The Sultanate of Oman is focusing on increasing its tourism potential, with the launch of a 25-year tourism vision worth US $35 billion. A report from Arabian Travel Market showed that inbound tourism to the Sultanate rose by an average of 7.4% per annum in the decade beginning 2005, with the country targeting 1.4 million international arrivals by 2019, up from 1.1 million in 2015.
Taking this seriously, the Oman Ministry of Tourism has forecasted hotel room capacity will expand at an annual growth rate of 5.3% over the next three to four years, and contribute 10% of GDP by 2020. Last year, the ministry revealed that the top 10 development projects have a total investment value of just over US $3.3 billion. Among those that will be opening their doors will be hotels from Westin, St. Regis and W, as well as Ritz Carlton — the Muscat Reserve, valued at $200 million. High-end mixed-use developments such as the Saraya Bandar Jissah Resort valued at $840 million are also underway as well as the Kempinski Hotel, Louis Vuitton Hotel and Fairmont Hotel which will be completed in the next few years.
With all these in the pipeline, the country has also ranked seventh out of the 100 places most favoured by Muslim tourists, according to the Global Muslim Travel Index. Showing a positive frame of development, figures from the Oman Airports Management Company for both Muscat and Salalah airports recorded an 18% rise in passenger numbers through the capital’s gateway in 2015, surpassing the 10 million passenger mark for the first time in its operational history, while Salalah Airport also saw a rise in traffic by 22% to reach more than one million passengers.
Orascom Hotels Management (OHM) managing partner Abdelhamid Abouyuoussef tells Hotelier Middle East: “Oman is a much needed refreshment to the world’s touristic map. The country has a special identity. It is blessed with amazing dive sites, thrilling sand-dunes, virgin beach expanses, tropical weather at Salalah and a unique cultural heritage. It also has a high standard of infrastructure, be it airports or medical facilities. This makes the country not only attractive to the tour operators and end users, but also to foreign investors who can see the country’s potential.”
STR Global has reported that projects in the pipeline that are ‘Under Contract’ are 34 hotels equivalent to 6,474 rooms in Oman over the next few years. Out of this, seven hotels and 967 rooms are currently ‘In construction’ and due to open in 2016.
Last 12 months
STR Global analysts reveal that while Oman experienced relatively flat occupancy growth for year-end 2015 (+0.1%), ADR was down from the previous year (-10.2%), resulting in negative year-over-year RevPAR growth (-10.1%). Interestingly, hotels in the Oman Regional submarket experienced a +31.1% growth in occupancy for year-end 2015, which, despite a -14.9% decrease in ADR for that market, led to a RevPAR growth of +11.6%.
Colliers International director and head of hotels MENA Filippo Sona focuses on the capital and says that in 2015, Muscat’s high-end hotels saw a slight drop in occupancy and average daily rate (ADR) in 2015. “Occupancy dropped by 3.4 percentage points and ADR by 5.2%. This decline in KPIs is due to lower demand materialising from the corporate segment, as declining oil prices resulted in reduced spending for oil & gas companies. The European market visiting for leisure purposes has also seen a decline due to the weaker Euro, and the Russian / CIS crisis.”
Sona asserts that the upscale/midscale market was very stable in 2015, with a 0.3 percentage point drop in occupancy and 0.4% drop in ADR. “Demand for more affordable accommodation options is growing, both for corporate and leisure travellers, and this is one of the gaps in the market, also in line with the Sultanate’s plans to launch a low-cost carrier,” explains Sona.
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