OMAN THE GULF’S RIVIERA

Stable hotel industry

Oman’s hotel industry is smaller in comparison to its neighbors in the UAE and has remained stable over the past few years, with fairly limited additions to the inventory. This reflects the steadiness that hotel operators have enjoyed, with fairly high stable REVPAR over the years. In fact, Oman continues to remain the sixth top market in MENA when it comes to REVPAR. The 318 hotels in the country attract just under two million tourists on yearly basis.

Attracting high-income tourists

Oman ranks at 92 (out of 141) in the hotel price competitiveness index, compiled by WTTC. This is also reflected in the fact that nearly three fourths of all premium hotel guests come from high per capita income countries in Europe and in MENA. However, the recent slump in oil prices over the second half of 2015 and first half of this year has put pressure on hoteliers. REVPAR dropped by approximately 13 percent as of July 2016 when compared to 2015.

Opportunities for operators

Most leading hospitality operators are present in the country, including IHG, Starwood, Marriott, Hilton, Wyndham, Accor and Carlson-rezidor. However, new operators are keen to enter and existing ones are keen to expand. The hotel pipeline is optimistic, with over 3,000 rooms in planned additions. Most of these rooms are slated for Muscat. However, since most of the additions are expected in the luxury and upper upscale segments, there are still significant opportunities for branded midscale, extended stay and budget hotels. As the integrated tourism complexes continue to develop, there will be increased opportunities for hotel development. Initial estimates show that the growth in (hotel room) supply could outpace the growth in demand for room nights. BMI forecasts tourists’ arrivals to grow by three percent per annum. That being said, Oman’s key challenges to the growth of the sector continue to remain in infrastructure and airport connectivity.

The Omani government has identified tourism as a key area for diversification in the country and has launched a national tourism strategy that will aim to take the total number of tourists to five million by 2040.

MENA real estate, hospitality and construction sector leader for Ernst & Young highlights the country’s hospitality scheme and market status