Oman hotel sector hit by low revenues

Lower average room rates and low occupancy affecting the overall profitability.


Companies operating in the hotel and hospitality sector had a tough last year with many hurt by lower average room rates and low occupancy affecting the overall profitability.

The annual financial reports filed by hospitality sector companies show that revenues came down in 2018 as compared to 2017.

The National Centre for Statistics and Information (NCSI) indicators for three to five star hotels for 2018 revealed that the number of guests decreased by 2.1 per cent (from 1,531,351 in 2017 to 1,499,461 in 2018).

Ubar Hotels and Resorts, owner of Golden Tulip Nizwa and Park Inn by Radisson Muscat, in its report stated that due to substantial increase in hotel inventory in Muscat region there has been a considerable pressure on the rates and as a result the overall Average Room Rates have dropped, which in turn also affected the overall profitability.

In 2018, the group earned a turnover of RO4,806,123 which was down ten per cent from turnover of RO5,322,557 in 2017. The group earned a profit before tax of RO241,913 for the year ended 2018, which was lower by 57 per cent in comparison to RO557,646 profit in 2017.  “Profit after tax is RO194,426 whereas as previous year the profit was RO425,798, mainly due to the major revenue contribution from long staying guests,” the company stated.

Hotels Management Company International, which owns The Chedi Muscat, generated total revenues of RO11.436mn (vs previous year RO11.701mn), which shows a decline of 2.26 per cent.

In its outlook, the company stated that there was a diminishing demand from the UK and Germany, the main source markets, ‘while the opening up of new luxury hotels in Oman is a matter of concern for occupancy’.

Gulf Hotels (Oman) Company, which owns Crowne Plaza Muscat, stated that it recorded gross revenue of RO6.342mn (2017: RO8.175mn) and net profit of RO0.711mn for 2018 (2017: RO1.617mn). “There was decrease of 22.4 per cent in total revenue and 56 per cent in net profit after tax as compared to last year mainly due to the closure of the hotel from May 11, 2018 to August 31, 2018 for renovation.

“We believe the renovated hotel will be well positioned to withstand the competition from the other hotels as well as the new hotel properties in coming years,” the company said.

Salalah Beach Resort, which owns Hilton Salalah Resort, posted a revenue of RO2,295,167 in 2018 compared to RO 2,881,953 in 2017.

“Net loss for 2018 is RO316,607 compared to RO 63,553 profit in 2017. Drop in revenue is attributable to (a) lower occupancies as one wing of the hotel consisting of 72 rooms was closed for renovation for about six months (b) lower food and beverage revenue and (c) closure of the entire hotel for 21 days consequent to Cyclone Mekunu.”

Al Buraimi Hotel Company achieved a total turnover RO528,000 compared to RO908,000 in 2017, a decrease of RO380,000 due to the fall in number of customers, the company stated.

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