Covid-19: More hotels up for sale

KUALA LUMPUR (July 31): Covid-19  and the numerous movement control restrictions imposed since March last year have no doubt badly impacted the hospitality industry and forced many owners to put up their hotels for sale.

Some of the recent casualties of the pandemic are Hotel Istana, Kuala Lumpur, which will cease to operate from Sept 1, while Mutiara Johor Bahru stopped operating on June 1 and Hotel Equatorial, Penang shuttered for good on end-March.

Zerin Properties CEO Previndran Singhe told The Edge Malaysia that listings of hotels for sale have increased by 40%, “with both foreign and local investors eyeing the properties”.

“Generally, the enquiries are spread from budget to five-star hotels, [and include] city and resort locations too,” Previndran said, adding that the focus is more on the three- to five-star-category hotels.

He, however also revealed that despite the interest shown, few deals have been done. The reasons?

“First, there is a slight price expectations mismatch, though we see this gap being met in recent months.

“Second, not all hotels that are for sale are truly investment grade and desirable to the investors. And, third, deals are being stalled because of the difficulty in mobilising teams to inspect the asset and conduct their due diligence.”

Meanwhile, Savills Malaysia deputy managing director Nabeel Hussain told the weekly that there is a “wide mismatch between buyer and seller expectations”.

“The hotel industry is the hardest hit of all the major property sectors as a result of Covid-19, but owners are hopeful that there will be a recovery in the next year or two.

“Selling a hotel on the basis of currently achieved room or occupancy rates is something to be avoided unless absolutely impossible, especially if it’s a temporary dip,” Nabeel said.

“The mismatch is typically an issue of economics and, unless desperate, it is not very easy to overcome,” he added.

“Speaking from previous experience, the interest, when present, tends to focus on the four-star and above categories, with a few three-star deals by the likes of Royal Group, for example,” Nabeel said.

Read the full report in this week’s The Edge Malaysia

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