Potential to upgrade unbranded hotel rooms

Makeover: Expert highlights opportunity for conversion of 10,000 independent units into international quality tourism stock

Conrad Prabhu –

The expanding inventory of unbranded hotel rooms and furnished apartments in the Sultanate — estimated to number over 10,000 units presently — can help drive up hotel room capacity in the Sultanate if given a suitable makeover, according to a key industry expert. Grant Salter (pictured), Head of Travel, Hospitality and Leisure Advisory Services at Deloitte Middle East, said the independent, unbranded segment — typically properties that are fall below a 2-star hotel rating — presents an opportunity for the conversion of these assets into better room stock for the industry.
Speaking at the 2nd Real Estate Forum Series, hosted by the Oman Real Estate Association (ORA) at the Crowne Plaza Muscat yesterday, Salter said the unbranded category accounts for a hefty 58 per cent of total hotel room capacity in the Sultanate.
“This is stock which is quite old and outdated, and has challenges in respect of its quality from an international tourism perspective,” said Salter. “There is potential for growth in this sector, through rebranding, improvement of that inventory, and so on, so that we have a broader range of stock available for the tourism market.”
The daylong forum, focusing on the theme ‘The Future of Oman Real Estate: Challenges & Opportunities’, was held under the auspices of Eng Saif bin Amor al Shaqsi, Under-Secretary of the Ministry of Housing. Welcome remarks were presented by ORA Chairman Eng Mohammed Salim al Busaidy.
According to the expert, the growth in capacity at the low-end of the market is reflective of a mature market in the Sultanate in respect of hotel categorisation. “We have a relatively small percentage of luxury 5-star component at the top end of the market and a quite strong level of supply in the lower sectors of the market,” he said.
This year, however, several new premium properties are expected to open their doors, notably in Muscat and Salalah, with the potential to boost room capacity by more than 1,900 hotel keys, said Salter. Of this number, 750-plus room will be added in the 4-star category, while around 1,200 rooms will bolster the capacity of the 5-star sector. The new capacity will have a significant impact on the supply and demand dynamics of the market, as well as the performances of these markets as operators and owners compete for market share, he said.
Going into 2018, however, just under 500 new rooms are in the pipeline, mainly in the 5-star segment, with supply expected to be moderate thereafter.
Salter also underlined the pivotal importance of the new Oman Tourism Strategy, unveiled last year, to achieving a targeted 3.4 per cent share of GDP by 2040.
Also expected to spur tourist traffic growth are the nation’s two main international airports at Muscat and Salalah, which have witnessed strong passenger throughput growth of 15 per cent and 11 per cent respectively in recent years.
Other key growth drivers are expected to be the national railway network, Duqm Special Economic Zone with its substantial tourism component, and several new carriageways currently under various stages of development, he added.