HIGH RISK, HIGH REWARD

Oman 2019 | TOURISM | INTERVIEW

Golden Group Holding's strategy is to align with Vision 2020 and use its experience to spread the risk associated with hotel projects.

How do you plan on allocating your OMR200-million sukuk issuance?

The sukuk represents one element of our financing. We have multiple projects in the pipeline for the first OMR50 million, including three hotels that are our priority. The remaining OMR150 million will be used over five years for our plan for tourism development in Salalah, which will be based on a 2 million-sqm plot across the beach.

How does the government help determine your regional tourism strategy?

We have formed a team that holds regular meetings with the ministries of tourism and housing, as well as the municipalities of Muscat and Sohar. Our strategy is to match the government's Vision 2020; the Ministry of Tourism has identified the focus areas in Muscat, Salalah, and other regions of Oman. After studying government reports, we study the prioritized and important areas before conducting feasibility studies with international firms to take their opinions into consideration. Once all the figures and facts encourage us to move into a certain region we find attractive, the plan enters the financing stage.

From which region do your hotels attract customers?

While most of our visitors are from the GCC, the number of tourists from Europe and Asia is increasing. The GCC, and especially the UAE and Kuwait, represents our core market. Since our segment attracts mostly high-income visitors, we do not aim to attract tourists through inexpensive rooms. In Oman's market, and in general, there is a balance in the tourism sector; a reduction in prices will attract more customers, but expenses will also increase at the same time. Our preferred method is to maintain the prices according to our target customers' expectations. Either way, the net profit will stay the same, though by not compromising on quality, we will be able to save a solid chunk of maintenance costs.

How has the construction area of your group captured business from tourism growth?

Since hotels are normally high-risk projects, they are not always profitable. In order to spread the risk, we also build commercial and residential buildings. Although some would argue that construction projects also hold high risk, we have plenty of experience in the industry, and we use that experience to work with private companies which fit our model and payment plan. The risk present in the industry means that we are proceeding with caution, though we are not stopping at all.