Diversity key for hotels to brace for Covid-19

The tourism industry is in a slowdown due to Covid-19 and it is budget hotels which are the most vulnerable.

With many countries on lockdown and banning foreigners from entering the country in a bid to curb the spread of the coronavirus, budget hotels suffer as they only have one main source of income – rooms.

Swiss-Garden Hotel general manager Danny Koh admitted larger hotels will not be spared but believes their diverse revenue streams are a blessing.

This ‘extra’ earning power may be able to help them weather the financial implications of Covid-19.

“All of us in the tourism industry have been impacted. There is no running away from that,” said Koh.

“I recently spoke to someone who works for a company which specialises in budget hotels and was told the group and rivals were suffering. There have been too many cancellations and some of these hotels’ occupancy rate has fallen to below 10 per cent.

“Some of them could close in the next few months if the situation doesn’t improve,” he warned.

Prime Minister Tan Sri Muhyiddin Yassin, had in his special address last Friday, said the country’s tourism sector was hit hard with an expected loss of RM3.37 billion within the first two months of the year as Malaysia’s gross domestic product (GDP) growth for 2020 is expected to shrink as much as 0.8 to 1.2 points, with a total potential loss of up to RM17.3 billion.

Koh said larger hotels have suffered a drop in business. Image: Amar Qastellani/Twentytwo13

“We did quite well in the first two months of the year but have experienced a drop of about 30-40 per cent this month. We have had to close off some floors and let some of our contract staff go as a cost-cutting measure.

“Our target is to try to break even in the next three months as business is likely to pick up in July or August – if Covid-19 cases taper off.”

He said many events have been rescheduled to the second half of the year, adding it is a matter of holding on.

Koh, however, warned the economic situation would get worse before improving and points to the SARS outbreak in 2003 as an example. The economy then only bounced back a year after it was brought under control.

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He said the 2020 Economic Stimulus Package, unveiled by former Prime Minister Tun Dr Mahathir Mohamad last month, was a big help to the tourism industry but stressed more needs to be done.

“The government has been quite supportive as a large percentage of our business is hosting meetings, conferences and events,” he said.

The Malaysian Trades Union Congress had recently called on the government to quickly come up with a bigger allocation to help workers get financial assistance, stressing the RM20 billion allocation in the package unveiled on Feb 27 was “inadequate”.

Koh revealed the hotel is launching a promotion to entice local tourists.

“Locals prefer to stay in bigger hotels and don’t mind paying a bit more as long as the whole family is comfortable,” he said.

“We are also working with companies such as Fave to offer discounts for our rooms and also our Ramadan buffet.”