Monday, December 26, 2011

Tough year ahead for Sabah hotels

KOTA KINABALU: Room occupancy rate expected to drop below 60 per cent next year.

The hotel industry in Kota Kinabalu is performing well this year as three-star hotels and above are experiencing an occupancy rate of 64 per cent as of November, an increase of four per cent compared to the same period last year.

However, Malaysian Association of Hotels (MAH) Sabah and Labuan president Alex Cham predicted that the occupancy rate might drop below 60 per cent next year as Malaysia Airlines (MAS) recently announced the suspension of four routes on the regional network starting early 2012.

The suspended routes include the twice-weekly Kota Kinabalu-Osaka (starting January 6), the thrice-weekly Kota Kinabalu-Perth (January 31), the four-weekly Kota Kinabalu-Haneda (February 1) and the four-weekly Kota Kinabalu-Seoul return B737 route (February 21).

In terms of average room rate, there was a slight drop from RM256 last year to RM250 this year, which Cham attributed to the more competitive environment with more new hotels coming up.

Room rates aside, the tourism industry is actually picking up with more tourist arrivals this year with the announcement to make Kota Kinabalu International Airport (KKIA) the Eastern hub and the addition of more direct flights from Kota Kinabalu to Korea, Japan and Perth in Australia.

Cham told The Borneo Post in an interview the hotel industry was starting to enjoy a rebound from the financial crisis in 2008 and lower occupancy rate in 2009, but the suspension of direct flights would hit tourism arrivals to Sabah.

In addition, Cham said Japanese or Korean tourists preferred direct flights, instead of stopovers and connecting from Kuala Lumpur and finally to Kota Kinabalu, which was time consuming.

When the earthquake and tsunami hit Japan in March, Sabah actually saw an increase in Japanese tourists arrival, he said, due to the availability of direct flights.

Cham continued to say that there used to be a direct flight from Japan several years ago, and when the flight was taken off the route, the industry immediately noticed a drop in tourist arrival from Japan.

Furthermore, Cham said Royal Brunei had cancelled its flight from Kota Kinabalu to Perth when MAS launched the route, and now he was not sure if Royal Brunei would resume the route again.

“The decision by MAS (suspending four routes in the regional network) is not a good thing for tourism.

“Sabah tourism is a major income source after the oil palm plantations,” he said.

He pointed out that MAS should find a solution to cut their losses instead of suspending direct flights as it would impact on the tourism industry here, and probably reducing national income.

MAH Sabah and Labuan Chapter has 47 members, the majority of them three-star and above.

“If MAS cut down on direct flights, the occupancy rate could decline below 60 per cent next year.

“Because as more hotels come up, the cake is not large enough to share,” Cham stressed.

Meanwhile, Sabah Hotel Association (SHA) president Christopher Chan said larger hotels (three-star and above) had achieved an overall 70 to 80 per cent occupancy rate this year while budget hotels (two-star and below) reported a drop of around 10 per cent in their occupancy rate.

Continue reading at: Tough year ahead for Sabah hotels

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