Another year before hotel operators could break even

To remain afloat, some hotels offer work-from-hotel packages to compensate for the low occupancy rate and pare some losses

by SHAHEERA AZNAM SHAH / Pic by MUHD AMIN NAHARUL

THE hotel industry currently hit hard by the Covid-19 pandemic can only expect to reach a break-even point towards the end of 2021 despite the recent 23.4% rise in occupancy following the lifting of the inter-state travel ban.

Malaysian Association of Hotels Kuala Lumpur (KL) chapter chairman BE Lim said the growth is still insufficient for industry players to make a profit after having been in the red since the beginning of the pandemic as hotels have to compensate the pricing to entice customers.

“If you compare the hotel price between today and last year, it is almost halved or about 56% down — particularly for hotels in KL. Even though the occupancy rate seems higher, operators are forced to compensate in other means to survive.

“The reduction in price does not help in covering the running costs, which has also resulted in the closure of some premises,” he told The Malaysian Reserve.

He added that the occupancy for hotels in KL or the central business district (CBD) is much lower than the average rate of those in the tourism targeted areas.

“If we only measure the average hotel occupancy in Malaysia, the rate is around 20% or more. But the numbers are different for hotels in KL as only 40% of the customers are booking the rooms for leisure.

“The bulk of the booking is still for business activities, and it is hard for hotels to recover if businesses are not going back to normal,” he said.

Listed hospitality companies like Shangri-La Hotels (M) Bhd have been impacted by the virus spread, posting losses of RM44.4 million in the recent two quarters.

To date, more than 10 hotels in KL that are members of the association have ceased operation due to low to zero occupancy as they struggled to sustain the operating costs.

The hotel industry is among the economic sectors which have been crippled by the pandemic, with operators reporting billions in losses which also left many unemployed.

To remain afloat, some hotels are offering work-from-hotel packages to compensate for the low occupancy rate and pare some of the losses.

Holiday Inn Express Kuala Lumpur City Centre GM Jonathan Lai said such packages have not been attracting businesses and contributed less than 5% to hotels’ revenue.

“It is an effort to recover some of the losses, but the contribution is very marginal. Corporates are hesitant to fork out extra money for their employees, and those who have been taking the packages are individual business owners,” he said.

Lim said among the efforts to keep the business safe while ensuring its longevity is via frequent sanitisation exercise that will uplift consumer confidence in the hospitality industry.

The practice is now a top priority among hoteliers to avoid lapses during the high turnover rate of customers.

“Sanitisation is an extra process for the staff after they are done with the basic cleaning process. Depending on which method they use, some will add close to an hour to ensure that all are sanitised,” he said.

Referring to the recent outbreak at Singapore’s The Mandarin Orchard, he said the sudden surge of customers in a time where the industry is operating at a low occupancy rate will catch hotels at a vulnerable place to meet the demand.

“I think (Mandarin Orchard) was caught off guard due to the irregular operational pattern, especially when Singaporeans are cashing in the government subsidy to boost its tourism industry.

“So, they got caught off guard very badly and it compounds itself when the hotel has a high turnaround time and a back-to-back occupancy,” he said.

According to a Bloomberg report, the high-end hotel, which also hosts quarantined travellers on a designated floor, was suspected of spreading Covid-19 among its quarantined travellers.

Thirteen positive cases among travellers who were quarantining at the hotel reported a “high genetic similarity” despite arriving from 10 different countries, suggesting the hotel could be the site of transmission for the travellers.

Preliminary investigations conducted also revealed past infection among its staff, which raised concern on the undetected transmission at the premise, as well as for a country that has been successful in managing local cases and curbing local infections.