Oman: a unique gem in the GCC

Oman: a unique gem in the GCC

Justin Kenny, consultant at Colliers for the Hotels MENA Region, explains how the sultanate is carving its own identity as an attractive destination with a diverse offering, despite tough competition from its neighbors.

Oman has made substantial investments in its hospitality sector in recent years, with a focus on luxury resorts, eco-tourism and cultural tourism. To date, it has had to contend with fierce competition from neighboring countries, including the UAE and KSA, which have well-established hospitality offerings. However, the sultanate is now focused on establishing itself as a destination in its own right and building on its many strengths, which include stunning natural landscapes, a well-established commitment to sustainable tourism and an ideal geography for multi-location stays.

Post-pandemic project pipeline
Over the past seven years, the Omani hospitality market has experienced consistent growth in quality branded supply. That said, growth was impacted by the Covid-19 pandemic, resulting in lower year-on-year growth from 2020 to 2022 compared to the period 2015-2020. The adverse impact of the pandemic has also led to the delay of several property openings in Oman. Despite these setbacks, Oman’s hospitality market has a healthy pipeline of supply expected to open in the next five years.
Several factors are driving this growth, including the Omani government’s vision to diversify the economy, an increase in disposable income and large-scale masterplan developments. As the global travel industry recovers, Oman is well-positioned to capitalize on its strengths and attract more tourists to the country.
Oman’s hospitality market has shown steady growth in recent years, with a compound annual growth rate (CAGR) of 9.5 percent from 2015 to 2022. The supply in markets analyzed is expected to continue to grow at a CAGR of 8.5 percent from 2022 to 2027, reaching approximately 19,500 keys by 2027.

Sharper focus on leisure
Approximately 76 percent of identified branded supply in Oman is allocated to the Muscat market in 2022. Data indicates that Muscat achieved a CAGR of 10.3 percent from 2015 to 2022. The market is expected to continue to grow at a CAGR of 9.2 percent from 2022 to 2027, reaching approximately 15,200 keys by 2027.
In terms of inbound tourist trips, Oman welcomed 1.4 million visitors in 2022, an increase of 305 percent on the previous year. Inbound visits in 2022 were down
38 percent on 2019 figures, with forecasts pointing to a full market recovery, reaching pre-pandemic levels, by 2023. The largest source markets for Oman’s tourism industry are GCC countries, followed by India, Germany and the UK.
In recent years, Muscat has undergone a transformation, moving away from a reliance on corporate and transient demand, and toward becoming an established leisure destination. This shift has been driven by the introduction of new luxury resorts and the opening of the Muscat International Airport in 2018, which have helped to stimulate leisure demand in the market. The development of more leisure-centric developments, in line with Oman Vision 2040, is expected to further increase leisure demand for Oman. Some notable projects include the newly opened Jumeirah Muscat Bay, the upcoming Four Seasons resort and private residences in Muscat, and the upcoming Hotel Indigo in Jabal Akhdar.

Tourism package potential
A unique feature which differentiates Oman’s tourism landscape from the rest of the GCC is the availability of tourism circuits, which are popular among the group leisure segment. These two-to-three-day destination hops enable visitors to experience the country’s diverse geographical features through what is typically provided as a five-to-10-day itinerary. Tourists get to enjoy a range of experiences, including old city tours in Muscat, mountain adventures in Jabal Akhdar, cultural tourism in Nizwa and dolphin watching in Masirah Island or Bandar Al Khayran. While neighboring KSA offers similar circuit packages, Oman’s strength lies in activity concentration and relatively time-efficient accessibility between stops. The tour packages in Oman involve journeys that are typically two-to-three-hour drives or 40-60-minute flights from one location to the next.

Differentiation is key
There are several steps Oman could take to further elevate its profile as a destination and boost demand: Develop authentic experiences: to differentiate itself from competitors, Oman should focus on offering authentic experiences and capitalizing on existing cultural and geographical strengths, such as its ancient forts, museums and traditional markets. Similarly, Oman’s coastline and mountains provide unique features and landscapes, making it an ideal destination for resorts and hotels. Salalah and the greater Muscat area are the markets offering the greatest beach resort opportunities. Jabal Akhdar and the emerging Jabal Shams are prime mountainous destinations identified for further hospitality development.
Focus on sustainable tourism: Oman has made a high-profile, robust commitment to sustainable development and eco-friendly tourism. By reinforcing these values, it could attract environmentally conscious travelers who are looking for destinations that align with their own beliefs. Developing eco-tourism initiatives that are sustainable and environmentally friendly will generate interest among tourists who are interested in nature-based activities, such as hiking, birdwatching and camping. With easy accessibility to Muscat but still sufficiently distanced from the capital city, Ad Dakhiliya has been recognized as a market offering considerable opportunities to develop eco-centric hospitality offerings. Its diverse landscape combines farmland, elevated deserts and mountains with attractive oases.
Lifestyle hotels: the growing number of Gen. Y and Z travelers offers significant opportunities for urban lifestyle hotels in Muscat and lifestyle/all-inclusive resorts in Salalah. These demographics tend to prefer urban environments with access to local culture, entertainment and nightlife. Urban lifestyle hotels cater to these preferences by offering stylish and modern accommodation in vibrant settings. Together with lifestyle/all-inclusive resorts, they represent a unique selling point for Oman’s hospitality industry, which has traditionally focused on luxury beach resorts and corporate city hotels. By targeting the demands of these generations and providing a differentiated offering, providers of lifestyle hotels can attract a new segment of travelers and contribute to the growth of Oman’s tourism industry.

Firm foundations
Oman holds strong hospitality potential thanks to its unique culture, rich heritage, stunning natural landscapes and a pioneering commitment to sustainable tourism. Moving forward, the country
looks set to continue prioritizing its unique selling propositions and leveraging its strengths, with a focus on national identity and a diverse, authentic hospitality mantra. Providing authentic experiences rooted
in history, while continuing to promote sustainable tourism and creating a new push into lifestyle hotel concepts presents a broad range of opportunities that will support inbound tourism demand, attract FDI to the industry and elevate the overall appeal of the destination.

Justin Kenny,
consultant at Colliers for the Hotels MENA Region
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