With Oman’s travel and tourism GDP predicted to rise at an annual growth rate of 6-8% to 2017, the country’s rapid development presents both a challenge and an opportunity for its mid-market hotels. “Next year the projection is tough, as Muscat will grow its room inventory by 18%,” says Rabih Zein, general manager of Radisson’s 175-room Park Inn Muscat.
“It’s very challenging, but at the same time it’s motivating, because all of them are four- and five-star hotels, so we need to be on our game 24/7 if we want to keep our slice of the market,” he adds.
Being primarily a business hotel, located in the heart of Muscat’s city centre and deriving around 50% of its business from the corporate market, the Park Inn felt the disruptive effects of the oil crisis and the devaluation of the Euro during the final quarter of last year. Nonetheless, 2014 was the “best ever year for the hotel”, Zein says.
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“The oil crisis has meant that some projects have been cancelled or delayed, and this has affected the business overall in Muscat. However, at the Park Inn Muscat we managed to keep our market share and we achieved all our key performance indicators. We lost a little on average house rate, but this was compensated by the occupancy, which is flirting around 70% as a yearly average.”
Vital infrastructure work will leave the small Sultanate poised for growth. Muscat International Airport is expanding and will soon have capacity to handle 12 million passengers annually, with further expansions planned in three phases to boost annual capacity to 24, 36 and 48 million passengers as demand grows.
This means that not only will Muscat need still more hotel rooms, but – with the promised influx of low-cost carriers opening routes into the country – “there is a big space in the market for three- and four-star properties, much more than there is for five-star”, Zein says.
“The opportunities today are stronger for the four- and three-star market. Short term, I’m not sure the investment in five-star hotels will be a great opportunity. The mid-scale is going to be the next big thing for Muscat.”
The opening of Oman Convention and Exhibition Centre, scheduled for next year is further expected to give Oman’s local mid-market hotels a boost. Located close to the international airport, the facility plans to host international, regional and national conventions, exhibitions and business events. According to Zein, its opening will have stabilising effect on the ‘feast or famine’ nature of demand that the city’s hotel market experiences currently.
“Business in Muscat is only six months a year, and three days a week – during that time, the supply cannot meet the demand. Outside those days, however, it’s a totally different story – on Tuesdays, your occupancy and your average house rate is 100% different to at the weekends.
“With the new exhibition centre for over 7,000 delegates, we will be able to accommodate big exhibitions, and be able to compete with Dubai and other big destinations. It’s going to bring a lot of new business.”
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