SMALL and medium hotels are likely to see another round of layoffs by October, said hotelier groups, even though an estimated 20% of hospitality workers have already been retrenched.

Many such hotels, especially in city destinations, are still seeing zero revenue despite domestic tourism having been been allowed since June 10 under the recovery movement control order (RMCO).

Malaysian Budget Hotel Association (MyBHA) president Emmy Suraya Hussein told the Malaysian Insight about 20% of employees were laid off industry-wide as of March, and another round of cuts were expected next month or October.

“For now, the hotel industry is still receiving assistance from the government but the situation is expected to worsen after September. 

“In terms of closures, about 18% of hotels nationwide have already shut down,” said Emmy, whose association represents 2,350 hotels in Malaysia.

In Selangor, about 70% of the 800 business hotels remain closed, said MyBHA Selangor chairman Ng Hong Keat.

Many of them are struggling mainly due to the landlord’s refusal to reduce rent, he said. That, coupled with poor occupancy rates, has led to cash flow problems and the inability to to pay the bills.

With all that, it’s not surprising that there should be another round of retrenchments later in the year, when the loan moratorium expires, Ng said.

The deferment of loan payments does not even begin to cover for the loss of income from low occupancy rates, which sink to the single digits on weekdays and rise no further than the low double digits on weekends, he said.

“For example, only about 15 rooms are occupied on Fridays and Saturdays, while the weekday occupancy rates are very poor.

“About 40% of hotel businesses are facing cash flow issues, and small and medium hotels are not eligible for Tenaga Nasional’s 15% discount on electricity bills. Many have applied and been rejected. 

“I hope the Selangor government can emulate Johor and exempt us from paying assessment rates and licence renewal fees for the time being,” Ng added.

In Malacca, Hotel Visma owner Goh Hock Gin said urban hotels are not filling their rooms as the locals who are allowed to travel prefer resort destinations away from the city.

“The occupancy rate on Fridays is around 30%, and about 40% for Saturdays and Sundays. The rate will go up to 60% or 70% if it’s a long weekend,” said Goh, who is formerly MyBHA Malacca chairman.

Malacca’s 405 small and medium hotels had previously retrenched about 30% of workers during the MCO, he added.

Hotels here are especially missing Singaporean visitors, who make up their main market. Currently, Malaysia and Singapore allow cross border travel only for business and work.

“Singaporeans make up half of our business, followed by Chinese and Vietnamese tourists. Domestic tourists only make up 20%,” Goh said.

Johor hotels, which rely on 70% domestic visitors and 30% Singaporeans, are also operating at a loss, said MyBHA Johor chairman Jarod Chia.

His MyBHA chapter represents 256 small and medium hotels, 72 of which have closed since the MCO took effect on March 18.

“From March to June, the average occupancy rate was 4%. That’s two to four rooms occupied.

“Since June (when domestic travel was allowed), occupancy has improved but does not exceed 25%, with about eight to 15 rooms occupied on a monthly average.

“The situation is very unstable and the future is still very uncertain. The key factor here is that tourists are worried about travelling and will not bring their whole family to stay in a hotel. Those who do stay are travelling for work,” he said.

Chia estimates that 10% of hotel workers in Johor have been laid off since March and expect more to lose their jobs in or after October.

The retrenchment rate among small hotels in Johor is not as high as those of other states, he said, because the southern properties typically have only three or four frontline staff – one for administration, and two or three for housekeeping.

“When financial conditions are poor, you can downsize by having only one worker for room service, and one fewer service staff member with three remaining. Our members say they can still sustain such a workforce and there are no massive layoffs yet,” he said.

However, Chia added that small and medium hotels are facing competition from four- and five-star hotels.

“They are slashing prices and tourists are grabbing the opportunity to enjoy luxury for just a little more than what they would pay for budget accommodation. AirBnB is another challenge for us,” he said.

Recently, Bangi MP Ong Kian Ming highlighted the insufficiency of the government’s wage subsidy programme for the hotel sector, noting that among budget hotels on the MyBHA member list, only about 25% received the subsidy of RM1,200 a month for three months for companies with fewer than 76 workers.

In contrast, Singapore subsidises 75% of the employer’s wage bill, thus having better impact on saving jobs. – August 30, 2020.