Luxury scramble in Oman means mid-range potential

Opportunities exist for mid-range hotels in Oman to fill a gap being left in the wake of the growth of luxury properties in the country, research suggests.

According to international real estate consultancy Cluttons’ Muscat Spring 2014 Commercial Market Outlook, which highlights the substantial supply pipeline of four and five-star hotel rooms that are expected in the next five years, there will be a shortage of mid-range hotels to cater for Oman’s growing tourism market.

The prediction comes at a time when the Oman government’s drive to promote the travel and tourism industry has resulted in the sector directly contributing OMR982.8 million (US $2.6 billion) to Oman’s GDP in 2013 and, according to The World Travel and Tourism Council (WTTC), this contribution is expected to rise by 10.2 per cent to OMR1.08 billion (US $2.8 billion) in 2014.

Business Monitor International is predicting tourist arrivals to increase by 24% by 2018, to 1.35 million visitors. While inbound tourism remains largely driven by visitors from GCC countries, the last two years have seen an improvement in inbound tourist numbers from Europe.

Head of Cluttons Oman Philip Paul said: “Last year was a watershed year for Oman’s tourism sector, as the Government implemented new strategies to ensure that the economic benefits of tourism are realised and Oman is recognised as a world-class destination for leisure and business travel.

“Government data reveals there was an 11% increase last year in revenue for four and five-star hotels across Oman, against 2012 figures. This suggests that investment in this sector by international hotel groups will rise further, underpinned by the robust level of domestic and regional demand for hotel rooms.”

He added that, while there was still a need for more luxury rooms, there was a "high risk" of oversupply in the segment

“Given the expected surplus of luxury high-end hotels, we see a significant opportunity for mid-range three and four-star hotels to expand in Oman, and this will present new development opportunities as the sector continues to mature.

“We believe that a diverse range of hotel offerings will add further impetus to Oman’s fast growing reputation as a popular holiday destination.”

Cluttons reports that the last 18 months have seen the opening of two new four-star hotels in Muscat - the 180-room Holiday Inn in Seeb and the 203-room Best Western Premier in Al Khuwair -while hotels currently under construction include the five-star Kempinski at The Wave and the five-star Millennium at the Tilal Complex in Al Khuwair, which also includes a yet to be branded four-star hotel.

In addition, Somerset Serviced Residences at the Panorama Complex in Bausher and two five-star Jumeirah Group hotels at the Saraya Bandar Jissah ITC development are also under development.

Construction is also expected to start soon on a four-star Crowne Plaza property, a five-star hotel at the Oman Convention & Exhibition Centre, the five-star InterContinental at Muscat Hills, the five-star W Hotel at the first phase of the redevelopment of the InterContinental site in Shatti Al Qurum and the four-star Wave Plaza at The Wave.

The current proposed and under construction hotels could potentially more than double the number of four- and five-star hotel rooms in the Muscat Capital area, it adds