Friday, December 3, 2021

For hotel industry, business is back but challenges remain

While hotel bookings have been on the rise since interstate travel was allowed, many operators continue to face financial problems.

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The surge in domestic tourists after the government eased health restrictions on interstate travel on the back of a successful vaccination campaign has given a new lease of life to the hotel industry, one of the hardest hit by the successive lockdowns and strict conditions imposed in the wake of fierce spikes in Covid-19 infections.

Yet challenges remain for these businesses even as the social and economic sectors gradually reopen in the move towards the endemic phase of Covid-19.

For now, hope is on the rise – tourists aside, hotels have also seen an increase in the number of bookings for meeting rooms and halls, allowing operators and industry players space to begin formulating their strategies for getting back on track.

According to the Malaysian Association of Hotels (MAH), average reservations for hotel rooms nationwide surged by 20% to 25% after the government lifted the ban on interstate travel.

MAH CEO Yap Lip Seng said hotels in the capital recorded an increase of nearly 25% while only Penang experienced a one-digit growth in percentage.

“Based on the trend last year after interstate travel was allowed, the average occupancy rate is expected to increase more than 40%,” he told MalaysiaNow.

As of now, he said, reservations for hotel rooms in Kuala Lumpur have grown by an average of 33%. Luxury hotels remain a popular choice for visitors due to accommodation rates and promotions, especially on weekends, he added.

But Emmy Suraya Hussein, president of the Malaysian Budget Hotel Association (MyBHA), said bookings at such establishments throughout the country have mostly been focused in beachside locations and those at islands and highlands, while bookings in urban areas have been less in demand.

She said this was the result of feedback received from some 2,300 budget hotel operators registered with the association.

“In general, budget hotel bookings have increased significantly but only in resort areas such as coastal and highland locations.

“Reservations for rooms in city areas like Kuala Lumpur, while better than they were, have not been as good.”

But holidays for festive celebrations such as Deepavali have helped boost bookings, she added.

Penang, Negeri Sembilan still hotspots

Mandy Chew Siok Cheng, president of the Lexis Hotel Group, said the hotel chain had seen a surge in bookings at its establishments in Negeri Sembilan and Penang following the green light for interstate travel given in early October.

Bookings have also increased for meeting rooms and halls for seminars, training courses and events, restoring some semblance of normalcy.

“It’s clear that the permission to cross state lines is driving high demand for the tourism and hotel industries,” Chew said to MalaysiaNow.

“Malaysians are seizing the opportunity to take a break and spend time with their families and friends after the long separation due to the movement control order (MCO).”

Her organisation expects room bookings to reach nearly 90% capacity every coming weekend.

But while business appears to be booming, Yap said the hotel industry will not fully recover without the return of international tourists.

For now, the industry will continue to be dominated by domestic visitors, at least throughout the coming year until the country’s international borders are reopened.

“Based on our survey, the hotel industry has a market mix of 55% domestic tourists and 45% international tourists.

“Hotels have begun taking in workers again, but the situation is not the same as it was before Covid-19. So hotels are still operating with fewer staff than before,” Yap said.

Budget for budget hotels

Emmy meanwhile said MyBHA was disappointed that it was not called for discussions with the government ahead of the 2022 budget presented in the Dewan Rakyat last week.

Finance Minister Tengku Zafrul Aziz, who tabled the budget, had said that the government would provide matching grants for repairs to 738 budget hotels registered with the tourism, arts and culture ministry, as well as repair grants to registered homestay owners with a total allocation of RM30 million.

“I don’t know how the government came up with these numbers because MyBHA was not involved in discussions with the finance ministry,” Emmy said.

“Overall, we are disappointed with Budget 2022 as it does not appear to provide any positive long-term effects for the hotel sector.”

She urged the government to reconsider the allocations for the hotel industry and tourism sector in general, saying many budget hotel operators experienced huge losses during the MCO period.

“Some have switched fields and do not want to return to this industry because they are afraid the same thing will happen again in the future,” she said.

“Those who want to reopen, meanwhile, have staffing trouble. Recruiting workers takes training, which needs a lot of money. They just can’t afford it.”

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