Resorts set to recover faster than city hotels after pandemic

Business prospect for 2020 is ’gone’ and hoteliers will only register growth in 2022, helped by domestic tourism, says a seasoned hotelier

by RAHIMI YUNUS/ pic by MUHD AMIN NAHARUL

RESORTS will recover faster than hotels in the city post-coronavirus pandemic, fuelled by Malaysians who are eager to return to normality and holiday routines.

The hospitality and tourism industry sank as people are ordered to stay at home, businesses come to a halt, airlines cancel flights, borders are locked and gatherings are banned in the last few months.

Zainal says the industry can only reach up to 40% of 2019 occupancy level by the end of this year – pic by RAZAK GHAZALI

Tradewinds Corp Bhd group CEO and MD Muhammad Zainal Ashikin Muhammad Rejab said resort hotels are banking on domestic travellers who will consider a staycation, subsequently helping the speedy recovery of these establishments after the pandemic.

However, he said business and city hotels are less fortunate as they largely depend on meetings, incentives, conferences and exhibitions (MICE) tours.

“MICE activities have come to a virtual standstill as borders are closed. Even wedding receptions cannot be held in hotels or anywhere.

“Those directly employed for banquet business have nothing to do now. I just cannot imagine the impact on businesses, especially hotels that emphasise on incentives, conventions and meetings,” Zainal told The Malaysian Reserve in a recent interview.

He said a hotel’s banquet business accounts between 15% and 25% or even more of its revenue, depending on the size of the property.

“But now that has gone down to zero with the pandemic.”

Zainal said resorts also have certain advantages as they are purposely built to provide domestic tourists with staycations and holiday experiences unlike hotels in the cities.

Tradewinds, one of the country’s largest hotel owners and operators, has seven accommodations for tourists and travellers under its portfolio, three of which are resorts namely Mutiara Taman Negara, Meritus Pelangi Beach Resort and Spa in Langkawi, and The Danna Langkawi. The other four — Hotel Istana Kuala Lumpur, Hilton Petaling Jaya, Hilton Kuching and Mutiara Johor Baru — are city and business hotels.

Kuala Lumpur hotels have been badly hit by the pandemic. The country’s capital is among the top regional business hubs and a favourite location to host international conventions.

MICE attracts a large group of travellers who fill up hotel rooms in the city. They too spend multiple times more compared to free independent travellers.

The Covid-19 impact has been devastating on the tourism and hospitality sector. A few hotels have permanently closed down since the government locked the country’s borders, stopped non-essential services and forced millions of people to stay home.

Thousands of staff working in hotels and related businesses are expected to be sacked in the coming weeks. Many hotels have already implemented salary reductions or fewer working days. Industry observers do not expect the sector to return to pre-Covid-19 days in the next 12 months.

Zainal said the hospitality sector would see a slow recovery beginning next year, with resort hotels leading the turnaround.

He said the business prospect for 2020 is “gone” and hoteliers will only register growth in 2022, helped by domestic tourism.

The seasoned hotelier’s prognosis is that the industry can only reach up to 40% of 2019 occupancy level by the end of this year.

“The economy for the hospitality industry needs to be churned out by domestic tourism,” Zainal said, adding that this is “better than nothing”.

He said the sector can ignore international travellers at the moment and stakeholders should gear all efforts towards the domestic market push.

Despite all these efforts, he expects hoteliers to struggle to achieve the average daily rate (ADR) and revenue per available room (revpar) that they enjoy pre-Covid-19 in the next two years.

Kuala Lumpur’s ADR and revpar for the January through May 2019 period was already down at 3.4% and 9.5% respectively, the lowest growth among other Asean cities, according to STR Inc, a US-based company that provides intelligence for the hospitality sector. STR attributed the decline to supply pressures.

Zainal said the industry is hoping for the government to incentivise domestic tourism and a Matta (Malaysian Association of Tour and Travel Agents) Fair via online stream could be established to promote travel packages.

He said an online portal that aggregated all industry players’ offerings instead of multiple online searches by property would be convenient for consumers to buy travel packages.