Hotelier Middle East – May 2019

MARKET UPDATE

HOTELIER MIDDLE EAST | May 2019 | Volume 18 Issue 05 23

Meanwhile, the total number of guests
in the Sultanate’s hotels showed a signifi-
cant increase by 10% in the two-month
period of 2019, reaching 308,397 from
280,274 guests for the same period of
2018.
According to Tri Consulting ’s Hotel
Market Report for Q1 2019, Muscat’s
hotels were driven by room revenues, but
the decline in in RevPar was compound-
ed by a 7% decrease in F&B revenue per
available room.
The report also showed that corpo-
rate demand remained the prominent
segment in 2018, but strong leisure and
group demand helped offset declines in
corporate and conference activity. Addi-
tionally, departmental profits also fell by
13.7% to 54.8% in Oman’s capital.
Commenting on the data from the
report, Colliers International’s head of
hotels for the MENA, Christopher Lund,
said there is a clear difference in perfor-
mance for the high-end luxury hotels
with the business four star hotels in its
major cities.
“Looking firstly at the four star busi-
ness hotels, it’s right that the rate and
the RevPar has come down in the past

year. They are struggling slightly, more

partly due to the low oil prices,” said

Lund. “There is a lot of demand and cor-

porate business related to the oil price.

What’s interesting is that if you single

out the luxury hotels, such as the newly

re-opened Ritz Carlton’s Al Bustan Pal-

ace, and a lot of the luxury ones that are

on the beach, these are targeting more of

the leisure tourists.”

Lund added that the luxury hotels in

the Oman has increased their RevPar by

5.7%, which has been driven by strong

average daily rates.

“There is a slight drop in occupancy,

but they have been able to maintain

their average rates,” Lund explains. “The

Chedi and Shangri-La hotel, those sort

of resort properties in Muscat have been

doing well.”

“The rate is very high, it is about

110 OMR, which is around 1,100 AED

($299.47). This means that corporate

demand is a bit down or not growing as

fast as the supply for corporate type of

hotels in Muscat.”

WHAT LIES AHEAD?

For Muscat alone, Hewett believed that

the main pressures for Oman’s capital

would be driven by not only lower de-

mand but also the entry of new proper-

ties, which would further increase the

supply and demand imbalance.

“As Oman continued to face economic

headwinds on the back of low oil prices

and lower government spending, the ho-

tel sector in the capital saw demand lev-

els fall, driving lower revenues and prof-

its,” Hewett told Hotelier Middle East.

While OMRAN’s Zoltan Kali admit-

ted there were some operating efficiency

challenges to be addressed. “The costs

structure of hotels in Oman is relatively

heavy compared to some other Gulf Cor-

poration Council (GCC) markets,” said

Kali. “The new airport and the Oman

Convention and Exhibition Centre fa-

cilitates the opening of new market seg-

ments that were less present before. This

will yield some healthy demand trend

which will give some momentum of sus-

tainability for the sector and increase

private sector appetite in hotel invest-

ments.”

Muscat is expected to witness another

2,200 keys enter the market in 2019,

with the majority of new properties po-

sitioned as upscale or higher. Potentially

a resurgence in Oman’s hotel market.

Colliers International’s Christopher Lund

Fraser Suite’s pool in Muscat

An exterior view of JW Marriott’s hotel in Muscat Fraser Suite’s one bedroom apartment