The hospitality industry is essential for the growth of any economy. The industry provides jobs - a particularly important factor in the Sultanate and the rest of the GCC. It also ticks the boxes in terms of economic diversification and employment, both direct and indirect. The dynamics of an industry in this stage of growth, coupled with the added pressure of regional tensions, falling oil prices, and the Covid-19 pandemic, has led to a situation where many properties are operating in a financially distressed state.
Oman Hotels Accelerator
The Oman Hotels Accelerator (OHA) is a commercial platform that turns distressed hotel properties into profit generating assets that will consistently deliver double digit returns to the investor.
OHA has identified distressed hotel properties in the mid to upscale range in Oman. The realistic operational value of the property has been calculated and accepted.
The next step is to negotiate with the bank to secure the asset at a more competitive valuation. This has benefits for the hotel owner, the bank and the investors in OHA.
OHA improves, maintains, manages and markets the property so that investors realise the significant capital gains from this once in a lifetime opportunity.
Click to access a presentation of the Oman Hotels Accelerator (OHA)
Click to access a presentation of the OHA Hotel Valuation
Distressed Property Solution (DPS)
The DPS identifies those distressed properties and starts a process of restoring the value of the properties through appropriate and decisive management.
The majority of mid-range hotels operating in the Sultanate of Oman were built in response to the last property bubble. With inconsistent background data, unrealistic expectations in terms of returns, and high construction costs, such hotels were starting their business cycle in a rather tenuous position.
The high costs associated with land acquisition and construction were often met by the owner taking on high levels of debt. These costs coupled with the current economic climate have led to many mid-range hotels not being able to service their debt through operational revenue.
Mid-range hotel owners in Oman have added further distress to their hotels by entering into management arrangements with companies and individuals incapable of operating a hotel in the current economic climate.
This has led to a dilemma for financial institutions as to whether to restructure debt or foreclose. Foreclosure of such distressed hotels is normally not in the best interests of either the lender or the borrower. The primary reason being that the property will not achieve its true market value due to the hotel trading at historic losses and the present lack of buyers for such assets.
An alternative to foreclosure is the MMIS Distressed Property Solution (DPS). The DPS is a complete platform of hotel management designed to stabilise, operate, and reposition the distressed hotel smoothly and cost-effectively for the mutual benefit of the lender and borrower.
The short to mid-term objective of the DPS is to improve the revenue of the business to service the debt. The long term objective is to enhance the hotel by producing stable revenues to allow for the debt to be serviced comfortably and a profit to then be returned to the owner.
MMIS will quickly assess the situation and develop a strategic action plan to turn around the financial performance of the distressed hotel. The MMIS strategic action plan is formulated around:
• effective operations and marketing;
• creating an operating budget;
• engagement of an appropriate Hotel Manager;
• maintaining accountability for the implementation of the necessary action steps; and
• communicating progress with the lender and borrower on an ongoing basis.
Upon assuming management of the distressed hotel, MMIS will respond quickly to stabilise operational performance, maintain the confidence of hotel guests and clients and enhance the value of the hotel. MMIS implements disciplined cost controls and can ramp up and maintain revenues.
To access and downoad a PDF Fact Sheet on the Distressed Property Solution please click .
Oman Hotels Accelerator