Signs of life in hotel sector

Holiday getaway: A worker tidies up a guest room at a resort in Langkawi. Resorts in Port Dickson, Penang, Melaka and Langkawi are likely to do better than city hotels, as people escape for holidays after a prolonged period of lockdown. — Reuters

AFTER months of on-and-off lockdowns, the hotel sector is seeing some signs of life, with quite a number already receiving bookings especially for the school holidays.

But it is going to be a slow recovery.

Based on a survey by the Malaysian Association of Hotels (MAH), occupancy this year is likely to close at below 30%, while for 2022, domestic-focused activities will probably bring occupancy to 35%.

About 120 hotels tracked by MAH have closed temporarily or permanently, with the industry incurring estimated losses of over RM6.5bil for 2020, and another RM9bil up till August 2021.

With interstate travel still not allowed, some of these hotels may decide not to reopen at all.

“Given the current sentiment of travellers, hotels need to be prepared to sustain with minimum business and strategise for future arrivals,’’ said MAH CEO Yap Lip Seng.

Of the 2,300 members in the Malaysia Budget Hotel Association, about half have closed down, while an estimated RM3bil in losses has been incurred by the budget hotel sector, said president Emmy Suraya Hussein.

A group of hotels located in Kuala Lumpur and Penang had reduced their headcount by 40%, and still registered a loss of RM7.5mil in 2020, and as of July, 2021, a loss of RM10.3mil.

“It is estimated that for every two weeks under the movement control order, about RM250mil to RM300mil is lost; the hotel industry is not able to sustain for long without international tourists,’’ said Malaysian Association of Hotel Owners (MAHO) executive director Shaharuddin Mohamed Saaid.

Individual members of MAHO report losses of RM2mil to RM30mil, with one hotel group estimating its loss stood at RM34.6mil for the first eight months of 2021.

Hanley Chew, founder of JustToniteHanley Chew, founder of JustTonite

“With the Langkawi travel bubble spearheading our recovery in tourism, the confidence among travellers is building up but this gradual rebound in the industry is subject to the public’s adherence to standard operating procedures,’’ said online hotel booking platform JustTonite founder Hanley Chew.

JustTonite hotel partners are preparing to receive more active bookings and have been engaging with communities over social media and its collaboration partners including Malaysia Airlines Bhd.

“With the recent reopening of Langkawi, we hope it will be a success and act as a benchmark for the rest of the country, as well as a possible signal for us to start receiving international guests.

“With the reopening of most economic sectors, the increased movement in business travel and resumption of new, existing and backlog projects will enable the sector to work towards the pre-Covid-19 era,’’ said Iconic Hotel Penang general manager Kevin Cheah.

So far, Iconic Hotel Penang has incurred a loss of RM5mil.

Kevin Cheah, general manager, Iconic Hotel PenangKevin Cheah, general manager, Iconic Hotel Penang

The overall feeling is that as long as interstate travel is not allowed, nothing much is expected to change; a full recovery is expected only when international borders are opened.

The industry needs a clear direction from the government on the way forward, said a MAHO member.

It is difficult to estimate the prospects for recovery, as there is no clear roadmap from the government especially regarding interstate travel and the meetings, incentives, conventions and exhibitions (MICE) tourism sector.

Announcements made just a few days before any reopening makes planning and projections difficult.

The year-end “holiday” mindset and pent-up demand will likely set the momentum for the domestic hotel sector after the restrictions over the last 18 months.

By the end of this year, there could be some steady growth but recovery will be driven by significant progress in the containment of the Covid-19 pandemic.

Hajjah Emmy Suraya Hussein, President, Malaysia Budget Hotel AssociationHajjah Emmy Suraya Hussein, President, Malaysia Budget Hotel Association

With a large city inventory in Kuala Lumpur and Selangor, recovery is going to be very slow, especially when the sector has to depend on the small and price-sensitive domestic market.

A trickle of international arrivals for business may be expected only in the second half of 2022, said another MAHO member.

The recovery may be even slower if another wave of Covid-19 infections hit overseas countries, with the autumn and winter seasons.

Resorts in Port Dickson, Penang, Melaka and Langkawi are likely to do better than city hotels, as people escape for holidays after a prolonged period of lockdown.

Upscale hotels and those with international brands in city areas also may gain some momentum from domestic staycations where rates are attractive now.

Some have included additional benefits and attractions for staycations.

The seven hotels under the Shangri-la Group in Malaysia have provided personal accident coverage with no additional charge, from Sept 22, 2021.

The StaySurance personal accident cover offered by Shangri-la Malaysia is underwritten by AIG, with a daily hospital cash benefit of up to US$100 (RM418.85) per day.

Local hotel brands and three-star hotels may lose out as they are not meant for staycations.

How long can the hotel sector hold out is a big question now. As they report their losses, they say the numbers are still climbing.

While waiting for more positive news, they are trying out various strategies to help mitigate these losses.

Yap Leng Kuen is a former Star Business Editor. The views expressed here are the writer’s own.

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