APPD Market Report Article
Kuala LumpurMay 31, 2022
Demand set to pick up in 2022 after a subdued 2021
- International visitation reached a historic low in 2021, totalling just 134,728 which is a mere 0.5% of 2019 levels due to continued border closures. This was partially offset by a sustained pick-up in domestic demand since October 2021 when Malaysia officially lifted its interstate domestic travel ban. High vaccination rates also encouraged domestic travel despite the recent Omicron wave.
- Despite a dismal 2021, there is growing optimism for a strong rebound in Malaysia’s tourism industry. This follows the recent reopening of international borders, since April 1st, 2022. Malaysia’s recent decision to remove COVID-19 testing for all inbound, fully vaccinated travelers is likely to provide a further boost to recovery in visitation.
No new major opening in 1Q22
- Hotel openings have remained largely muted over the last two years due to delays in ongoing developments and postponement of planned openings amid uncertain demand due to the COVID-19 pandemic. This remained the case in 1Q22, with no new major openings in the city.
- A total of 2,240 keys are expected to enter the market for the rest of 2022, with the significant increase attributed to the backlog of openings from the last two years. Key upcoming openings include the 535-room PARKROYAL COLLECTION Kuala Lumpur, 210-room Pan Pacific Serviced Suites and 271-room Ascott Star KLCC Kuala Lumpur.
RevPAR expected to see a strong rebound from 2021 lows
- Revenue per available room (RevPAR) reached a record low of MYR 89 in 2021, which was just 21% of 2019 levels. As of YTD March 2022, however, RevPAR increased by 103.5% y-o-y to MYR 132, albeit the significant growth was also from a low base in 2021. Growth was driven by occupancy rates, which almost doubled from same time last year.
- On a month-on-month basis, RevPAR has been trending upwards since October 2021 when the interstate travel bans were lifted. With the reopening of borders and further easing of COVID-19 restrictions, we anticipate the rebound in international visitation to further drive the recovery in trading performance.
Outlook: Regional countries and domestic guests to drive recovery
- Malaysia is anticipating two million international visitors and up to MYR 8.6 billion in tourism revenue in 2022 following the reopening of borders. The 1.6 billion MYR allocated for tourism initiatives under Budget 2022 is expected to help key tourism stakeholders cope with the expected rebound in visitation.
- Initial recovery in 2022 will likely be driven by domestic guests and visitors from neighbouring countries, such as Singapore and Indonesia. The recent depreciation of the ringgit against major currencies has also improved travel affordability for international visitors, allowing Malaysia to better compete with other regional destinations, which have also reopened in recent months.