Hospitality sector hots up in Penang

The Macalister Mansion which opened in 2012, attracts a mix of Asian and European guests because of the way the owners had restored the building.

Penang will see six hotel projects with an approximate gross development value (GDV) of RM693mil taking shape on the island between this year and 2017.

These six hotels comprise the RM300mil The Rice Miller Hotel & Godowns; the RM250mil The Wembley – St Giles Premier Hotel and Cititel Express Penang; the RM25mil Victoria Street Hotel; the RM33.8mil Ozo Hotel, and an unnamed RM80mil hotel in George Town.

Besides the The Ozo Hotel and St Giles Wembley, which are contemporary themed projects, the rest are boutique hotels with heritage themes.

These hotels will add some 1,157 rooms to the local hospitality industry.

Penang will be in need of more hotel rooms when The Subterranean Penang International Convention and Exhibition Centre (Spice) and the Penang Waterfront Convention Centre (PWCC) starts operating in 2015 and 2017, respectively.

The Malaysian Association of Hotels (MAH) Penang Chapter expects an increase in visitors from the meeting incentives, conventions, and exhibitions market.

The Rice Miller Hotel and Godowns now undergoing restoration and construction works. The hotel is scheduled to open at the end of the year.
The Macalister Mansion which opened in 2012, attracts a mix of Asian and European guests because of the way the owners had restored the building.

“There will be a shortage of hotel rooms. There are currently more than 14,000 rooms provided by the 52 members of MAH (Penang),” said MAH Penang vice-chairman Andy Fong.

Last year, the number of international arrivals at the Penang International Airport rose by 9.32% to 671.2 million from 614 million in 2012, according to statistics obtained from state tourism bureau Penang Global Tourism.

“Domestic arrivals at the Penang International Airport also increased to 1.5 million in 2013 from 1.2 million in 2012.

“We can expect a similar increase for both international and domestic arrivals this year,” Fong said.

The Rice Miller Hotel & Godowns and The Wembley – St Giles Premier Hotel and Cititel Express Penang are scheduled to start operations by the end of this year.

Jennifer Cheng, chief marketing officer of Asian Global Business Sdn Bhd, the company behind The Rice Miller Hotel & Godowns project said, the “partial infill” development and restoration project, comprises a 46-suite hotel, retail space with 17,000 sq ft of lettable area, two five-storey office blocks, and 99 units of city residences.

A general view of Campbell Street in Penang. Rising tourist numbers are spurring a spate of hotel projects on the island.
A general view of Campbell Street in Penang. Rising tourist numbers are spurring a spate of hotel projects on the island.

“The company restored two 19th century heritage buildings to accommodate a hotel and commercial outlets.

“There are in total 46 hotel suites, inclusive of a penthouse.

“There is also a residential-suite component with 99 city residences, called The Rice Miller City Residences, each with built-up areas ranging from 1,000sq ft to 2,500sq ft.

“The units are priced at RM1,400 per sq ft.

“We have already sold 60% of the city residences,” she said.

The food and beverage facilities will include a restaurant called Kate@9, which serves contemporary cuisine; The Mill, which serves local and international food; and The Sweet Spot, a bakery cum pastry cafe, and an international vegetarian restaurant.

“There will also be a couple of trendy bars, and 23 retail outlets,” Cheng added.

Cititel Hotel Management Sdn Bhd (CHM) managing director Datuk Eric Lim said The Wembley – St Giles Premier Hotel and Cititel Express Penang, with a combined RM250mil GDV, are also scheduled to start business by end of this year.

“The two hotels are joined by a shopping podium.

“The Wembley – St Giles Premier Hotel, a four-star hotel with 415 rooms, is designed to house the largest pillarless ballroom in George Town, with a seating capacity of 1,500, which will be ideal for banquets, conferences and conventions.

“It is also the first hotel here with a helipad. This development will also include retail space, restaurants and food court,” Lim added.

The Cititel Express Penang is a three-star hotel with 234 rooms.

“Both hotels target the leisure and meeting, incentive, convention, and exhibition markets.

“The hotels will have a total of 542 parking bays,” Lim added.

East Design Architect Sdn Bhd director Lawrence Lim said the company is undertaking the designing work for The Rice Miller Hotel & Godowns in Weld Quay, Victoria Street Hotel on Victoria Street, Ozo Hotel in Argyll Road, and the unnamed hotel project in Magazine Road.

The unnamed RM80mil hotel project is an infill development scheme with a colonial facade.

“The 250-room hotel will be built on top of a shopping podium, which is designed also to accommodate medical centres,” he said.

Lim said the OZO Hotel at Argyll Road, a contemporary themed hotel, will have 132 rooms, and all its recreational facilities, such as a swimming pool, gymnasium, and sky lounge, on the highest floor.

The five-storey Victoria Hotel, an infill development, will have the facade of a 19th century colonial commercial building and 80 rooms, each with a built-up area of 250sq ft.

“It will be a four-star hotel with a rooftop swimming pool, sky bar, and food and beverage outlets on the ground floor,” Lim added.

Fong said hotels in Penang achieved 70% occupancy rates for January and February this year on sales of over 160,000 rooms for each month.

In the same period last year, the occupancy rate of Penang’s hotels stood at about 65%.

“The whole of last year, the occupancy rate of local hotels was 66.5%, registering a sales of about two million room nights.

“This year the occupancy rate should exceed 70%,” Fong said.

On room rates, Fong said, due to the higher cost doing business, room rates for local hotels are expected to increase by about 10% by the end of this year.

“Presently, the rates for city hotels range between RM400 and RM500 a night, while the rates of beach hotels are between RM300 and RM800.

“The rates for heritage boutique hotels are between RM400 and RM1,000.

“Hotel room rates have increased about 8% since 2012,” he said.

Fong said Penang is seeing more tourist arrivals from Indonesia, China, Japan, Australia, and the UK.

“We expect the occupancy rate of heritage boutique hotels to rise over 80% this year,” Fong said.

According to Fong, what attracts foreign visitors to boutique heritage hotels in inner George Town is the way the projects are being restored for adaptive commercial use.

“The intricacies of restoration work and the antique furniture used determine the pricing of the rooms per night,” he said.

Fong, who is also the general manager of 23 Love Lane, a boutique heritage hotel, said its guests were interested in the details of the restoration and did not mind the rates, which were still very competitive compared to similar hotels in the region.

“The furniture for 23 Love Lane, Penang, for example, comes from the 19th century Straits Settlement period.

“Overseas visitors make up 70% of guests in boutique heritage hotels, while the remainder are domestic travellers,” he said.

Macalister Mansion, which opened in 2012, attracts a fair mixture of Asian and European guests because the way the owners restored the building. As much as possible of the 100-year-old building was preserved, according to its general manager Coreen Yeap

“A lot of time was spent on restoring and preserving the original features of the building, which is named after Penang’s British Governor Colonel Norman Macalister.

“The design process spanned an eight-month period from February to September 2011, with the owners working collaboratively with a Singapore-based interior design company,” she said.

On advertising and promotion, Fong said, generally boutique heritage hotels spend little on such programmes.

“The boutique heritage hotels in Penang are known through word of mouth and the social media.

“There are also foreign writers who come to Penang in search of such heritage commercial projects to report about in tourism and lifestyle magazines,” he added.

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