Oman building hotels to complement other tourism initiatives

Three new hotels under construction in Muscat are expected to bring 900 additional rooms to Oman’s total capacity by 2018. With other hotels planned or being built nationwide, there are signs of confidence in the sultanate’s ability to attract higher tourist numbers across various budget classes in the future.

Hotel Growth

Over the last decade Oman has seen rapid growth in the number of three-, four- and five-star hotels. According to data from the National Centre for Statistics and Information (NCSI), for the 2005-14 period, the number of hotels grew from 161 to 287, while total room figures increased from 8132 to 14,862. Revenues during the period almost tripled, from OR78.1m ($202.8m) to OR216.5m ($562.3m).

Ministry of Tourism (MoT) figures for 2015 put the number of licensed hotels at 318, including 12 five-star hotels, as well as 23 two-star and 20 three-star hotels. Room numbers were up 8% on 2014 at 16,691. With the opening of projects like the Oman Convention and Exhibition Centre (OCEC), and the redevelopment of Muscat’s traditional port and harbour area into Mina Sultan Qaboos, the number of major hotel developments in Oman is set to keep growing.

The three hotels set to come on-line by 2018 in the sultanate’s capital are a five-star, 304-room JW Marriott being constructed near the OCEC at a cost of $104m; a four-star, 300-room Crowne Plaza being built by L&T Oman, a subsidiary of India’s Larsen and Toubro, also near the OCEC; and a five-star W Hotel, which is set to be delivered alongside expansion work being done at Muscat’s Royal Opera House.

“Omran currently has 1400 keys, with another 900 keys currently under construction. We are aiming to introduce a thousand keys before 2020, which means a lot of hotel development,” Salah Salem Al Ghazali, chief information officer at Omran, the government’s tourism development arm, told OBG. “Our internal research shows that around 1600 five-star hotel keys are available now in Muscat, and we estimate there will be an additional 1200 by 2018. This tells you there is more interest to come from the private sector; they see there is potential,” he added.

Future Plans

In February 2016 Muriya Tourism Development Company (MTDC), an integrated tourism project developer, announced plans to invest $500m in new hotel and leisure facilities in Salalah in the Dhofar Governorate and Jebel Sifah, which is 30 km from downtown Muscat. The development company hopes to complete a string of high-end hotels in the country over the next six to eight years.

According to Times of Oman, its plans involve building three new hotels in Salalah with a combined total of 700 rooms. The same month the announcement was made, MTDC opened its third hotel in Oman – the four-star, 218-room Fanar Hotel and Residences in Salalah.

Revenue

Despite a robust development pipeline, revenue of Oman’s major hotels has fallen recently. According to the NCSI, revenue for starred hotels over the first quarter of 2016 dropped by 8% year-on-year to $137.6m, with occupancy rates falling from 66.9% to 65.3% that quarter. One reason for the decrease in revenues was that discounted room rates were offered to local residents in efforts to attract domestic tourists.

Despite the drop in occupancy rates, there is little evidence that the market is oversaturated or that additional hotels will negatively impact the performance of those already present today. “We do not really compete directly with each other; the world has changed,” Mark Kirk, general manager of Shangri-La Barr Al Jissah Resort and Spa, told OBG. “We have to be competitive regionally, and additional hotels here will only be a positive, as it will bring marketing dollars to Oman tourism. Competition always makes you better,” he said. With this level optimism from sector stakeholders, it seems likely that more developments will arise in the years to come, particularly if the government proves successful in accomplishing the series of tourism goals set for between 2016 and 2040.