By Kang Siew Li
THE hotel industry expects a slow recovery from the after-effects of the Severe
Acute Respiratory Syndrome (SARS) outbreak in the region.
A hotel operator said it would take at least six months to make up for the lost
revenue as visitors stay away because of SARS fears.
"This year is practically gone. We (the local hotel industry) lost two months (April
and May) of income to SARS and if this goes on for another month, we will run out
of budget, which makes the work to recover lost ground all the more difficult,"
Value Hospitality group general manager Dennis Tan told Business Times.
"Even if people start to travel this month, the volume will not be like it was before
because it will take another three to four months for the hotels to fully recover,"
Value Hospitality saw occupancy rates of the Malaysian hotels under its management
at just 35 per cent, down by more than one-third, in April and May. The company
manages seven hotels in Kota Kinabalu, Bintulu, Miri, Bongawan, Klang, Kuala Lumpur
and Kajang, and a golf course in Bongawan.
"The good news is that we saw a slight pick-up in occupancy since the lifting of
the World Health Organisation advisory on Singapore on May 31, indicating that business
people in Singapore are travelling again.
"This is important because Singaporeans account for some 45 per cent of total tourist
arrivals to Malaysia," said Tan, adding that occupancy rates of the seven hotels
it manages have climbed back to some 50 per cent.
Tan said tourist hotels in Malaysia would take longer to recover from SARS because
tourists would put off travel until the outbreak was completely eradicated.
"Several hotels in Kuala Lumpur, which are dependent on tour groups from SARS-affected
countries such as Taiwan and China, are still experiencing hard times," he noted.
Tan believes that tourist traffic from China will continue to slow over the next
three months as SARS is still a predominant issue there.
He warned that if bookings do not pick up by next month, many hotels may be forced
to retrench staff to balance their books, with a high possibility that some may
go out of business.
"Labour costs constitute 35 to 40 per cent of a hotel's total operating costs and
thus, staff are often the first target of budget cuts.
"In fact, this (retrenching workers) was what many hotels in Singapore did in March
and April," he said.
In Singapore, hotels are reporting about 15 to 20 per cent occupancy rates compared
with 60 to 70 per cent at this time last year.
Tan said Value Hospitality has given a contingency plan to managers of the hotels
"The contingency plan will be activated if the current situation does not improve
over the next three months," he said, acknowledging that this includes cutting staffs.
Meanwhile instead of just focusing on managing three and four-star hotels, Value
Hospitality is looking for opportunities to manage five-star hotels as well.
The company guarantees it can improve the profits of five-star hotels with a minimum
of 300 rooms by RM2.4 million per year, four-star hotels with 200 rooms by RM1 million
per year, and three-star hotels with 100 rooms by RM300,000 per year.
It is also looking to manage hotels for owners of a small group of hotels. Currently,
the seven hotels under its management belong to individual owners.