AFTER struggling to get back on its feet post-Covid, the hotel industry is now facing an onslaught from online travel agencies.

The agencies are offering travel, hotel and ticketing arrangements, which have had an impact on their business, hoteliers said.

Business, small and medium-sized as well as low-cost hotels have little choice but to engage with online players, or risk having fewer bookings at their establishments.

Malaysian Budget & Business Hotel Association (MyBHA) president Sri Ganesh Michiel said while the occupancy rate did increase to 80% over the past two weekends due to school holidays and the long Malaysia Day holiday, hoteliers are not making money.

“Yes, you see the hotels are almost full, tourists are staying in the hotels, especially on weekends, we all see that the hotel business is very good, but, let me be clear, hoteliers are not making money.”

Fierce competition among online travel agency (OTA) platforms have led to this, he said, adding that almost all of them are offering special discounts, such as flash and mobile deals. 

For instance, a RM200 room rate finally sold for RM60 after discounts.

“Hoteliers also need to pay commissions ranging from 17% to 20% to online platforms, so hoteliers really have no money to make,” he told The Malaysian Insight.

He said if a hotel does not participate in the promotions, the platform will remove the hotel from its system, paving the way for other competitors to replace them.

Sri Ganesh said that after the epidemic, many tourists tended to book hotel rooms on online platforms. This was not the case pre-Covid. 

On top of such platforms, hoteliers are facing other challenges such as higher costs, and suppliers have raised prices due to rising raw material costs.

This is evident in the case of bath supplies and cleaning companies.

 “The hotel doesn’t have enough workers to clean the rooms.”

MyBHA Johor chapter chairman Jarod Chia said in the past two weeks, hotel room sales have been really good, with an occupancy rate of almost 80%. 

He agreed that “seeing people doesn’t translate to money,” as hotels are forced to lower rates.

He said the most common OTAs in Malaysia are Agoda, Booking.com, Traveloka and Ctrip International Travel (Malaysia).

“Frankly speaking, OTAs have helped hotels boost their popularity and occupancy rates. At the same time, hoteliers are also making money.

Chia said Airbnb also had eaten into their market share.

“The hotel industry took a big hit as the pandemic raged in 2020. Until now, vicious competition among more platforms has resulted in cheaper room rates. If hoteliers do not participate, they lose competitiveness.”

He said the platforms would advise hoteliers to give at least a 25% discount, so that it would be attractive and tourists would choose. 

“In other words, if the hotel does not participate in the preferential rate programme, the hotel will have far less exposure on the platform. As a result, tourists will see those hotels that participate in the preferential programme first.” 

Association members have since been advised to steer clear of such platforms.

Chia said OTAs are foreign companies and do not pay certain taxes in Malaysia after receiving commissions from local hotels.

“Star-rated hotels have complete equipment and their own market monitoring systems. Therefore, even if there are promotions for five-star and four-star hotel prices, they will not be too low, but will remain at a certain level.

“On the other hand, small and medium-sized hotels have no choice but to compete.”

He said the hotel industry had made recommendations to the Tourism, Arts and Culture Ministry and the Malaysian Competition Commission, with hopes they could help ensure fair competition.

“Our hotels have to meet council specifications and fire brigade safety standards. We’ve put in a lot of money, but our business is slowly being eroded by unlicensed lodgings.” – September 26, 2022.