Strong competition from Fujairah and Ras Al Khaimah is likely to hit hotel performance in Muscat for the remainder of this year, with revenue per available room (RevPAR) forecast to fall, according to a new report.
PwC’s Middle East forecast report predicted a 1.2 percent drop in RevPAR in the Omani capital city this year, partly due to competition from the two neighboring emirates and weaker average daily rates (ADR), Arabian Business reported.
The report, which also looked at Abu Dhabi, Doha, Dubai, Jeddah and Riyadh, said that despite a number of challenges such as the fall in oil prices and devaluation of the euro against the dollar, Oman continued its strategy of “slow and steady growth” in its capital city.
It added that Muscat’s occupancy and ADR levels reached 66 percent and $231 respectively in 2014.
“Looking forward to 2015-16, economic growth and continued infrastructure spend and increase in number of tourist are likely to support future growth. However, many of the challenges experienced in the second half of 2014 will continue in 2015, resulting in a forecasted decline in RevPar of 1.2 percent in Muscat,” the report said.
However, it added that stronger RevPAR growth in Muscat is expected from 2016, with the city posting growth of 8 percent.
“The positive outlook in 2016 is driven by growth in both ADR and occupancy, reflecting continued infrastructure spend, moderate supply increases and the increase in tourist numbers that will result from government promotional programs,” PwC said.
The government is supporting the growth of tourism with new infrastructure, including expanding the main airport. The ferry terminal is also being upgraded, which may drive increased tourism.
Room numbers are set to double over the next three years, with close to 350 rooms recently opened, and 990 due for construction.
Kenneth Macfarlane, Oman country senior partner, said: “The outlook for Muscat is ‘more of the same’, in a positive sense. It’s an under-marketed destination, with a lot of potential and a well-considered plan for sustainable long-term growth.
“The diverse landscape across Oman, together with the major development projects, is positioning the city well for sustained future growth. Oman’s vision includes delivering $1 billion of tourism revenues by 2020.”
