Hotels to see further drop in occupancy, delayed recovery due to CMCO

Hotels to see further drop in occupancy, delayed recovery due to CMCO
EARLIER hopes that the hotel and domestic tourism sectors could recover by next year are now dashed due to the third wave of the Covid-19 pandemic, and recovery is now only likely at the end of 2021, said the Malaysian Association of Hotels (MAH).

MAH CEO Yap Lip Seng told The Malaysian Insight occupancy rates had begun to pick up when the government introduced the recovery movement-control order (RMCO) in June, peaking at 42% during the Merdeka holiday weekend at the end of August.

After Merdeka, overall occupancy then dropped to 39%, and in the first three days of October, dipped further to 35%-36% due to the spike in Covid-19 cases.

“With the increase in cases since October 1, we saw immediate reactions from the market with popular destinations receiving cancellations for both room reservations as well as events.

“We earlier anticipated the beginning of tourism recovery in the middle of 2021, but looking at the situation now, it will likely be end 2021,” Yap told The Malaysian Insight.

He said a further drop in occupancy of between 10% and 15% is expected over the next few weeks, more so with the conditional MCO in place for Selangor, Kuala Lumpur and Putrajaya.

“This would cost the hotel industry between RM60 million and RM100 million, if the situation does not improve any time soon,” Yap added.

Malaysia’s daily run of triple digits for new Covid-19 cases began on October 1, with 260 infections. Since then, the highest daily number recorded was 691 cases on October 6. The numbers in this past week have been hovering between 560 and 660 new cases daily.

Cumulatively, the country has more than 18,750 Covid-19 cases, of which nearly 6,300 were active as of yesterday.

Yap said if the situation does not improve, the hotel industry will be forced back to the early days of the pandemic with more restrictions on movements and operations, and further delay the sector’s recovery.

Malaysia Budget Hotel Association (MyBHA) president Emmy Suraya said a slow-down in bookings was already noticeable in late September.

“Since late September, we noticed that bookings for October, November and December began to slow down. We assumed then that this was because the moratorium on repaying bank loans had ended.

“But since the spike in Covid-19 cases from early October, we have received cancellations for group and individual bookings from all over Malaysia,” Emmy said.

With the CMCO currently in place in Sabah, Selangor, Kuala Lumpur and Putrajaya, she expects the occupancy rate for budget hotels to drop to single digits.

“Budget hotel owners and operators were already feeling the pinch before this and we now foresee more will close their business and eventually retrench staff,” she added.

Yesterday, the Malaysia Association Tour Agency (MATA) said government funds for the tourism sector under the Penjana economic recovery plan was not reaching tourism enterprises due to strict conditions imposed by banks.

The RM1 billion financing scheme is to be disbursed through 12 local financial institutions, but strict conditions have only seen less than 1% of the scheme approved.

Malaysian Tourism Council president Uzaidi Udanis, meanwhile, said hotels should be more creative in their promotions.

“They should make the prices more flexible, which will help local tourists and boost their confidence. This should be practised until the end of 2021.”

He also urged industry players to collaborate with online activity platform Kofkino, where travel and tourism content can be broadcasted for users to experience virtually, instead of physical travel.

Uzaidi said this platform could boost virtual tourism in Malaysia and more industry players should participate as a way to increase their revenue.

“More tourism players should take part because due to the pandemic, most places only have two options, to shut down their business, or to to find an alternative way to sustain their business.”

Uzaidi also suggested the Tourism, Arts and Culture Ministry adjust regulations for operators, such as doing away with the need to have an office as a condition for licence renewal.

“Tourism companies have to fork out RM5,000 monthly in order to pay rent for an office, when we can actually work from home.

“We also want the ministry to consider allowing operators to share space with other tourism offices under the same roof so at least it will ease the burden for rental,” Uzaidi added. – TMI October 17, 2020.