Approximately 15 per cent of the hotels in Malaysia may have to shut down their operations due to Covid-19 pandemic.
Data from the National Property Information Centre (Napic) showed that there were 3,225 hotels providing a total of 257,195 rooms as at 3Q2019.
Malaysian Association of Hotels (MAH) chief executive officer Yap Lip Seng said this finding was based on a survey conducted by the association on April 16.
“From the same survey, 50 per cent of the hotels responded that they are considering ceasing operations and 35 per cent of hoteliers said they would temporary halt their businesses.
“Some hotel operators said they would remain closed at least till year end, while some said they would only resume their businesses after a vaccine for Covid-19 is found,” he told the New Straits Times today.
A total of 4,880 hotels, including budget hotels, in the country are registered with the Tourism, Arts and Culture Ministry.
According to the Malaysian Association of Hotels (MAH) chief executive officer Yap Lip Seng, hotels are looking at potential losses of up to RM3.3 billion from room revenue alone for the first six months of this year.
Although hotel services are part of the essential services that are allowed to operate during the Movement Control Order (MCO), hotels are prohibited from accepting new guests, and they can only provide services to those who had already checked-in into the hotel before March 18.
Food and beverage services are to be limited to room service only, and all other facilities and services of the hotel should remain closed.
Yap said the closure was also partly due to the “close to oversupply” market in the country.
“Looking at the data, Malaysia is already close to oversupply in terms of hotel rooms. That is further worsened with unregulated and uncontrolled homes which are turned into tourist accommodation that does not contribute taxes to the country. With the downturn in tourism demand, supply needs to be adjusted,” he added.
Asked when would the closure begin to take place, Yap said it would probably happen in the coming weeks.
“We do not know at the moment. Majority of the hotel owners and operators initially were on a ‘wait & see’ strategy, not knowing how long the MCO and the situation will last.
“Now that the MCO period is extended, many hotels may be forced to decide on the final outcome in the next couple of weeks,” he said.
A WhatsApp message claiming that 21 hotel establishments are going to close down has been widely circulated. A check on Facebook found that the same message has gone viral since January 15.
In the 21-list, two hotels are claimed to be closing down for renovation while the rest are either winding up or closing down for good. All of the hotels listed are part of the Kuala Lumpur skylines, with big names including Sheraton, W Hotel, Royale Bintang, and among others. Here is the message:
1) Swiss Garden Hotel – closing down March 31, 2019 for renovation
2) Royale Bintang Bukit Bintang – up for sale. Closing down March 31, 2019
3) W Hotel Kuala Lumpur – up for sale. Potential china buyer has been identified
4) Sheraton Petaling Jaya – up for sale
5) Grand Season Hotel – closed down
6) Holiday Inn Glenmarie – rumored may close too
7) KL Journal – up for sale
8) Pullman Putrajaya – closing down for renovation
9) Travelogue Hotel, 3 stars. aka Geo Hotel, 203 rooms, f/hold, RM130mio
10) Ibis Hotel, 3 stars, Jln Yap Kwan Seng, 684 rooms, 3 stars, Rm500 mio
11) Renaissance Hotel, 5 stars, 912 rooms, f/hold, RM1. 2 bill
12) Holiday Inn Express, 3.5stars, 386 rooms, f/hold, RM365 mio
13) G Tower, 5 stars, Jln Tun Razak, 32 storey commercial, f/hold, RM1. 2 bill
14) TRX 5 Stars Hotel, 4 stars, 480 rooms, 26 storeys, complete by end 2021, RM1. 25 mio per room key
15) Four Points by Sheraton, 4 stars, Jalan Petaling KL, 4 stars, f/hold, 318 rooms, opening in Apr 2019, RM 280 mio
16) Verdant Hill Hotel, 223 rooms, 4 stars, f/hold, 20 storeys, RM180 mio
18) W Hotel, 5 stars, Jalan Ampang, 25 storeys hotel, 150 rooms, f/hold, USD 100 mio
19) Four Season Mall, high end mall, KL, 6 storeys, f/hold, Robinson Shopping Mall as anchor tenant, RM550 mio
20) Colonial Beach & Spa Resort, 4 stars, 176 rooms, f/hold, RM 55 mio
21) Hotel Sentral Group (10 properties)
For the people who are not familiar with the hotel industry, this may come as a shock. However, reports have contributed the drop of inbound tourists and the rise of alternative accommodations such as Airbnb as the reason to the downfall of the hotel industry − especially evident in 2018.
FeedMe Malaysia have run a check on the list and found that at least seven of them have been reported by the media.
Singapore-based company Hotel Royal Ltd have offered RM197 million to acquire Royale Chulan Bukit Bintang Hotel. Malay Mail reported the deal was sealed yesterday (Feb 19) and the Boustead Hotels & Resorts Sdn Bhd will now focus on the only one hotel they own on Jalan Conlay, namely Royale Chulan Kuala Lumpur.
As for W Hotel, The Star reported that the hotel along Jalan Ampang will be sold at RM360 million or RM2.4 million per room. The 5-star hotel has 150 rooms which started operation in August 2018. However, in a follow-up report by EdgeProp, Tropicana Corp Bhd said they did not plan to sell W Hotel off, citing high occupancy as its cling onto business. Tropicana Corp Bhd was founded by Tan Sri Danny Tan Chee Sing, brother to Berjaya Group’s Tan Sri Vincent Tan.
In May 2017, The Edge reported Sheraton PJ was up for a pirate sales amounting to RM350 million. After operating 20 years and once the tallest hotel establishment in KL, Grand Seasons Hotel will also close its door for good this February 28, citing severe building facilities rundown as a big challenge to keep the hotel running. The hotel is owned by Lim Siew Kim, a daughter of late Genting Bhd tycoon Tan Sri Lim Goh Tong.
Geo Hotel was sold for RM83 million in 2017, The Edge reported. It looks like it is going to be sold off again, according to the viral message. Last month’s news report revealed that Sentral Group will be letting go 10 hotels for a whooping RM625 million.
While we cannot ascertain the viral message claims entirely, FeedMe Malaysia has found seven of the claims are true.
In a report by The Edge, the shortcoming of the local hotel industry is no secret as Airbnb-like accommodations have outpaced the expansion in tourist arrivals. Coupled that with the increase of the minimum wage and electricity tariffs, many hotel establishments are scratching their heads on keeping account balance positive.
President of Malaysia Budget Hotel Associations Leong PK said the hotels’ golden years were 2008 to 2012. Since then, it has been downhill, Leong who represents 2,000 budget hotels revealed.
“Today, if we breakeven we are lucky,” said Leong, adding that many budget hotels are winding up now.
Tourism is Malaysia’s top revenue but lately, it has shown worrying signs of deterioration. According to Tourism Malaysia website, the total tourist arrivals have dropped 6.56 million, from 25,95 million in 2017 to 19.39 million last year.
The tourists are also spending fewer days when travelling here. In 2016, tourists accounted for an average of 5.9 nights stay in Malaysia; in 2017, it dropped to 5.7 nights.
Source : Feed My
30% mid-range hotels to close down due to Covid-19
THE global Covid-19 pandemic has brought the travel and hospitality sectors to a halt. The most badly hit are three- and four-star hotels which are expected to bear the brunt of the virus outbreak.
The Malaysian Association of Hotels (MAH) CEO Yap Lip Seng said based on estimation, 30% out of 4,888 hotels registered under The Ministry of Tourism, Arts and Culture are expected to close down soon.
“These are the mid-range (three- to four-star) local brand hotels that would not be able to sustain due negative cash flow for more than three months.
“The next three months will be the tipping point where these hotels would be forced to decide,” he told FocusM.
In Ipoh, Perak, after about two weeks of the MCO which began on March 18, the 4-star Tower Regency Hotel announced that it will cease operations from April 30 to cut its losses. Meanwhile, Ritz Garden Hotel in the city had also announced a temporary closure from April 1 for three to six months.
“Hotels in Perak are highly dependent on the domestic market which commands a lower yield, yet they have to bear similar overheads compared with other states. This leaves them more susceptible to external forces beyond their control,” Yap says.
The Covid-19 pandemic has claimed its first “economic victim” here when the VHM Hotel Management Group disclosed through a memorandum that it was closing some of its properties in Penang and Ipoh.
VHM owns and manages up to 17 properties in Penang, Ipoh and in the border township of Danok (Thailand).
It is learnt that employees in the Jazz, and Jerejak in Penang as well as its Kinta Riverfront (Ipoh) hotels were issued circulars notifying them of the closure of the properties.
The memorandum on “Closure of Hotel Business” from the hotel’s board of directors and management to its staff dated April 22 revealed that the hotel will be closed and all its staff will be retrenched.
It mentioned that the management has taken cost mitigation measures since the virus began to circulate in China late last year.
It also mentioned that the hotel has been suffering losses for months even before the virus outbreak, but it tried to keep its employees.
The memo also mentioned that the management has no other option but to cease operations and retrench the staff.
Unable to wait out MCO, Ipoh’s landmark Syuen Hotel closing permanently
One of the most well-known hotels here, Syuen, will shutter its operations on May 31 after failing to secure the funding needed to continue under the adverse business conditions caused by the movement control order (MCO).
The hotel’s board issued a notice to all employees informing them that they were being retrenched as a result.
Among the oldest hotels in Ipoh, Syuen is the latest to fold under financial pressure as occupancy dried up after authorities enforced the MCO to try and contain the spread of the coronavirus disease (Covid-19) in the country.
In the notice leaked online and which an employee confirmed receiving, director Loh Sow Chee told employees that the company had already been suffering substantial losses for the past three years.
GTower Hotel shuts down after 10 years in business
G City Club Hotel Sdn Bhd, which manages a 180-room hotel under the trade name of GTower Hotel, is shutting down its hotel operations, after a decade in the business, due to a drop in occupancy rates.
G City Club Hotel said the decision to cease operations was a direct result of low occupancy suffered in the past few years from increased competition from new hotels and the proliferation of homestays in the Kuala Lumpur City Centre (KLCC) vicinity.
“The hotel had been initially conceptualised and targeted at corporate travellers and the past few years has seen a sharp decrease in our corporate clientele especially from the oil and gas industry,” it said in a statement today.
It said prolonged roadworks and the Mass Rapid Transit works in the KLCC vicinity had also created accessibility problems in the Jalan Tun Razak area, resulting in much lower occupancy from leisure travellers.