Hotels in Muscat registered a growth of around six per cent in revenue per available room (RevPAR) in 2014, according to PwC’s second hotel forecast for the Middle East.

The report titled ‘Accommodating growth’ uses a number of economic variables to forecast hotel occupancy, average daily rate (ADR) and RevPAR in Muscat, Abu Dhabi, Doha, Dubai, Jeddah and Riyadh in 2015 and 2016.

Despite challenges faced by the region in 2014, such as the fall in oil prices and devaluation of Euro against the dollar, Oman continued its strategy of slow and steady growth in its capital city Muscat, said the report.

While occupancy was the principal growth driver in Doha, Abu Dhabi and Riyadh, it fell in Muscat and Dubai. However, ADR fell in Riyadh, Doha and Abu Dhabi while the strongest gains were in Jeddah and Muscat.

Muscat’s occupancy and ADR levels were largely as predicted last year at 66 per cent and US$231 respectively.

According to the report, economic growth, infrastructure spending and increase in the number of tourists is likely to support growth in 2015-16.

However, many of the challenges experienced in the second half of 2014 will continue this year, resulting in a decline in RevPAR in Dubai (-2.4 per cent) and Muscat (-1.2 per cent). ‘The decline in Muscat is in part due to competition from neighbouring Fujairah and Ras al Khaimah, resulting in weaker ADRs.’

However, there will be stronger RevPAR growth in Muscat from 2016 with the city clocking a growth of eight per cent along with Abu Dhabi at 8.3 per cent.

Despite a forecast decline in RevPAR in Muscat this year, it retains the third spot out of the six cities and strong growth for 2016 reinforces its solid position. ‘The positive outlook in 2016 is driven by growth in both ADR and occupancy, reflecting continued infrastructure spending, moderate supply increases and boost in tourist numbers that will result from government’s promotional activities.’

The government is supporting the growth of tourism with new infrastructure, including expanding the airport. ‘Overall, room numbers are set to double over the next three years with close to 350 rooms recently opened and 990 due for construction, with a higher proportion in the four star range than is typical elsewhere.’

Kenneth Macfarlane, country senior partner for PwC in Oman, 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.”

There’s also been a noticeable increase in the number of operators offering two centre holidays, combining shopping in Dubai with a more diverse experience in Muscat. “The demographic of Muscat’s visitors is very different from the other five cities, and it also hosts the region’s first fully Sharia’a-compliant hotel, which is proving very popular in the region,” said Alison Grinnell, PwC Middle East Hotels Leader.