Hotel business still languishing

Despite special offers and slashed rates, average hotel occupancy rate at 15.6% with no notable pickup since start of RMCO


HOTELIERS are still reeling from the devastating effect of the Covid-19 pandemic as the public remains weary of checking in despite all the special offers and slashed room rates following the government’s decision to ease various travelling restrictions.

The Malaysian Association of Hotels (MAH) CEO Yap Lip Seng said the average hotel occupancy rate is currently at 15.6%, with no notable increase or pickup seen since the beginning of the Recovery Movement Control Order (RMCO).

“Moving forward, our projection for the average daily rate hasn’t changed since our survey dated May 31, which is to see a decrease of 27% within the next six months to a year,” he told The Malaysian Reserve (TMR).

Similarly in June 2020, 107 hotels or 27% of the 402 outlets that are sampled in the Moving Forward survey by MAH are still not operating.

The 107 hotels are expected to be gradually opened from next month, while seven hotels are under permanent non-operational status until further notice.

A random check on several booking platforms shows drastic rate cuts among the more reputable hotels by as low as 75%.

Several five-star hotels, which were beyond reach among the locals before, are now more accessible, yet travellers are still apprehensive to gamble on their health and safety.

Yap said there are markets that the hotel industry is betting on for future business recovery, with 91.04% of hotel operators stating that they are looking forward to fully independent travellers who use online travel agencies (OTAs).

“The hotel industry is still OTA-dependent. This is followed by walk-ins and those who utilise the hotels’ own websites, tailed by corporate, government, as well as the meetings, incentives, conferences and exhibitions tourism.”

The hotel industry has taken a serious hit from a drop in the number of guests due to the Covid- 19 pandemic, with booking cancellations leading up to over RM6.36 billion in revenue loss for the entire year.

TMR previously reported that the losses are expected to extend until next year, as well as occupancy to stay below 40%.

Due to this, hotels have been cutting manpower, as well as costs, in order to remain sustainable and survive the preventive measures of Covid-19.

Yap said even beyond the Conditional MCO, hotels are still looking to reduce the number of employees in total permanently.

“Of the total number of hotels, 64% stated that they will reduce headcount and 14% will reduce the number of staff by half or more.”

The RMCO has seen airlines as well as hotels attempting to revive the domestic tourism industry by forming partnerships to offer synergistic services.

Hotels also tried to maintain sustainability during the month of Ramadhan by offering food and beverages (F&B) takeaway packages, which unfortunately recorded a rather huge loss.

“With an average of RM336,000 loss of F&B revenue in the fasting month, the estimated total would be over RM135 million.

“Currently, over half at 53.74% of hotels are operating for takeaway, followed by a lesser 41.54% running for delivery and only 32.34% for dine-ins,” Yap said.

In the association, most hotels operate an average of two F&B outlets each.