed out that the government plays significant roles in creating an enabling environment for tourism to flourish. They agreed that the government of Oman has aided the sector but was not doing enough to market the tourism sector and thus the only way of ensuring growth of the industry is to invest in marketing the industry. b. Challenges faced in the industry The interviewees assessed in the study pointed a number of challenges they currently face. 60% of them pointed that lack of qualified human personnel is the major factor that hinders growth of the tourism sector in the country. The interviewees also agreed that their sector experienced shortage of qualified manpower due to high employee’s turnover and the attitudes of the Omani towards working in the private sector. The government should invest in policies that encourage qualified foreigners to work in the hospitality industry of Oman. c. Strategies to improve the tourism sector All the interviewees used in the study pointed that the Oman tourism industry has the potential of growing further if the government and other stakeholders in the industry work together. The first way of improving the industry is to extensively market the sector to external tourists especially through modern advertising channels. The Oman sector is not well-known outside Europe and America. Targeting markets where the sector is not known will ensure the growth of the industry.
SWOT analysis of the tourism industry To facilitate growth of the industry, SWOT analysis is necessary for identifying strengths, weaknesses, opportunities and threats that operators in the industry face. A major strength of the industry it is rapidly growing, and it is recording high number of tourists annually. New entrants into the market have the opportunity to exploit the business potential arising from the soaring number of tourists. The main weakness faced by operators in the industry is high employee’s turnover. This is caused by the little remunerations and compensation systems that demoralize the employees. In addition, many Omani prefer government jobs instead of working in the private field which form the tourism sector (Neelufer & Al Amri, 2014).
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In Oman, there is a shortage of the hospitality workforce, and the government has not helped the operators to secure qualified personnel from other countries. Foreigners wishing to work in the countries tourist sector find it hard to secure employment visa. The tourist sector also faces the challenge of the language barrier as majority of the Omani population do not speak English language (Neelufer & Al Amri, 2014). Lastly, the tourism industry in Oman faces a number of external threats from other countries in the region. Other countries in the Middle East are also investing extensively in their tourism sector to sell them to the world. The Oman tourism industry has not effectively marketed itself to the world due to lack of media presence and media channels for advertisement (Neelufer & Al Amri, 2014). The lack of efficient marketing channels has hindered the tourism sector in marketing new destinations within the country to attract more tourists. The SWOT analysis presented below was elaborated based on the following: -
The interviews conducted for the present research paper Data collected from the field Reviews of previous published articles, books and materials.
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Table 3 – SWOT analysis of tourism industry in Oman
Strenghts: - Very secure area, no threats of terrorist attacks - Good temperature throughout the year as compared to other Gulf countries - Beautiful coastal line along with the mountains which is very rare in Gulf countries - Khareef season in summer when the population from the Gulf countries are migrating in Dhofar region for its refreshing weather - Good hotel and restaurant infrastructure - Young demographic – almost half of the population is under 25 years - Economy is solidly based and able to support investments in tourism sector
Weaknesses: - Language barriers - Lack of good public transportation system - Difficulties in obtaining work visas for workers from outside Oman - Strict work regulations and conditions for expats - Lack of short-term training courses for the workers in tourism industry - Locals prefer government jobs instead of private sector - Lack of marketing and promotion channels - Lack of local specialized work force - Lack of hospitality concept between the locals - Lack of a wide range of tourism products - Conservative country system - Lack of diversity in economy - Small domestic market - High staff turnover - Lack of direct international flights from Dhofar Region
Opportunities: - The Omanisation process - Better management of cultural and natural resources - Interest from international investors - Increase of interest and demand from international tourists to visit exotic places - Plenty of historical places, providing growth opportunity for tourism - Intensive promotion of the country from the Ministry of Tourism, opening offices in different countries and good marketing strategy (“Oman - Beauty has an address ”) - International airport construction in Dhofar region.
Threats: - The Omanisation process - Lack of environmental monitoring and active measure for protection - Risk of social conflict between tourists and local values, especially in very conservative area - Risk of very rapid growth - The Omani riyals strictly paired with US dollar ( 1 omani riyal equals 2.60 USD, fixed exchange rate), there is a risk that dollar weakness will lead to imported inflation
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Note: The Omanisation process which is enforced by the government is at the same time an opportunity and a threat. It is an opportunity because the companies must give preferences to Omani nationals even if they are not as well prepared as other expats, so it is much harder for the companies to hire expats, and a threat because most of the Omanis prefer to work for the government and not for the private sector, or prefer not to work until they will find a government job. According to the research, two strategies were identified and will be discussed in details in the following sections. These strategies are innovation and creativity and effective management and leadership skills. Various subtopics and issues related to innovation/creativity and effective management skills in improving performance of firms operating in Oman tourism industry will be discussed. Innovation in the tourism industry All stakeholders in Oman industry believe that the innovation in the tourism sector will greatly help in improving the sector. The government of Oman being the greatest stakeholder is working hard to revive and renovate the tourism sector by undertaking a number of programs meant to develop the tourism industry basic infrastructure (Walder & Rico, 2006). On the other hand, private firms and individuals who are stakeholders in the sector are also working tirelessly to come up with ways of refurbishing the tourism sector so as to attract more tourists (Walder & Rico, 2006). Technological innovations All the stakeholders in the country’s tourism industry should work as a team to come up with both technological and non-technological innovations. Technological innovations are new techniques of accomplishing tasks aided by use of modern technology (Walder & Rico, 2006). This means that there should be investments in modern technologies. The use of modern technologies in the sector will greatly help in provision of up to date services to the tourists. The first example of technological advancement that the Oman tourism industry should implement is online booking of hotels (Neelufer & Al Amri, 2014). This would ensure efficiency and ease of booking accommodation facilities across the country and hence attract more tourists. Non-technological innovations Technological innovations are not the only measures that are needed to renovate the tourism sector in Oman; non-technological innovations are also needed. Non-technological innovations are innovations that are not technological in nature (Weiermair & Bernet, 2010). They mostly encompass improvement of the skills, attitudes and approaches of all stakeholders in the industry. The government should improve the training of operators and human personnel in the industry sector through attendance of conferences and exchange seminars with operators from countries with well-known tourism sector. The tourism sector should develop and integrate the roles of public and private agents in the sector (Weiermair & Bernet, 2010). Private and public agents play key roles in facilitating service delivery in the tourism sector and therefore their undertakings should be coordinated to ensure they both work as a single unit. The coordination of public and private service providers will mean that the will conduct research together on issues affecting the sector. The multi-
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disciplinary approach in the industry in the long run will lead to improvements in the sector since challenges faced by the stakeholders will be addressed through consultations. The fourth nontechnological innovation that can improve the tourism sector of Oman is to maintain the consistency of the tourism industry and its linkage with society as a whole (Weiermair & Bernet, 2010). The link is necessary because it is not possible to innovate in tourism without acknowledging the need to mobilize the population which must, in particular, be prompted to cultivate the principles of warmth and hospitality. Policy innovations Besides technological and non-technological innovations the government of Oman should invest in strategic innovations in the tourism sector. The policy innovations should be geared towards coming up with policies that improve service delivery in the tourism sector. The first policy that the government should implement is increased in the capacity of national carriers in order to ensure that there is the capability to transport high number of tourists across the country. To ease congestions and delays in airports and other points of entry, the government should install electronic devices to aid in executing procedural duties. The second policy that the government should implement is global marketing and development of the sectors products and services. The government should engage in extensive publicity of the tourists attraction sites in the country. Through global promotion of Oman tourism sector, the government will be able to promote the country’s tourism competitiveness. The third way that the government should implement is coming up with new policies that encourage f new entrepreneurs to exploit business opportunities and aid in the extension of the sector. The government can support entry into the market by lowering taxes and other levies charged on enterprises in the sector. The private stakeholders should complement governments’ efforts of policy innovations by coming up with strategies that promote the tourism division. The first strategy that can be utilized by the private stakeholders is creation of new events and attractions (Kusluvan, 2003). The stakeholders should collaborate to come up with new ways that promote tourist attraction in the country. This means that the stakeholders should combine existing products in new ways to come up with new services. The last strategic approach that private players in the sector should undertake is regular training of their human resource personnel to ensure that the quality and staff are regularly updated so as to offer quality services. Effective management in the tourism industry Effective management is crucial for growth and sustainability of any given industry. To facilitate the growth of the tourism industry, there is a need for effective management of the industry. Effective leadership encompasses programs and practices that are critical in promoting organizational goals and strategies. Organizations are guided by aims and objectives that determine the ways and methods of achieving the aims in a given time frame. Effective leadership in tourism in Oman should be characterized by sound leadership skills that guide the stakeholders in setting viable goals and means of achieving the goals (Kusluvan, 2003). Human personnel play a key role in facilitating achievement of organizational objectives and as such effective leadership is necessary for coordinating the various skills and potentials of different employees. In simple terms, best practices in leadership involve attempts to enhance the skills base of employees through effective human resource management.
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Recruitment and retention of staff Operators in the tourism industry of Oman should recruit and select staff with the correct skills and experiences in hospitality. In recruitment and selection of staff the firms in the industry should use a number of assessments in the selection process to assess the work principles, traits, interpersonal skills and problem-solving abilities of potential employees (Kusluvan, 2003). Through extensive evaluation of the potential employees, operators in the tourism sector will recruit the most qualified personnel to help in improving the sector. Further, the firms in the sector should strive to retain their workforce. Currently, employee’s turnover is very high in the tourism sector in Oman. To address the issue of high employee’s turnover firms should remunerate and compensate employees reasonably (Kusluvan, 2003).
Employee involvement and employee relations Operators in the tourism sector of Oman should seek greater involvement from employees. The reason for employee involvement is to offer independence, inspiration, support and self-control in work processes among the employees (Kusluvan, 2003). To ensure effective involvement of all employees in management, the firms in the sector should use educative and participative instruments, such as team briefings and quality circles (Kusluvan, 2003). Employees should have inputs in the decision-making process to make them feel as part and parcel of the organization. Operators in the tourism sector in Oman should encourage their employees to consult one another and exchange ideas among themselves (Kusluvan, 2003).
Conclusion and recommendations The tourism sector in Oman is a major contributor to the economic development of the country. In order to promote the economic growth in the country, the government should implement policies that encourage the growth of the tourism sector by removing barriers that prevent foreigners from working in the country. The government should also lower the tax rate of 17% that is charged on operators in the industry. The tax rate is very high and discourages new entrants into the tourism sector market (Neelufer & Al Amri, 2014). Over the years, the tourism sector has witnessed low productivity mainly due to high employee’s turnover. Many operators in the sector operate independently and rarely consult with their peers in the industry. To make use of the full potential of the industry, the stakeholders in the tourism sector should come up with ways that promote the growth of the industry. Further, the operators should work as a team and frequently conduct peer audits amongst themselves so as to improve areas where they are weak. In order to deal with low marketing and to improve the current condition of tourism industry, the government should heavily market the sector to the outside world. With the advancements in technology in the current generation, the marketing plans should be carried out via modern mediums such as social sites, global TV channels among others (Neelufer & Al Amri, 2014).
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Adequate marketing of the industry will greatly help in selling the sector to the outside world and hence attract more tourists to Oman. Further, the government should also invest in efforts meant to ensure development of tourism facilities across the country. The decentralization of the hotels and other amenities that support tourism across the country will help open all areas of the country that can attract tourists.
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