Visitors to Malaysia from neighboring China, Indonesia and Singapore are drying up due to travel fears imposed by COVID-19. Some hotels are operating as quarantine facilities.
REPORT FROM MALAYSIA—Malaysian hoteliers have been living under the coronavirus shadow since January, when tourists from several Chinese, then South Korean, provinces were progressively banned entry, and the country itself has been in lockdown since 18 March.
As a result, hotel occupancy fell to 11% in the last two weeks of March, according to the Malaysian Association of Hotels.
“Hotels are allowed to operate partially under the shutdown,” thanks to the government deeming them essential services, said Kamaruddin Baharin, deputy group director of operations at Kuala Lumpur-based Boustead Hotels & Resorts Group.
He added hotels can cater only to existing guests, not new ones.
“All other facilities and services of the hotel must remain closed. Hotels are also allowed to keep a bare minimum staff on the premises during the period for critical needs, such as security and engineering,” Baharin added.
Yap Lip Seng, CEO of the Malaysian Association of Hotels, said hotels likely would come to a near standstill.
The change was swift, with hotels given only one day to be ready for closure, he said, adding he now fears many will not reopen.
Coming on the heels of cascading cancellations from China and other markets, he said lost bookings for the three months up until 20 March already represented 193,000 fewer room nights and nearly 76 million Malaysian ringgit ($17.4 million) in lost revenue.
Most hotels had lost more than 50% of their business even before the movement control order came into effect, Seng said, and “now we are more concerned with the loss of demand for the coming months, and expect the losses will double by the end of the year.”
The hotel association is now predicting a loss of 560 million ringgit ($128.3 million) by the end of 2020 and that occupancy will climb slowly—16% in April, 19% in May and 25% for June.
That will “probably continue that way at least for another six months,” Lip Seng said, adding that Singaporeans, Indonesians and Chinese made up 64% of total arrivals in 2019.
At the property level
Vivienne Angella Chu, GM of the Accor’s 684-room Ibis Kuala Lumpur City Center, has been quarantined in her hotel for more than a month, along with several long-stay guests.
“Our hotel is still open, but we have suffered a lot, with just 10% occupancies right now,” Chu said.
“We are only allowed to serve guests who already checked in before 18 March, and F&B can only be served in-room,” she added.
Hotels are allowed to check in healthcare workers and other essential service staff such as transport workers.
“We can take them on provided that they get an official letter from the ministry of health,” Chu said.
Not just KL
A trickle of guests, as well as the government’s 4 April announcement that some higher-end hotels will be used as quarantine facilities, will grow Malaysia’s hotel occupancy.
Anyone entering Malaysia must undertake a mandatory 14-day quarantine.
Sixty-three hotels to be used for quarantine include the Hilton Kuala Lumpur, Four Points by Sheraton and Grand Millennium Kuala Lumpur. Hotels in Sabah also have been used for quarantine purposes.
Capital Kuala Lumpur is the epicenter of cancellations, but Sabah, on the island of Borneo, is the next worst hit region, also underpinned largely by Chinese tourists.
Between January and March, Sabah’s hoteliers reported nearly 34,000 cancellations and revenue losses of 11.79 million ringgit ($2.7 million).
Christopher Chan, honorary adviser to the Sabah Hotel Association, said hotels in Semporna, a gateway city to the province’s eastern coast islands, immediately dropped to 10% occupancy following Sabah’s action to halt flights from China at the end of January.
The government has indicated it will diversify tourism post-COVID-19, which some tourism players demanded to end over-dependency on the Chinese market.
In 2019, China accounted for more than 40% of international arrivals to Sabah.
Sabah’s total visitors reached more than 4 million in 2019, with international arrivals increasing 7.9%.
Before COVID-19 struck, new hotels in development included two Hyatt properties, a Hyatt Centric and a luxury Hyatt Alila eco-resort.
“Tourism is basically at a halt now in Sabah. Both inbound and outbound flights are operating at a bare minimum. Most of our hotels are closed,” said Felix Joikon, deputy president of the Sabah Hotel Association and GM of the Megah d’Aru Hotel.
“Some island resorts have closed operations totally and laid off all workers,” he added.
“The lockdown has certainly slowed hotels here down. Prior to it, with Chinese and Korean tourists gone from the market, it was already super quiet. With the lockdown, we decided to close operations for the initial 14 days, which then became a month,” said Josephine Lu, owner of the Eminent Hotel in Kota Kinabalu, also on Sabah.
Lu said while several luxury resorts, such as the famed Sutera Harbour Resort, closed their doors, “other major city hotels are still open.”
The Malaysian Association of Hotels is lobbying for better wage subsidies for employees, stating that the recent government bailout falls short of expectations, providing only 600 ringgit ($137.53) a month for three months, for staff earning 4,000 ringgit ($916.88) or less a month.
Malaysian hoteliers are pushing for almost double that figure for a six-month period.