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POISED FOR GROWTH

The Malaysian hospitality industry is growing on the back of increasing tourism and MICE activities

by S.Sulocana

Malaysia’s Hospitality Industry is flourishing thanks to the ‘Malaysia Truly Asia’ campaigns carried out around the globe by Tourism Malaysia. The industry is experiencing additions in the form of hotels and hospitality-related services to cater for an increasing number of business travelers, as well as the tourism and Meeting-Incentives- Conventions- Exhibitions (MICE) industry segments.

Tourism Malaysia is also actively promoting the MICE segment to mark Malaysia as the preferred destination to hold such events. Malaysia’s unique selling proposition is its strategic location as the hub of the Asia Pacific region, its sophisticated facilities and the lower cost compared with the rest of the region.

The hospitality industry appears to be flourishing in Kuala Lumpur, Johor Baru, Penang, Kota Kinabalu and Langkawi. A total of 24.6 million tourists entered Malaysia in 2010, marking an increase of 4.2% year-on-year compared with 23.6 million in 2009.

The tourism industry in Malaysia continues to show resilience despite the global economic crisis. The total receipts in 2010 increased to RM56.50 billion compared with RM53.37 billion in 2009. Total receipts have been experiencing a steady 10-year compounded annual growth rate of 13%.

Tourism Malaysia figures show there were 2,367 hotels and 168,497 rooms in the country as at the end of 2010. As at March 2011 there were 215 four- star and five-star hotels in Malaysia, of which 60 hotels offering 23,129 rooms are located in the Klang Valley area.

The average hotel occupancy rate in 2010 was fairly stable, standing at 60% in 2010. The average room rate for three, four and five-star and budget hotels hovered around RM160, RM224, RM365 and RM100 respectively.

Several big names entered the hospitality industry last year. DoubleTree by Hilton made its mark by opening a 540-room hotel in the Kuala Lumpur city centre and Banjaran Hotsprings resort by local hotel operator Sunway City Berhad opened 25 luxury villas.

Notable brands that will be coming on stream are The Regent, Hyatt and St Regis. The Regent will be entering the market in 2011 with a 250-room hotel complemented by 102 luxury residential apartments in Kuala Lumpur city centre.

Hyatt Hotels & Resorts, which currently operates two hotels in Malaysia, will be growing its brand to have bigger representation in popular tourist cities in Malaysia namely Penang, Malacca, Langkawi and Johor Bahru. Hyatt currently manages the 330-room Hyatt Regency Kuantan in Pahang and the 288-room Hyatt Regency Kinabalu in Sabah. The hotel chain owners are also anticipating the opening of Grand Hyatt hotel located in the Golden Triangle in 2013. The hotel will offer 412 rooms, bringing the total inventory of Hyatt to 1,030 rooms.

St. Regis by Starwood Hotels and Resort Group will be entering the industry in 2014, setting a new benchmark in terms of room rates. Located in KL Sentral, the primary transportation hub in Kuala Lumpur, hotel rates are expected to hover around RM1,000. The development will include a 208-room hotel and 160 units of apartments.

The need for branded budget hotels in Malaysia has also increased over the years, due to cheap travel offered by low cost carriers (LCC), Air Asia and FireFly. The rapid expansion of local and international routes has also contributed to the growth of budget travelers and even business travellers looking for economical fares.

The LCCs have become a transit mode to other destinations. Air Asia has expanded its routes to 78 destinations around the world, including the recent additions of Seoul, Paris and Christchurch. Firefly, on the other hand, flies to 18 destinations and will be expanding its routes in the coming years. Currently, Tune Hotels and Grand Paradise Hotels are the only two branded budget hotel chains in Malaysia. The chains operate nine and two hotels respectively in various states in Malaysia.

Malaysia’s hospitality industry has a long term growth potential, judging by its resilience despite the global economic turmoil and global pandemic outbreaks. An important point to note is that the hospitality industry is investor-friendly, with no restrictions on foreigners owning any type of hospitality asset. At present, 58% of four and five-star hotels in Kuala Lumpur are owned by foreign entities.

Source from Property Quotient - A Malaysia Property Incorporated Publication (June 2011 issue 13)