MUSCAT // Shopkeepers at the Muttrah souq, one of the most popular tourist spots in Muscat, half-heartedly call out to passers-by to try to tempt them in, as the rich scent of frankincense drifts through the maze of stores selling trinkets, traditional Omani hats and spices.
Sales to tourists this season have declined, shopkeepers say, as the spending power of the visitors, who mainly come from the UK, Germany and Italy, has weakened.
"The people continue to come, but they are not purchasing like before," said Sidhique Moidu, the manager of Kashmir Garments. "The reason is the global economic crisis."
His shop has hundreds of pashmina scarves, ranging in price from 1 Omani rial (Dh9) to 1,200 rials.
Rajan Chowdhury, a shop assistant at Silver World, which offers an array of goods including camel ornaments and belly-dancing costumes, also said that sales to tourists were "not like before … because of the depression".
Oman is heavily dependent on Europe for tourists. Some 1.6 million tourists visit Oman each year, accounting for more than 2 per cent of its economy. The industry directly employs about 35,000 people.The number is expected to increase to 50,000 by 2021, according to the World Travel and Tourism Council.
For several months of last year, protests took place in Oman, prompting cancellations and putting off a number of potential visitors. But this year, it is economic weakness in Europe that is dragging business down, hoteliers say.
"This year is softer than it was in January, February last year, which was prior to any disruption in Oman," said Peter Donlevy, the director of sales and marketing at the Shangri-La Barr Al Jissah Resort & Spa in Muscat.
"We're looking at economic considerations in Europe now rather than things in the region.
"I think there's other things that have happened in the global world, particularly out of the UK, being our primary market, where they've got their own economic situation … that has a greater impact on people travelling out of the UK, rather than any perceived security issues in Oman."
There was a decline in occupancy as the resort, which consists of three luxury hotels, of between 3 to 5 percentage points last year compared with the previous year, he said.
But despite weakness in Europe, Mr Donlevy remains optimistic that business will be better, in part because the number of guests from the GCC is on the rise. Last year, the resort had an increase of about 5,000 room nights from guests from the GCC - both expats and nationals.
The increase could have been helped by regional unrest, as countries such as Bahrain were largely avoided, he said. As well as actively trying to attract more tourists from the GCC, the resort is trying to diversify its customer base by turning to countries such as India and Turkey, Mr Donlevy said.
Oman's ministry of tourism is still forecasting 10 per cent growth in tourism this year.
Salim Al Harthy, a sales manager at the InterContinental hotel in Muscat, said leisure travel has declined but that corporate business coming mainly from the Gulf region has held up well and is keeping the hotel occupied this week.
The manager of another business hotel also said that bookings were strong.
"The occupancy is running in the range of 80 per cent, which is far higher than we did at any time in 2011," said Manu Madan, the general manager of the City Seasons Hotel Muscat, which opened last March. "Corporate activities are on the peak … Conferences are being done and those could have been held elsewhere, but Muscat is benefiting."