PETALING JAYA (March 19): Hotels are now focusing on mere survival as the industry faces a gloomy outlook for the rest of the year, with the Visit Malaysia 2020 (VMY2020) campaign now cancelled.
The Malaysian Association of Hotels (MAH) CEO Yap Lip Seng told EdgeProp.my that more government assistance will be needed as it foresees serious headwinds from the lingering effect of the COVID-19 outbreak, which has led to the cancellation of VMY2020.
MAH did not expect the campaign to be called off completely. “We were expecting to see marketing and promotion plans to be put on hold temporarily, and to keep VMY2020 theme in the background,” said Yap via email.
“Initially we were hopeful that the situation would improve by June, followed by a slow recovery from July. The hotels would still be able to take advantage of domestic travel to be fuelled by VMY2020 initiatives to boost performance in the second half of the year. We are not seeing improvements at the moment even as we move into the second quarter,” he noted.
“Hotels now need to focus on survival. Cash flow is the main challenge and the industry is looking forward to more assistance from the government,” he opined.
MAH has made a few new requests to the government, mainly focused on employees’ payments and cash flow.
“The industry needs government assistance to pay its employees as the livelihood of the people is affected. While it is unavoidable for many to put employees on unpaid leave and even effect pay cuts, we do not want people to lose their jobs,” Yap said.
Although the government will provide RM600 cash assistance under its economic stimulus package for workers forced to take unpaid leave during the COVID-19 outbreak, Yap hoped the government could introduce a general payroll subsidy to all heavily-impacted industries. “This would help employers sustain and recover when the situation improves,” he suggested.
The industry also hopes for a higher discount on electricity, a reduction on tourism tax and a lower general tax while banks could waive loan interests for this period, on top of the current moratorium on loan repayments.
While survival is the goal, Yap stressed that at the moment, hotels need to set their priorities right, which is to assist the government in containing the COVID-19. “We understand employers are already heavily burdened at the moment because of business losses, but the situation will worsen if the virus is not contained. We need to work together to fight COVID-19,” he urged.
Hotel occupancy is already on the decline before COVID-19 due to various factors, but the pandemic has brought tourism to a standstill. Based on MAH’s data, the average occupancy of hotels in 2019 was at 59.99% compared with 60.72% in 2018. “With the current situation, at best, we can only expect minimal occupancy for the rest of 2020, at nothing more than 50% averagely,” Yap said.
As more hotel rooms are expected to enter the market, especially at popular destinations, the industry will likely struggle with the increased inventory and competition from home-sharing platforms.