KLCCP Stapled Group flags cost pressures on retail, hotel segments amid Middle East tensions

KUALA LUMPUR (April 29): KLCCP Stapled Group (KL:KLCC), controlled by Petroliam Nasional Bhd, said rising cost pressures may weigh on its retail and hotel segments this year amid heightened economic uncertainty from prolonged Middle East tensions.

However, the impact is expected to ‘remain manageable’ as the group — comprising KLCC Property Holdings Bhd and KLCC Real Estate Investment Trust — continues to prioritise cost discipline and operational efficiency, chief executive officer Datuk Mohd Salem Kailany (pictured) told reporters after its annual general meeting on Tuesday.

“The outlook is that the market is expected to be challenging. I think what we need to do is put our heads down and look at all the details… If you look at our performance, what you will see is that while revenue growth is in the single digits, we are able to extract more profit.

“There is discipline in managing our costs; these are driven through sustainability initiatives and cost optimisation. So all these are positive. I suppose what we intend to do is continue on this journey whilst at the same time trying to generate more revenue,” said Mohd Salem.

KLCCP Stapled’s retail segment is anchored by Suria KLCC and the Menara 3 PETRONAS retail podium, which cater to luxury and tourist-driven spending. Its hotel segment is led by Mandarin Oriental Kuala Lumpur, focusing on high-end leisure and business travellers. The group also owns PETRONAS Twin Towers, Menara Exxonmobil and Menara 3 PETRONAS.

On Suria KLCC, Mohd Salem said moving annual turnover has stabilised at about RM2.7 billion, compared with a peak of slightly above RM3 billion previously. He noted that tenant occupancy costs remain below 20% of revenue on average — a level the group considers manageable — supporting lease renewals and rental revisions.

“So, we feel that, in terms of renewals and related matters, it will still be doable. I don’t want to make what you would call empty promises, but suffice to say that, so far, we have been able to achieve single-digit rental growth,” he added.

On its hotel segment, Mohd Salem said Mandarin Oriental Kuala Lumpur is optimising revenue across its rooms, serviced apartments, meetings, incentives, conferences and exhibitions (MICE), and lifestyle offerings, supported by its newly renovated Grand Ballroom. The hotel will also continue to drive direct bookings while capturing demand from key growth markets, particularly across Asia.

Last year, KLCCP posted a record performance, with net profit rising 25.95% to RM1.28 billion for the financial year ended Dec 31, 2025 (FY2025), from RM1.02 billion a year earlier, while revenue edged up 1.69% to RM1.74 billion from RM1.71 billion.

The group also declared a record dividend payout of 47 sen per stapled security.

Mohd Salem said the group remains selective in evaluating potential acquisitions amid the challenging environment, with its focus firmly on domestic opportunities.

“At the moment, there is no plan for us to go overseas yet,” he said.

In 2023, KLCCP had outlined plans to acquire mature, yield-accretive assets as part of a broader strategy to expand its portfolio globally, at a time when Malaysia’s economic outlook was clouded by moderating consumer spending and tax-related headwinds.

Units in KLCCP slipped six sen or 0.66% to RM9.08 at the time of writing on Tuesday. At this price, KLCCP was valued at RM16.4 billion.

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