Hotel, tourism industry hanging by a thread

MAH says there will be added cost management measures on top of existing ones, including further staff reduction, direct pay cuts and unpaid leaves


THE lull in travel activities is a critical time for survival for the hotel and tourism industry with almost zero income except for those operating as quarantine centres.

Malaysian Association of Hotels (MAH) CEO Yap Lip Seng said there will be added cost management measures on top of existing ones, including further staff reduction, direct pay cuts and unpaid leaves.

“As of the end of last year approximately 100 hotels closed either temporarily or permanently. Moving into 2021 and another Movement Control Order (MCO) in early January, an estimated 20 more hotels had closed.

“We are looking at more hotels closing temporarily in response to the National Recovery Plan (NRP).

As of now, closures are being extended on a month-to-month basis,” he told The Malaysian Reserve (TMR).

From MAH’s recent survey, almost 28% of hotels had cut manpower by more than half and over 51% reduced between 10% and 40% of headcount.

Almost 45% of hotels are still imposing pay cuts on their employees, while 63% are placing their employees on unpaid leaves.

Once daily Covid-19 cases drop below 4,000, Yap said the situation would differ among hotels based on locations as the lockdown relaxation is expected to be based on the infectivity rate of respective areas or states.

“However, as long as restrictions in Kuala Lumpur and Selangor are extended, it will impact the entire industry as these two states are key source market of domestic tourists.

“The industry will be highly dependent on domestic tourism for another year,” he added.

Yap said when the NRP was announced, the industry was concerned about the late reopening of the tourism sector, which was estimated to be in the fourth quarter of 2021.

“While this means that the industry is not expected to have any business till then, it allows us to plan ahead. Hoteliers could decide on the next course of actions, including closure to minimise losses.

“This, however, must come hand in hand with government support and assistance as the industry is expected to lose all channels of income including food and beverage,” he said, adding that the People’s Protection and Economic Recovery Package (Pemulih) was insufficient as it had not addressed specific needs of the tourism and hotel industry.

Extension of electricity bill discount is needed, but the fixed quantum of 10% is hardly sufficient and of insignificant amount considering average occupancy is at most 20% in the coming months due to extended travel restrictions, said Yap.

The removal of the RM4,000 salary cap, however, is much welcomed as it allows employers to leverage the subsidy for all levels of its employees.

“Although the government recognises the impact on the tourism industry, the one-off financial assistance of RM3,000 is only offered to travel and tour operators. Hotels were not included despite sustaining heavy losses and cashflow burden.

“Extension of the Tourism Tax and Service Tax exemption for hotels up to December 2021 on the other hand is needed to encourage spending although it is not a direct fiscal support.

“We were also recently notified that the extension of the Service Tax exemption will be only for room revenue, while other services within the hotel are not included,” Yap said.

Langkawi Tourism Association CEO Zainudin Kadir echoed the same sentiment, saying the island mostly depends on tourism and can only survive until September this year if the MCO is prolonged.

“After September, if the border remains closed, many of us will cease our operation. Even now many have already shut down their business including 60% from sea tourism and car operators.

“In fact, some car rental operators had to sell their cars at below market price to survive,” he told TMR.

There are around 61,000 workers in Langkawi from various tourism-related segments like car rental and boat operators, retailers, hotels and homestays, and restaurants and cafés that have been badly affected since the pandemic hit.

Zainudin urged the government to provide a specific date for the border to reopen, so that industry players can be better prepared to plan packages and promotions.