The other day I attended a hotel investment event at Al Bustan. Nice turnout of Omani and Middle Eastern hoteliers partially due to the fact that it was at the same time as the Omani Investment Forum. The stats presented by STR Global and JLL Hotels indicated how Oman's hotel sector is going through a demand supply mismatch with demand lagging behind. This results in drop of room rates especially in the more expensive segment.
Another piece of takeaway was that the only market segment where occupancy, rate and RevPAR were still growing was the lower mid-scale and mid-scale market (3 star and weaker 4 star).
Yet another prof that domestic tourism has a lot of unexplored potential and that the sector is overly exposed to the international corporate and leisure demand.
Without a major push in demand it will be very difficult to justify new projects, although Omran is currently developing a hotel (Khasab Hotel) primarily focused on the Omani families. Obviously there are several ways to encourage domestic demand, but one idea could be to introduce a travel voucher for public sector employees. This is practically a check offered as part of the employment package (as a perk) could only be used up in hotels in Oman and it would not be convertible to to cash in any other way. Later this could be extended to usage in other hospitality facilities like spa's and/or health clubs.
I would expect this to give a nice boost to the local demand and it would be a smart way to use up funds to generate further spending and economic benefit associated with the travel to the destination and perhaps other local expenditure. Again there are countries where the system works quite nicely, such as the Cheques Vacances in France, Hungary or China for that matter. To be fair, in those places the check is further insensitive by a favorable tax regime.
The other existing segment that could be significantly strengthened is the regional GCC demand but that is a separate topic for discussion.
Another piece of takeaway was that the only market segment where occupancy, rate and RevPAR were still growing was the lower mid-scale and mid-scale market (3 star and weaker 4 star).
Without a major push in demand it will be very difficult to justify new projects, although Omran is currently developing a hotel (Khasab Hotel) primarily focused on the Omani families. Obviously there are several ways to encourage domestic demand, but one idea could be to introduce a travel voucher for public sector employees. This is practically a check offered as part of the employment package (as a perk) could only be used up in hotels in Oman and it would not be convertible to to cash in any other way. Later this could be extended to usage in other hospitality facilities like spa's and/or health clubs.
I would expect this to give a nice boost to the local demand and it would be a smart way to use up funds to generate further spending and economic benefit associated with the travel to the destination and perhaps other local expenditure. Again there are countries where the system works quite nicely, such as the Cheques Vacances in France, Hungary or China for that matter. To be fair, in those places the check is further insensitive by a favorable tax regime.
The other existing segment that could be significantly strengthened is the regional GCC demand but that is a separate topic for discussion.
I have many friends who visit countries to see the sights. They never pay for luxury hotels because they only sleep in their rooms and are out and about the remainder of the time. This is a segment of the tourist trade that is forgotten in the GCC.
ReplyDeletealternative accommodation facilities are also very few to find...you can barely find one or two offers for Muscat on airbnb.com and even for Dubai and AB not too many.
ReplyDeleteGood insight that, and I think the major problem seems to be 'build it and they will come' attitude.
ReplyDeleteYou see that there are plenty of hotels coming up. Folks need to understand that hotels are just 1 part of the complete tourist experience.
So many other facets (of which you have touched many in your previous posts) are left untouched. Recreational activities, camping activities, 'wild' adventures etc. There's a lot that can be done. Sure, there are quite a few museums and old forts and things. Problem is I can complete seeing the major ones in less that 2 days. But what about activities? What about the non-luxury traveler? What about the eco-tourist? Accommodation alone isn't sufficient.
There's much to do if tourism is going to make a telling contribution in the near future here. I guess now since the scenario is a bit clearer that demand is behind supply and that we have enough hotels, investors and government bodies will look towards actual entertainment options.