At the helm
Published: 01/11/2009 3:14 am
The main challenge for Omran is to integrate local communities so that they can derive the maximum benefit from development around them
A developer with a heart is probably how Wael al-Lawati, CEO, Omran, would like to describe his company. Currently, the company is involved in developing and investing in more than ten projects with a combined value of over US$10bn, which are expected to be completed in the next five years.
With all of its directly managed projects having 100 per cent government financing, a bigger challenge, unlike in the case of other developers, lies elsewhere. It is to effectively undertake and deliver the mandate of creating jobs for village communities by reaching out and involving the villagers as it builds resorts and communities around them and build upon the company's growing development know-how.
Al-Lawati says the idea is to integrate local communities so that they can derive the maximum benefit by tapping into the many job/business opportunities that spring up as a result of the development. However, al-Lawati is clear on one thing - Omran doesn't want to create dependency.
They are not talking about helping by buying stuff from the community irrespective of the quality. It is about training the villagers to achieve the standards required by the establishments in the new development. We are trying to create a competitive environment.
The idea is not to say, 'Please come, we will buy anything you bring because we want to help your community'.
This is not about charity. Musandam, he says, is a great case where a number of local people have sensed the business potential in tourism and taken up the idea of the dhow.
More importantly, they have adapted according to the market, providing the services and safety measures required to lure more customers. Those who haven't adapted have slowly fallen by the wayside as hotels and tour operators shy away from using their services. Respecting local culture The ideology that sets the basis for development as Omran sees it is the vision of His Majesty that local community's culture and customs are respected. "If you look at Musandam, it is incredible. Villages with only six or seven homes each have power and water connections, and access to schools and hospitals. None of the residents have been asked to move to Khasab, the city. So we have to respect that development philosophy which is very unique. We don't want to move people from one part of the country to another just for the sake of development. On the contrary, we are looking at how we can encapsulate all that is Omani into our development from architecture to Omani staff and Omani sense of hospitality." At Omran, al-Lawati says, they never forget that the key driving force behind the government's move to open up the tourism sector was to create more jobs and to increase the contribution of the tourism sector to the country's GDP. Creation of new jobs is a challenge for any government in the world, but for a young nation like Oman, where the population pyramid is a lot wider at the bottom, it is a much bigger challenge. "It is important how many jobs we create and how we make sure that young Omanis are in a position to take up these jobs in hotels and allied services that come up. With every project we have to ensure that. We look at the project with all these factors in mind." The first project to be ready will, of course, be the Asian Beach Games (ABG) project. The hotel at the ABG site will be ready by November 2010 and the marina by the end of this year, a year ahead of the schedule. "In fact, we are ahead of schedule at the moment. It will be ready before the end of 2010," says al-Lawati, scotching rumours that the financial crisis has affected the project. He says it was one of the first projects for which Omran sought assurance from the government when the financial crisis started. The government has recently agreed to additional funding which confirms its commitment to deliver the facilities for the games. In this instance, Omran is developing the project on behalf of the Ministry of Sports Affairs, which al-Lawati says is a sign of growing confidence within the government of Omran's unique experience. At the ABG project, the aim was to integrate it with the community. Already 50 people are working with the contractors. Omran is now trying to look at the community to see what they can offer in terms of handicrafts and other items during the games and afterwards. Communications are on with the Wali and local people to get suggestions. "We try to maximise what's being bought from them - starting with the food we serve at events." Involving fishermen The second project to be ready will be the residential units being built for Oman Drydock Company's management, followed by Crowne Plaza - both in Duqm. "Obviously, Duqm is in a different situation as it is a small fishing village. There are much more interesting jobs at the port and the dry dock." Al-Lawati says he understands that the villagers there may not be interested in working in the hospitality sector due to issues like long hours. So the plans are being made with a different point of view. "Here we are adopting a two-pronged approach - raise awareness about the hospitality sector and direct job opportunities. But also to explore business opportunities with budding local entrepreneurs. For instance, we can look at how the fishermen can support the operations. They could sell fish to the hotel. We should create tools for them to be able to do so. Omran will ensure that the hotel operator helps educate the fishermen so that they can bring back fish of the quality required by the hotel." It is very much about the business opportunities that the villagers can use. There will be a need for transport from the airport (Duqm airport is expected to be ready within the next few years) and for tour guides. The community can sell handicrafts, it can run a traditional fishing expedition for tourists, etc. "There is a whole list of things on which we need to train people on how to benefit from the new project." But along with pointing out business opportunities, Omran will be educating them about the safety standards of the boats, and teach them how to function without destroying the eco-system as more tourists come in. "There is a whole lot of things to do. But if we find the right people with the right attitude, the business will thrive." Seeing the potential is not to say that al-Lawati thinks it is going to be a smooth ride. "I don't want to simplify the issue. It is a challenge. There are always issues along tribal lines. People will always have something to fault or question our judgement. There will never be enough opportunities from one hotel for the entire village. There will always be choices that have to be made." Omran's role is to help the community in whatever way it can to aid the budding businesses in these developments. There is a long-term business case along with the social responsibility. "If communities reject us, feel we imposed something upon them, they might accept us for a few years, but that resentment will never go away. Eventually it can hurt our business." Since Omran develops and operates, it has a long-term stake. "We are not here to build the hotel and sell it. It's not a two-year concern. We'll continue to own the hotel. So if there is a problem in ten years, it is a problem." Sense of trust Al-Lawati says there has not been any instance so far where it had to give up a project due to resistance from the local community. "We are still a young company. Most of our projects are on the drawing board. So we have not had to face as many communities as some others. We are currently operating some small hotels where we have been welcomed by the community due to the clear economic benefit that is expected." The fact that Omran is a government-owned company works to its advantage as there is a sense of trust. "Communities don't view us as a greedy developer. They know that we are approachable and that helps. So we take more responsibility in this regard. Of course, we need to make profit. But that is not at the cost of any community." But what if there is a strong opposition from the community on a future project? "In most cases resentment stems out of a lack of understanding or communication about the project, its components, execution plans and potential benefits. Therefore, the first approach is to ensure that there is a common understanding and that decisions are not being made on emotional grounds with limited factual considerations. If there is a huge resentment in the community, plans have to be reworked. I have seen numerous cases where ministers have gone to people in remote villages to find out why they are not happy to have a hospital or a school in a particular area. Plans have been adapted to suit the local community when it is realised that they have valid objections." While Omran's own projects haven't been hit thanks to the full support from the government, the financial crisis has affected some of its partners' projects. All these projects relied on a business model where there was a mix of components. There were residential elements which were very profitable and quick to market. Most of the sales took place on an off-plan basis. The requirements for investments were very low. You had to have only designs and the confidence to be able to sell these projects. And then you build as and when the cash flow comes from customers. In return, before the profits are made, the government requires these investors to build hotels, golf courses, marinas and other touristic components. That was the balance required. But with this slowdown in residential sales across the world as investors became shy of mortgages and banks adopting a cautious approach regarding lending have led to a situation where a lot of people feel that may be this is not the best time to buy. As prices started falling, those who had the money wanted to see whether they would come down further and those who didn't have the money are no longer interested or incapable of buying. A lot of these projects have seen a slowdown. That has changed the business models. "To a certain extent, most of our projects had to re-evaluate their plans," says al-Lawati. With Sama Dubai work slowed down on the site at Yiti. "We are now looking at building a hotel as the first component and then the residential components would follow." In the Ras al Hadd project with Qatari Diar, it has been decided that there is no point in trying to sell homes now. The idea is to start with the hotels. "It's easy to get people to go to a hotel for a night than to get someone to spend RO100-200,000 on a property, which is a much bigger decision. That will require a lot more interest in the destination, seeing the product, the infrastructure around, etc. Eventually residential sales can follow. That is a proven phased business model in many remote or new destinations." At the Sifah and Salalah projects with Muriya, work is continuing. Since the market is not in a buying mood, no new projects have been launched. "We are trying to consolidate the previous sales and continue with the construction. We have signed up with the major hotels. In Salalah also it is the same situation - no major sales launches, just ensuring that we keep our current customers happy. We are moving towards delivery of homes next year." Obviously, sales prices that were achieved last year were the peak and probably it will be a while before one could see such prices again. Banks luckily have started showing interest once again after almost six months of being very cautious, says al-Lawati. "Most of the projects in Oman are taken up with cautious approach, in a step by step manner. So we are not affected like other countries." In fact, people were apprehensive about some of the projects. "But the way we delivered them has changed that perception. It is understandable that the people were worried about which projects will go ahead due to the financial crisis. The government's handling of the crisis with its prudent fiscal policies, continuous spending on large infrastructure projects and commitment to government-owned companies like Omran have inspired the market to continue and the financial institutes to start lending again." Public beaches Al-Lawati feels the criticism that Omran is taking away all the beaches from public reach is unfair. "We don't decide what projects actually go ahead. We implement the decisions of the Ministry of Tourism and the Tourism Committee which decide on what projects and which partners can go ahead. We merely represent the government's stake in infrastructure development. In none of the direct projects there are any allegations of taking away any public beaches. With some of our partners obviously some of these beaches are being turned into resorts." He lists the easily accessible beaches. "Shatti al Qurm is still available. That's a big stretch of public beach. Sifah still has a lot of beaches, Muriya has been given a part of that. The new road to Sur has opened up a whole new stretch of beaches to the public. Those were the beaches that were not probably accessible or well-known to people before this. Several other pockets are available and still open to the public. " Al-Lawati says the government has realised that there is an issue. The Ministry of Tourism has created a plan where various public beaches are developed in such a way that there is access and minimum facilities. They have made a list of beaches to develop with basic facilities like shade, parking, toilets and may be a restaurant or cafÃƒÂ©. Others will be left with no development so the more adventurous can still use without the crowds."I think you should credit the government for realising that there is an issue and acting on it. As we develop our tourism sector, it is understandable that many new issues and debates will start which were not relevant previously and I am heartened by the fact that the government is keen on understanding best international practices and to adapt plans as we find what is best suited for Oman and to ensure we continue to safeguard the beauty and unique attributes of Oman.""