Testing time for hotel industry

E&O Hotel’s average occupancy rate for the first two months of 2016 was close to 80 versus 60 for the same period in 2015.

THE local hotel industry is undergoing a challenging time because of competition from other hospitality service providers.

Members of both the Malaysian Association of Hotels (MAH, Penang Chapter) and the Malaysia Budget Hotels Association (MyBHA, Penang Chapter) are either seeing stagnant or declining occupancy rates.

MAH Penang chairman Khoo Boo Lim said occupancy of hotels in 2015 weakened to 54percent from 66percent in 2014.

This is because there was now more competition from Airbnb, as well as heritage and budget hotels.

“Going forward in 2016, we hope to see the occupancy climb back to 66% as in 2014. We can expect the weakened ringgit to play a role,” said Khoo.

“The weakened currency has made the resort hotels in the beach area a bargain. You get four-to five-star facilities and treatment at very competitive rates.

Khoo says the weakened currency has made the resort hotels in the beach areas a bargain.

“Presently, the beach hotels are priced at over RM300 per night, while the city hotels are over RM200 per night,” he said.

The arrival of domestic tourists to beach hotels improved in 2015, while the arrival of European guests remained stable.

The airlines should look into implementing direct flights from destinations such as Melbourne, which had an established tourism market for holiday destinations in Asia.

“Key areas such as Shanghai and Beijing are also good destinations to establish direct flights to Penang, as there are a lot of interest for tourism in this region,” Khoo said.

MyBHA secretary Arthur Chin said budget hotels in general experienced a 50% occupancy rate in 2015.

“In January and February (this year), the occupancy rate of our members hovered between 44% and 50%, more or less the same as in the corresponding period in 2015.

According to Chin, budget hotels in general experienced a 50% occupancy rate last year.

“The ratio of domestic and overseas guests for our members now stands at 50-50.

“We expect more or less the same occupancy rate for 2016,” he said.

According to Chin, the competition from other hospitality service providers such as Airbnb lodgings, guesthouses and homestays has intensified.

“A recent survey done on an online travel booking portal showed there were over 700 listings for accommodations in Penang, which include Airbnb, guesthouses, and homestays.

“The pricing of Airbnb accommodations ranged between RM42 and RM300 per night,” he said.

The competition has led to the budget hotels lowering the room rates to around RM85 and RM140, compared to RM100 and RM200 before 2014, Chin said.

“There is an excess supply of rooms, while tourism arrivals have stayed stagnant or declined slightly.

Ooi says international visitor arrivals at the Penang Airport between January and December 2015 contracted by 4.7%.

“Maybe Penang should follow the example of Kuala Lumpur. The Kuala Lumpur City Hall (DBKL) has recently frozen the issuance of hotel licences in the federal capital until further notice,” he said.

Meanwhile, Penang Global Tourism chief executive officer Ooi Chok Yan said international visitor arrivals at the Penang International Airport for the period between January and December 2015 contracted by 4.7% to 683,897 from 717,724 in the same period in 2014.

The number of domestic hotel guests in Penang had also dropped to 2.27 million during the January-September period from 2.4 million during the corresponding period in 2014, according to statistics obtained from Tourism Malaysia.

The Tourism Malaysia statistics show that during the same period (Jan-Sept 2015), the number of foreign hotel guests dipped to 2.21 million in 2015 from 2.27 million in 2014.

However, the arrival of tourists via international cruise rose by 69% to 187,194 in 2015 from 110,715 in 2014, according to Penang Port statistics.

G Hotel Gurney and G Hotel Kelawai communications director Christina Tan said the occupancy rate to-date was 70% for both the hotels.

The projected occupancy rate for the first six months of 2016 for the two hotels was 70%, compared to 80% for the same period a year ago, according to Tan.

An example of a hotel for budgetconcious travellers.

Tan said the weakened ringgit had not boosted guest arrivals.

“We are still getting the same number of guests.

“The domestic arrivals is still strong due to a weaker ringgit which makes overseas travelling expensive,” she said.

Tan said Airbnb was competing with hotels for leisure travellers but not for the corporate clientele.

Eastern & Oriental Berhad (E&O) group hospitality and lifestyle director Michael Saxon said the average occupancy rate at E&O Hotel for the first two months of 2016 was close to 80%, as compared to the average occupancy of 60% for the corresponding period in 2015.

“The increase in guest arrivals could be attributed to the currency situation, as well as other factors, including the continuous growth in popularity of Penang as a destination.

“Our top three markets are Malaysia, the UK and Australia. We have also been observing an increase in bookings from Singapore, China and Saudi Arabia.

“Domestic guests have played a key role in our growth,” Saxon said.

According to Saxon, during the Christmas and Chinese New Year holidays, the average occupancy rate during the peak season from Dec 20 to Jan 4, 2016 was close to 85%, even hitting 100% on certain days.