MAH president Datin Christina Toh
PETALING JAYA: The Malaysian hotel sector has been off to a slow start this year, as economic uncertainties from ongoing geopolitical tensions continue to deter international travellers.
Malaysian Association of Hotels (MAH) president Datin Christina Toh said “Business has been slow. Yes, we are seeing a lot of inbound travellers, especially from China, but it is not as many as initially expected.
“This is in spite of the increase in flights between the two countries and implementation of visa-free policies,” she told StarBiz.
Toh said the ongoing conflict between India and Pakistan has also affected the level of inbound travellers into Malaysia.
“One five-star hotel in Kuala Lumpur was set to host an incentive-travel group from India recently, but it was cancelled due to the unrest between India and Pakistan.”
According to statistics released by Tourism Malaysia, the country saw a total of 6.74 million visitor arrivals in January and February of this year.
This was an increase of 31.3% from the 5.13 million visitors in the first two months of last year. It was also higher by 14.5% than the 5.88 million visitors recorded in the first two months of 2019, pre-pandemic.
The highest number of visitors during the first two months of this year were from Singapore, which rose 50.8% year-on-year (y-o-y) to 3.1 million visitors.
This was followed by China, which saw a 43.1% increase to 816,765 visitors during the period under review. Visitors from India grew 42.4% to 222,822.
Nevertheless, despite the yearly rise in visitors, Toh said it was not being reflected in terms of hotel occupancy rates.
“We think many of them could be staying at budget hotels or even Airbnb.
“Additionally, the economic uncertainty from the geopolitical tensions are forcing people to be cautious with their spending habits,” she said.
According to MAH data, average occupancy rates (AOR) for hotels in Malaysia dropped 1% y-o-y to 54.3% in the first quarter (1Q25).
The AOR for five-star hotels dropped 4.5% y-o-y to 55.3% in 1Q25, while four-star hotels saw a mild pick-up in yearly AOR by 0.7% to 55.9% during the period.
As for three-star hotels, the AOR dipped 2.3% y-o-y to 49.5% in 1Q25.
Meanwhile, the average daily rates (ADR) for hotels in Malaysia dropped 6.6% y-o-y to RM330 in 1Q25.
According to MAH, the ADR for five-star hotels dropped 2% to RM507 in 1Q25, while the ADR for four-star hotels rose slightly by 0.7% to RM277. The ADR for three-star hotels meanwhile plunged 39.9% to RM171.
Separately, the average revenue per available room (revpar) for hotels in Malaysia dropped 7.5% y-o-y to RM179 in 1Q25. Y-o-y, the revpar for five-star hotels dropped 6.4% to RM280; rose 1.4% to RM155 for four-star hotels and plunged 41.3% to RM85 for three-star hotels.
For the second quarter of this year, she said the sector is “not so promising”.
“In spite of events like the Asean Summit this month, we are not seeing a pick-up in hotel occupancy rates.
“In fact, we are hearing of postponements and deferrals due to the summit.
“We believe that road closures during the summit deterred some travellers. Many have postponed their visits till after the summit.”
Toh believes that the hotel industry will see better traction during the summer holiday season, which will be between June and August.
According to Knight Frank in its Real Estate Highlights for the second half of 2024 report, city-centre hotels, particularly those in the Klang Valley, saw improved occupancy rates driven by rising international tourist arrivals.
“While current rates remain slightly below pre-pandemic levels, the upward trend is encouraging.”
Looking ahead, Knight Frank said the Klang Valley is set to see a wave of new luxury and upscale international hotel openings this year.
“Prominent brands such as Kempinski Hotels, Waldorf Astoria and Park Hyatt are expected to enter the market, driving strong growth in ADR.
