Covid-19: Malaysia’s hotels draw up new strategies in view of RM3.3b in losses forcing thousands out of job, says association

The hospitality industry is expecting no more than 30 per cent average occupancy rate this year.  — Picture by KE Ooi
The hospitality industry is expecting no more than 30 per cent average occupancy rate this year. — Picture by KE Ooi

KUALA LUMPUR, April 17 ― Hoteliers are back to the drawing board to reinvent themselves in light of the Covid-19 pandemic.

Malaysian Associations of Hotels (MAH) Yap Lip Seng, in projecting that the sector may see no more than 30 per cent average occupancy this year, said this would cause many hotel operators to drop off a cliff with total losses amounting to billions.

He said subsequently, lodging operators must find ways to reinvent themselves to stay afloat during these trying times.

“Hotels are at the moment back to the drawing board with a focus on building confidence, which is essential for guests to feel safe when travelling and staying in hotels,” he said.

“Standard operating procedures (SOP) and policies are currently being revamped to be ready for the recovery apart from marketing and promotion plans.”

He also expressed doubt if the move by some hotels to have “buka puasa” delivery during Ramadan would be effective.

Yap said that although such initiatives could generate some income, he doubted that the move would have any significant financial improvements for the hoteliers.

“Dining SOP is one major part of hotels’ focus to ensure it is safe for guests to dine and enjoy the hotel’s environment and ambience in the near future,” he said.

Pinch felt before MCO

Yap said that a report by the asociation showed that hoteliers were already facing problems before the movement control order (MCO) as the number of cases began rising outside of China, sparking a global travel fears and restrictions.

Following the enforcement of MCO on March 18, the sector saw a drastic dip in occupancy and revenue rates, with a recovery not expected at least until the third quarter. 

Hotel room cancellation and losses due to travel fears and restrictions from January to March 20. ― Malay Mail graphic
Hotel room cancellation and losses due to travel fears and restrictions from January to March 20. ― Malay Mail graphic

“We are looking at up to 30 per cent of hotels being forced to either close down permanently or temporarily (as long as six months to a year) until the condition improves,” he added.

Earlier this month, the Tower Regency Hotel and Apartments in Ipoh announced that it will permanently shut its doors on April 30 due to financial problems that the company has been facing for the past three years, which have been aggravated by the enforcement of MCO.

Referring to the association's report, Yap said as of March 20, of a sample size of 56,299 employees in the hotel sector, 2,041 (four per cent) people were laid off, 9,773 (17 per cent) were asked to take unpaid leave and 5,054 (nine per cent) received pay cuts.

The economic implications of the Covid-19 pandemic has forced over 2,000 hotel workers out of their jobs as of March 20. ― Malay Mail graphic
The economic implications of the Covid-19 pandemic has forced over 2,000 hotel workers out of their jobs as of March 20. ― Malay Mail graphic

He also expected more hotel workers to be out of job by now after the enforcement of MCO.

According to the report, room cancellations alone due to Covid-19 fears from January to March 20 amounted to over RM75 million of revenue losses with the cancellation of over 193,000 room nights.

However, the drastic decline started when the first phase of MCO came into effect in a bid to curb the spread of the infectious disease, which at that time had infected 673 people and killed two locally.

When compared to last year, the report highlighted that the occupancy expected for the same period of March 18-31 this year translates into a loss of over RM500 million in revenue.

With MCO’s second extension until April 28, the industry is projected to suffer further losses of over RM1.5 billion if the movement restrictions are lifted as per scheduled.

In such a case, the report projected the industry to gain a slight momentum in occupancy rate in May and June at an estimated loss of RM1.2 billion.

Overall, the hoteliers are estimated to lose a whopping RM3.3 billion in room revenue alone from January until June.

Malaysian Association of Hotels has estimated a total loss of about RM3.3 billion in room revenue from Jan to June due to Covid-19 pandemic. ― Malay Mail graphic
Malaysian Association of Hotels has estimated a total loss of about RM3.3 billion in room revenue from Jan to June due to Covid-19 pandemic. ― Malay Mail graphic

Yap also revealed that the association has prepared and sent a tourism stimulus proposal to the Finance Ministry as well as Tourism, Arts and Culture Ministry asking for more relief in addition to the earlier benefits announced by the Prime Minister Tan Sri Muhyiddin Yassin.

The new proposal seeks the government's help to ease hotels’ burden on utilities, temporary reduction of employer’s contribution to Employees Provident Fund, subsidy for employees’ payroll, loan interest waiver and loan servicing among others.

The proposal also called on the government to regulate illegal hotels and home-sharing platforms such as Airbnb that have adverse effects on the hotel operators. 

The proposal highlighted that there were at least 53,000 home-sharing listings in Malaysia that had operated over the years without being taxed.

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