Knight Frank expects recovery in local hotel market to continue in 2023

• Its report also revealed that hotel occupancy in Kuala Lumpur has been rising since the start of 2022, reaching 60% in August 2022.

KUALA LUMPUR (Dec 15): The recovery in the Malaysian hotel market is set to continue in 2023, with demand outlook being strong, Knight Frank Malaysia stated today.

Its report also revealed that hotel occupancy in Kuala Lumpur has been rising since the start of 2022, reaching 60% in August 2022.

Kuala Lumpur has been successful in pushing up the average daily rate (ADR) which was only 6% down from August 2019, although less successful at improving its revenue per available room (RevPar) which was down 28%.

“We are forecasting that Kuala Lumpur hotel occupancy will reach about 75% by late 2023, with RevPar recovering in 2024,” said Knight Frank.

Meanwhile, on the supply side, the city’s existing hotel stock of 47,500 is forecast to grow by 9% over the next three years and about 60% of this new supply will be in the luxury and upper upscale segments which are now “underrepresented”. “We feel these new luxury offerings will make Kuala Lumpur a more attractive holiday destination, boosting occupancy and growth in hotel revenues.”

Knight Frank also reported that since the beginning of 2022, international passenger traffic volume to KLIA has been “rebounding with average month-on-month growth of 27%, boosted by the complete removal of border restrictions, improving flight connectivity, and easing of regional travel restrictions”.  

In September 2022, KLIA received 1.64 million international travelers, or about 53% of September 2019 of 3.51 million.

“Of course, when China does eventually lift its travel restrictions, this will provide an added boost. Halal tourism provides huge growth potential for the Malaysian hotel market with international Muslim travelers growing by 7.5% CAGR between 2013 and 2019.”

Malaysia is the top-ranked destination in the Mastercard-Crescent Rating Global Muslim Travel Index 2022 and Kuala Lumpur, Penang, and Langkawi “are particularly well-positioned to capture this market”, Knight Frank explained.

The property consultancy was also positive on Malaysia being put on the global food scene with “the Michelin Guide covering two wonderful culinary hubs, Kuala Lumpur and Penang”. Thirty two restaurants obtained the Bib Gourmand and four restaurants received a Michelin star.

“Malaysian cuisine is one of many traditional attractions for tourists together with its lively cultural scene, museums, majestic tropical rain forests, and some of the best islands and beaches in the region.”