Hotel association maintains 25% occupancy rate target

  • Corporate News
  • Monday, 05 Oct 2020

MAH chief executive officer Yap Lip Seng said the target could however change at any time, in light of the Covid-19 pandemic and its impact on the economy.

PETALING JAYA: The Malaysian Association of Hotels (MAH) is maintaining its average hotel occupancy rate target of 25% for this year, assuming that domestic demand can be sustained.

MAH chief executive officer Yap Lip Seng said the target could however change at any time, in light of the Covid-19 pandemic and its impact on the economy.

“At the moment we are tracking the occupancy rates weekly. Right now, it’s averaging at around 39%. It went up to 42% during the Merdeka weekend, ” he told StarBiz.

Yap said the rise in average occupancy rates was mainly driven by resorts on islands and beaches.

“But it’s extremely sensitive.

“Once there are reported cases, cancellations follow. Our initial forecast for the year was 25% with December peaking at 32%.

“Although it seems higher now, we still need to monitor if the domestic demand can sustain, especially with the end of the moratorium.”

With the intention of reducing non-performing loans induced by job losses and salary reductions due to the pandemic, the government announced a blanket loan repayment moratorium for six months from April to September under the Prihatin Rakyat Economic Stimulus Package.

According to the latest survey by MAH, the average year-to-date July hotel occupancy rate stood at 32.3%.

The average hotel occupancy rate in July stood at 36.69%. The states that recorded an average occupancy rate of more than 50% were Pahang (75.27%), Terengganu (64.88%) and Perak (60.76%).

The states that were worse hit in July were Labuan, Putrajaya and Perlis with zero occupancy rates, according to the survey.

Last month, Malaysia Budget Hotel Association national deputy president Sri Ganesh Michiel told StarBiz that budget hotels in places such as Cameron Highlands, Langkawi and Tioman were reporting very good business.

He said some hotels were reporting occupancy rates of between 80% and 90%, adding that the level would be higher if not for the standard operating procedures to maintain social distancing.

Ganesh said city-based hotels were however still reeling from the impact of the Covid-19 pandemic.

He also raised concerns that the budget hotel sector could be badly hit once the six-month loan moratorium ended.

“Right now, people have cash in hand and many are taking advantage of promotions and rebates. Once they have to start paying their loans from next month, we may see a significant drop in occupancy rates, ” he said.

Ganesh also said four and five-star hotels have also been slashing their prices heavily, a move that has severely affected the businesses of budget hotels.

The impact of the Covid-19 pandemic on the local hotel and tourism sector is forcing some hotel operators to diversify their business. In August, Impiana Hotels Bhd announced that it planned to diversify its core business to include property development, with the aim of improving earnings and enhancing shareholders’ value.

Impiana said the diversification would complement the group’s existing businesses of management and operation of hotels and resorts, property investment and hotel development.

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