What were some of the developments in your business in Oman in 2020?
Budget has been in this business in Oman for the last 40 years. It has achieved a good amount of goodwill and respect in the market due to our continuous zeal to surpass our customers' expectations. Initially, we started with two locations, but now we have seven locations spread across Oman. In a way, we are moving closer to our customers to serve them better. Training is extremely important, and we have an ongoing program to train our employees and develop them for the next level of leadership. Moreover, as a small gesture to the frontline workers who have selflessly provided services during the pandemic, we have been offering them 50% discounts on our car rental rates. Budget has evolved with time and partnered with online aggregators. We have partnered with MONAK and Ezhire because it is one of the few online players in the market, thus giving our customers a hassle-free and paperless experience. They can upload their IDs, driving licenses, and so forth, and then pick up their car from a particular location without any physical contact. We were one of the first to start operations in Duqm three years ago, as it is considered to grow and become the hub of business in Oman, and now we have a good yield on the business there.
What are the main trends impacting the car rental market in Oman?
The trends are always changing depending on time and the market situation. During the pandemic, we have witnessed corporations and individuals becoming more rational and forward thinking when it comes to spending their money, mainly due to the uncertainty that looms over us. They are shifting toward short-term rentals because they don't want to commit for longer terms or bound themselves with a contract. That's better for them also because they know their fixed costs and can plan for a couple of months rather than two or three years down the line. Hence, we all have to adapt to the new normal and build our business around that. We are working to develop a couple of products that will be more adaptable to corporates and individuals, considering the uncertainty at the moment.
Have you noticed a difference in the kind of clients you are seeing recently?
Earlier, corporations were also reluctant in going with leasing options. They thought probably buying the vehicles upfront and selling them after five years was a better option as asset would belong to them. Now, people are more rational and wonder if it's really necessary to block so much of their revenue upfront. Their initial fixed costs or investment are lower if they rent compared to the huge investments of buying cars. They have now understood that leasing is the best business to do and the best option at the moment. When you know your fixed costs, it's easier for you to manage your cash flow. With that, we see more individuals as clients these days; they don't want to shell out a huge amount of money or take on a liability with something like a four-year commitment to a bank with today's market. I see a lot of inflow of individuals coming for short-term rentals. While leasing cars you don't have to worry about the vehicle maintenance, insurance, replacement stress, registrations stress which comes along with when purchasing cars.
How would you assess Budget's fleet in Oman in line with all changes surrounding the pandemic?
We do have a fleet ranging from small 1.1-liter vehicle to the high-end luxury cars. We had some vehicles specifically for the tourists such as vans, high-end 4WD cars and so on, however we deflated those products so that it wouldn't affect our bottom line. In this way we optimized our fleet so that we can control our cashflow as much as we can and take less damage. We used to have a lot of luxury vehicles and we still have few but customers are becoming more frugal, not opting for high-end luxury cars at the moment. Thus, we are focusing now on the small to medium segment, where the majority of our business comes from, and we are doing well there. We have purchased a lot of vehicles in those segments at the moment to meet the demand.
Is sustainability something you are considering for your fleet?
Yes. Today, many people are talking about sustainability and eco-friendly or environmentally conscious initiatives that produce less carbon dioxide. In the future, we are open to electric vehicles in our fleet, though we first need to have a proper infrastructure to be in place in Oman. We are eager to have bicycles and are now in talks with some clients that manufacture bicycles so that we could perhaps start a business here to promote or revolutionize some sustainable business. It might not happen very soon though however we can start working towards it.
How would you characterize the opportunities in the Omani market?
Despite the crisis situation, we have found opportunities. The term “staycation" has become the new normal, as people want to stay in hotels in Oman. They also choose to visit places like Jebel Akhdar, where they will need a 4WD vehicle. Not all families have one, so we have connected with many two-way travel operators and hotels to provide 4WD. Customers can rent one for a few days, or, if they don't want to drive, we can provide them a driver. We have diversified our business to focus on staycations and hotels. Also, when the flights were not operating from Muscat to Duqm, we saw a surge in business in chauffer drives from Muscat to Duqm and Muscat to Salalah also saw a flow of traffic so did Muscat to various PDO sites.
Where do you envisage your growth coming from in the coming years?
This pandemic is a passing phase, and once the vaccines are rolled out and completed, we will see tourism return to Oman as Oman is a country with natural beauty and has been the top destination spot for tourists from Europe. Khareef season will start in mid-June, and we expect more people to start coming by June and July and we can return to business, expecting to recover what we lost in 2020.