With a steady increase in the flow of tourists into Oman fuelling growth in Muscat’s luxury hotel sector, there is a significant opportunity for mid-range hotels to cater for a gap in the market, according to real estate consultancy Cluttons.

The government’s drive to promote the travel and tourism industry has resulted in the sector directly contributing RO982.8 million ($2.5 billion) to Oman’s GDP in 2013, stated Cluttons in its Muscat Spring 2014 Commercial Market Outlook report

Citing the World Travel and Tourism Council (WTTC) report, Cluttons said this contribution was expected to rise by 10.2 per cent to RO1.08 billion in 2014.

The 'Muscat Spring' report highlights the substantial supply pipeline of four and five star hotel rooms that are expected in the next five years  and also indicates a shortage of mid-range hotels to cater for Oman’s growing tourism market.

Business Monitor International is predicting tourist arrivals to increase by 24 per cent by 2018, to 1.35 million visitors. Inbound tourism remains largely driven by visitors from GCC countries but the last two years have seen an encouraging improvement in inbound tourist numbers from Europe.

Philip Paul, the head of Cluttons Oman, said: "Last year was a watershed year for Oman’s tourism sector, as the Government implemented new strategies to ensure that the economic benefits of tourism are realised and Oman is recognised as a world-class destination for leisure and business travel."

"Government data reveals there was an 11 per cent increase last year in revenue for four and five-star hotels across Oman, against 2012 figures. This suggests that investment in this sector by international hotel groups will rise further, underpinned by the robust level of domestic and regional demand for hotel rooms," he noted.

The opportunity for mid-range hotels was highlighted earlier this year when Hirsch Bedner Associates (HBA) announced the launch of its award-winning Studio division in the UAE and the wider Middle East to offer interior design solutions for the growing mid-tier hospitality sector.

Catering to small and medium-sized hotels, Studio offers cutting edge, stylish design solutions tempered within the paramount constraints of schedule and budget.

Justin Wells, the director of Studio Middle East, said: "In the Gulf, the mid-range hotel market is still significantly undersupplied, with luxury properties dominating the hospitality space. We launched Studio to cater to demand from the region’s expanding mid-range hotel sector."

"With a growing number of travellers choosing to visit Oman, there is an increasing need for high-quality budget-conscious options. Studio provides cutting edge, stylish solutions for small to medium hotel owners and developers who want to maintain rigorous quality control but without high premiums," added Wells.

Cluttons pointed out that the last 18 months have seen the opening of two new 4 star hotels in Muscat: the 180-room Holiday Inn in Seeb and the 203-room Best Western Premier in Al Khuwair, while hotels currently under construction include the 5-star Kempinski at The Wave, the 5-star Millennium at the Tilal Complex in Al Khuwair, which also includes a yet to be branded 4-star hotel.

In addition, Somerset Serviced Residences at the Panorama Complex in Bausher and two 5-star Jumeirah Group hotels at the Saraya Bandar Jissah ITC development are also under development, stated the expert.

In addition, construction is expected to start in the near future on a 4 star Crowne Plaza property, a 5 star hotel at the Oman Convention & Exhibition Centre, the 5 star InterContinental at Muscat Hills, the 5 star W Hotel at the first phase of the redevelopment of the InterContinental site in Shatti Al Qurum and the 4 star Wave Plaza at The Wave.

According to Cluttons, the current proposed and under construction hotels could potentially more than double the number of 4 and five star hotel rooms in the Muscat Capital area.

"Although, there is a need for more luxury rooms in Muscat, there is also a high risk of oversupply in this segment, which may translate into downward pressure on room rates," remarked Paul.

"Given the expected surplus of luxury high-end hotels, we see a significant opportunity for mid-range three and four star hotels to expand in Oman, and this will present new development opportunities as the sector continues to mature. We believe that a diverse range of hotel offerings will add further impetus to Oman’s fast growing reputation as a popular holiday destination," he said.

The notable recent openings elsewhere in the Sultanate include the 78 room, 5 star Alila Hotel in Jabal Akhdar and the 400 room, 5 star Rotana hotel in Salalah, he added.-TradeArabia News Service