THE tourism industry is seeing a slow pick-up, with hotels in the Klang Valley recording only a 20% occupancy rate, said industry players.

The average national hotel occupancy rate stands at 25%, largely because foreign tourists are still unable to travel due to border closures brought about by the Covid-19 pandemic, they told The Malaysian Insight.

While some budget hotels in major cities are looking to shut down, local visitors are filling up hotels in Kelantan and Terengganu.

Malaysian Association of Hotels (MAH) CEO Yap Lip Seng said bookings initially saw a spike for weekend getaways at local resort destinations under the recovery movement-control order (RMCO), which allows interstate travel.

But based on recent MAH data, he said, the hotel occupancy rate is only 25%.

“Most states and major cities are experiencing low occupancy due to their dependence on foreign arrivals. Kuala Lumpur, Selangor, Kedah, Johor and Sabah, in particular, are averaging between 12% and 20% only.”

Last month, however, Terengganu and Kelantan, which attract local tourists, recorded high average occupancy at 70% to 75%. Penang saw 43% occupancy, and Sabah and Sarawak, 26%.

“Even though the government has allowed interstate travel and domestic tourism under the RMCO, the industry is seeing a slow pick-up in bookings after initially anticipating demand to be driven by corporate and business travellers, followed by couples,” said Yap.

MAH observed high occupancy at resort destinations accessible by car, adding this is likely because travellers are avoiding flights.

The association is working with airlines to offer promotions to locals and make the most out of the personal income tax relief announced by the government.

“At the same time, as a tribute to the Covid-19 frontliners of Malaysia, MAH and its members are extending special deals and packages for our national heroes to plan holidays with their families,” said Yap.

MAH is also exploring other collaborations, including with Astro, and is working out a special incentive programme with Tourism Malaysia to boost domestic travel, he said.

Dire situation

Malaysian Budget Hotel Association president Emmy Suraya Hussein echoed MAH’s data and observations.

While the occupancy rate is high in some states, it is usually only on the weekends, she said.

She said hotels in cities are still seeing close to zero occupancy under the RMCO.

“Many hotel franchises in cities are limiting their operations, while some budget hotels have ceased operations.

“About 18% of our budget hotels have ceased operations – some temporarily, some permanently – because they want to minimise their operating cost.”

Even with business conferences and exhibitions, she said, city hotels remain quiet, with occupancy as low as 20%.

She hopes the National Economic Recovery Plan (Penjana), announced by Putrajaya in June to aid businesses affected by Covid-19, will help budget hotels recover.

Under Penjana, RM2 billion is allocated to the banking sector to offer financing facilities to small and medium enterprises.

The financing facilities are at a concession rate of 3.5% per annum, and the maximum loan/financing amount goes up to RM500,000 per SME.

Emmy said the hotel and tourism industry will recover once people are confident that coronavirus cases remain low.

“It will recover, but it will take time because we are still seeing Covid-19 cases increase and decrease, and people are scared that there might be a third wave.” – August 12, 2020.