The Malaysian Insight

THE hotel industry has lost RM9 billion due to the on-and-off Covid lockdowns in the past two years, industry experts said.

The interstate travel ban, in force since January, has worsened their predicament.

Many hotels have had to impose pay cuts while others have had to lay off workers.

As more hotels close down for good, the surviving hoteliers fear the number will only grow in the coming months.

Malaysian Association of Hotels (MAH) CEO Yap Lip Seng said a survey of 320 hotels found that as of June 14, 120 hotels in Malaysia have shut down and others have suspended business.

MAH has 1,000 members.

Yap said based on feedback from hoteliers, it is estimated that 15-20% of employees have been laid off.

He urged the government to consider alternative long-term exit plans, adding that the ban on interstate travel has hampered the industry’s recovery.

“The biggest problem lies in the ban on interstate travel which has been in place since January 22,” he told The Malaysian Insight.

The MAH survey showed the occupancy rate in January stood at a mere 17%. It improved slightly to 27% in February only to drop to 18% in March and April, and 15% in May and June.

The average occupancy rate for 2021 is 23%, is an all-time low.

“We suffered losses of RM5 billion in the first half of the year. In June, of the 320 hotels which took the survey, two have closed down for good while 91 have closed temporarily. About 71% are open as quarantine centres for Covid-19 patients,” Yap said.

Losses for the industry came up to RM6.5 billion in 2020. In total, losses to date amount to around RM9 billion, he added.

The survey also found that 28% of hotels have reduced their manpower by half, while 51% are slowly doing the same. Yap said it is a worrying pattern that will eventually lead to loss of talent in the industry.

“To further bring down operating costs and increase productivity and efficiency, hotels have limited the number of tasks for each employee. Many employees have also been forced to take unpaid leave.”

Yap said he expected the bleak situation persist in 2022 with a projected average occupancy rate of 35%.

Budget hotels

Malaysia Budget Hotel Association (MyBha) deputy president, Sri Ganesh Michiel, said a poll conducted by the association in June found that 53% of its members have closed temporarily due to low occupancy rate.

Sri Ganesh said a small to-medium sized hotel would usually employ around seven employees. Since 53% have suspended operations, it has left around 8,100 employees in 2,158 budget hotels nationwide jobless.

“Small and medium sized hotels with 40 rooms charge an average of RM90 a night. By our estimate, budget hotels have lost more than RM84 million in the first half of this year,” he added.

MyBha Johor chapter chairman Jarod Chia said while the government has relaxed restrictions for fully vaccinated individuals, the vaccination rate in the southenmost state is still low.

To date, less than 50% of the adult population in the state have been fully vaccinated.

He said unlike the Klang Valley, Johor is dependent on foreign investment and tourists from Singapore.

Chia said given that Singapore has vaccinated a large number of its population, the state and federal government should speed up the vaccination rate in order to form a tourism bubble with its neighbour across the causeway.

Singapore has vaccinated about 80% of its population and will be allowing quarantine-free entry to vaccinated visitors from Germany and Brunei soon.

“We have asked the Johor Tourism Board to speed up the vaccination exercise among those in the hospitality and tourism industry.

“Although Johor intends to launch a private vaccination plan, we urge that our sector be given priority in the national immunisation rollout as the RM350 cost of private vaccination is quite high,” Chia said.

According to data from the Health Ministry, as of August 31, only 1.29 million adults, or 47.8% of the residents, in Johor have been vaccinated. 

Vaccination key

Chia said vaccination is key to reviving the state’s economy.

Given the less than wholly successful vaccine rollout, he said it is unlikely Singapore will allow its citizens to travel to Johor.

He added that while business for hoyels picked up in other states following the implementation of the recovery movement control order last year, that was not the case in Johor.

Data from the Tourism, Arts and Culture Ministry show Johor was not among the popular domestic tourist destinations last year.

The honour went to Selangor,, followed by Perak, Kuala Lumpur, Sabah, and Kedah.

Chia said one way to change this is to have the frontline workers in the tourism and hospitality sector vaccinated as soon as possible. He also advocated for a travel bubble. – September 4, 2021.