Tourism Tax Bill must be value accretive, says CEO


(From left) KLCCP Stapled Group head of legal and corporate service division Abd Aziz Abd Kadir, CEO Datuk Hashim Wahir, and chief financial officer Annuar Marzuki Abdul Aziz at the 4th Annual General Meeting of KLCC REIT and the 14th Annual General Meeting of KLCC Property Holdings Bhd

KUALA LUMPUR: The newly passed Tourism Tax Bill 2017 has to be value accretive to enable the tourism and hospitality industries to thrive, said KLCCP Stapled Group CEO Datuk Hashim Wahir.

Speaking after the group’s AGM yesterday, Hashim said the tourism tax would put pressure on customer traffic, as it meant that tourists would now have to spend more, and it remained to be seen how the tax would affect tourism activities.

“We seek more Government contribution in terms of support and facilities to show people the value that is passed on to them from the tax collection.

“Tourists will then be more willing to pay the taxes because they can see the value.

“The Government also has to ensure that the tax is not overly burdensome to the extent that it would affect tourist arrivals.

“The quantum of the tourism tax has to be reasonable,” said Hashim.

KLCCP Stapled Group’s strategy will emphasise on working with the tourism industry and the Government to obtain more value from the tourism tax collected.

The group’s hospitality segment, which is represented by Mandarin Oriental Kuala Lumpur, will continue to operate in a challenging environment this year, due to market sentiments and the tourism tax.

Hashim said the hospitality industry was facing challenges in not being able to increase average room rate (ARR).

“The hospitality industry is finding it difficult to increase the ARR due to competition, overall occupancy rates as well as the increase in cost from the tourism tax.

“Hotel rates will depend on market sentiments, and the tourism industry will face challenging times ahead due to higher expenditure on leisure from the tax.

“Hence, our strategy for Mandarin Oriental is to maintain the ARR and ensure that our services are maintained at current levels,” he said.

The hotel segment saw a decline in its contribution to KLCCP Stapled Group’s revenue from 12% in 2015 to 11% last year.

This was mainly due to the significant impact of softer corporate demand, increased competition from new luxury or boutique hotels and renovations to guest rooms.

The occupancy rate in Mandarin Oriental was maintained at 47%.

The final phase of renovation, which comprises club rooms and suites, along with the presidential suite, will be completed by mid-year.

Last year, Mandarin Oriental registered an overall turnover of RM150mil.

Meanwhile, KLCCP Stapled Group is in the midst of negotiations with a tenant in the IT industry servicing oil and gas players to take up the remaining 40% space in Menara ExxonMobil.

The group hopes to complete negotiations within the next one to two months.

Recall that ExxonMobil had signed a long-term lease agreement for Menara ExxonMobil on a 9+9+9-year basis at end-January, but only took up about 60% of the total lettable area.

The office segment, comprising Petronas Twin Towers, Menara 3 Petronas, Menara ExxonMobil and Menara Dayabumi, is expected to remain stable on the back of locked-in, long-term tenancies with high-quality tenants.

It remained the major contributor to the group’s revenue with a 44% contribution last year.

Apart from that, KLCCP Stapled Group’s retail segment is expected to remain stable on the back of Suria KLCC’s tenant remixing enterprises, as well as the completion of the luxury men’s and women’s zones on Level 1 to enhance customer shopping experience.

These measures resulted in footfall exceeding 48 million, registering the highest ever tenant sales of RM2.5bil.

The retail rental yield last year was at 6.5%, while the rental reversion rate stood at 2% to 5%.

On the topic of acquisitions, KLCCP Stapled Group is on the lookout for assets which match its current assets in terms of quality, premium factor, location and risk profile, although the group has yet to identify any potential acquisitions.

KLCCP Stapled Group distributed 95% of its overall distributable income with a distribution per stapled security of 35.65 sen, a 2.9% increase from 2015, achieving a commendable annual total return for the year.

The KLCCP Stapled Group, Malaysia’s largest self-managed stapled security, is made up of KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust (Reit).

As of December 2016, KLCCP Stapled Group had a market capitalisation of RM15bil, which constituted a 34% market capitalisation of the Malaysian Reit segment.

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