Travel Industry, News and Analytics

New Travel Restrictions Make It Impossible for Hotels in Malaysia to Survive

New countrywide restrictions were implemented in Malaysia starting from 13 January 2021, crippling the local tourism industry. Although hotels can continue their work, the new rules liquidate virtually all revenue sources for them, making it even harder to survive.

Hotels in Kuala Lumpur and other Malaysian cities reopened in June 2020 after a lockdown but the increase in the number of new Covid-19 cases at the beginning of October caused a significant decline in occupancy. In large cities, the occupancy fell to 20% while less popular destinations suffered from even a larger decline. When domestic tourism resumed again in early December, Malaysians were eager to travel, and so the average hotel occupancy peaked at 43% during the holiday season.

However, the government recorded another surge in the number of Covid-19 cases and decided to limit domestic tourism again. To prevent the spread of the diseases, the government plans to keep hotel occupancy below 20%. There is no information on how long the lockdown will be this time. After a poor performance in 2020, hotels in Malaysia started 2021 with losses, and it is getting harder for them to survive. The Malaysian government, in its turn, doesn’t offer any sufficient steps on helping the industry. The 10% discount on electricity from January to March 2021 is the only initiative available at the moment.

There is a wage subsidy program in Malaysia, which is aimed to help the most affected industries during the tough pandemic period. Unfortunately, hotels and the tourism industry in general are not eligible for the improved program. The Malaysian Association of Hotels proposed the government establish a 50% wage subsidy for hotel employees earning up to RM4,000 and a 30% wage subsidy for employees earning up to RM8,000. This would help to save jobs and prevent people from losing their jobs. Regrettably, this proposal was neglected.

As of January 2020, the hotel occupancy in Malaysia fell to 20%. The new rules and massive booking cancellations leave no hope for the Chinese New Year period that is historically one of the busiest times for hotels across Asia. As a result of the new limitations, the Malaysian hotel industry will lose approximately RM600 million in revenues every month.

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