Hotel Valuations to rebound in Muscat
14 Jan 2020 1:48 pm
Muscat will bounce back after suffering one of the largest falls in hotel valuations in the Middle East, according to hotel and hospitality analysts, HVS.
A new HVS report suggests that hotels in Muscat will increase in value by nearly 22% by 2022, largely erasing the loss of value of hotel investments witnessed over the period 2015-2018 (see the Chart at right).
With oil price falls and a subsequent loss of confidence in the Omani economy in 2015-2018, the value per hotel key - the standard industry metric for valuing hotels - lost 31% in value between 2015-2018 to be OMR41,300 (USD107,000) in 2018.
However, the latest HVS assessment points to increasing hotel values with a rise in HVS's hotel valuation index of 21.9% over the period 2019-2022 (see the table at right). The positive outlook for Muscat is second only to Doha - which also suffered a downturn in values, of 35%, in 2015-2018 - in the 14 regional cities considered by HVS.
This encouraging perspective comes as there is increasing discussion in Oman of ways in which the hospitality industry, and tourism more generally, can grow.
In responding to the positive outlook highlighted by the HVS report, Mac Thomson, Chief Executive Officer of hotel and asset management group, MMIS LLC, said “The latest report from HVS is a reminder for the hotel and hospitality sector that most trends in the industry are cyclical.”
“The downturn in the market over the past few years was a result of many factors out of the industries control. Now it is time for the private sector to play its part in promoting Oman more as a very attractive leisure destination and providing the accommodation and experiences that local and international visitors are seeking.
“Hotel operators need to look at the growing tourism markets such as China and India, and understand what will encourage them to visit Oman,” he said.
“For example, the number of Chinese tourists travelling to the GCC is expected to increase 81 percent from 1.6 million in 2018 to 2.9 million in 2022. This represents less than 6 percent of the Chinese international tourists; and less than 4 percent of the Chinese population have passports. So there remains a massive market potential, as long as local operators take efforts to encourage this market to visit Oman.
Another matter that is being addressed is the lack of mid-range accommodation within Muscat. Tourists are keen to see affordable hotel rooms that provide international standards.
“With nearly half of the current hotel keys being in the four and five star category, it is time the hospitality sector moved its focus away from the top end hotels to affordable accommodation favoured by more budget-conscious visitors.
“Oman offers an extraordinary mix of cultural and natural environment experiences to which we should be adding the health and wellness and adventure tourism experiences that have proved so attractive elsewhere in the world.
“His Majesty’s Government and the Ministry of Tourism have made an admirable commitment to the sector with the 25-year National Tourism Strategy with major investments in airline and airport infrastructure, and an easing of visa requirements.”
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