Consultants: Still room for limited service hotels or branded budget hotels

Posted on | April 18, 2011



By THE STAR

PETALING JAYA: Although the supply of hotel rooms in Kuala Lumpur is quite adequate, property consultants say some segments of the market are still underserved.

As of 2010, the total supply of 3- to 5- star hotel rooms in Kuala Lumpur stood at 23,972, of which 5-star rooms accounted for 50%.

Zerin Properties chief executive officer Previndran Singhe said the entry of international brands of the likes of Fairmont, W, Four Seasons, Conrad, Bulgari and MGM would augur well for the market.

“There is also room for limited service hotels or branded budget hotels such as Tune Hotels and Holiday Inn Express; ethnic hotels like India’s Taj and Oberoi; eco-tourism products at all luxury levels; and limited serviced apartments in the likes of Citadines,” Previndran told StarBiz.

The supply of true blue serviced residences was also limited, he said, adding that many of them were actually live-in apartments.

CB Richard Ellis (Malaysia) vice-president research, Nabeel Hussain, said there were very few internationally-branded three-star hotel chains within Kuala Lumpur, and some of the larger serviced apartment operators, such as Oakwood, were absent from the market as well. A number of new hotel projects are under development and the most anticipated include the new Grand Hyatt, scheduled to be completed next year, and the St Regis in KL Sentral, scheduled for completion in 2014.

Also in the pipeline are properties managed by All Seasons and Hilton’s Garden Inn, two internationally-known budget hotel brands.

Nabeel said a number of the large international groups, such as Accor, Hilton and Starwood, have a significant presence in Kuala Lumpur and appear to be looking to increase their hotel portfolio.

On hotel room rates, Previndran said rates in the luxury sector were still underperforming and were expected to increase.

“As globalisation sets in further, borders will be blurred and we will see parity setting in with our neighbours,” he pointed out.

Nabeel said generally, any increase in hotel room rates needed to start with the top-end properties and anticipated that properties such as the Grand Hyatt would set a new benchmark for the top end of the market.

“At the moment, Kuala Lumpur has some of the lowest room rates for five-star properties in the region,” he added.

In its latest quarterly report on Kuala Lumpur’s hospitality market, CB Richard Ellis Research said drivers for increased business and tourism spending might come from an improving economy (2011 GDP growth is projected to be 6%-6.5%) and a number of new initiatives being considered by the government.

It said the opening of the Pullman Kuala Lumpur Bangsar (Accor’s largest hotel in Southeast Asia with 515 rooms) later this year and the Grand Hyatt in 2012 might lift rates at the upper-end of the market, which could then have a knock-on effect in the 3- and 4-star hotel categories and also the service apartment segment, which competes for many of the same customers.

The luxury segment of the hospitality market, comprising mostly 5-star hotels, recovered in 2010 as full-year average occupancy for 5-star hotels reached 68%, up from 2009’s 58%.

CB Richard Ellis said although average room rates were lower in 2010 than in 2009, the net effect was positive, as revenue per average room (RevPAR) for this segment was RM224 in 2010 compared with RM196 in 2009, an increase of 14%.

In fact, RevPAR for all three segments of the market – 3-star, 4-star and 5-star – improved in 2010.

Knight Frank Research said supported by concerted government efforts to attract more foreign tourists through innovative tourism packages and products, the hospitality sector was expected to continue to grow steadily into the first half of 2011.

It added that under Budget 2011, an allocation of RM85mil has been made for the provision of infrastructure facilities to facilitate construction of hotels and resorts in remote areas.

Another RM50mil allocation is to build covered walkways in the KLCC-Bukit Bintang area.

Under the Economic Transformation Programme (ETP), 12 Entry Point Projects (EPPs) have been identified to stimulate tourism growth, which include positioning Malaysia as a duty-free shopping destination for tourist goods, designating Kuala Lumpur city centre-Bukit Bintang area as a vibrant shopping precinct, establishing Malaysia as a leading business tourism destination and improving room rates, mix and quality of hotels in the country.

Other measures identified include the removal of import duties for products popular with tourists and developing pedestrian walkways and public transportation between shopping malls and hotels in the designated area.

- Malaysia Property News


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