APPD Market Report Article
Kuala LumpurAugust 26, 2022
Mike Batchelor, CEO - Hotels & Hospitality Group, Asia
Demand set to pick up following reopening of borders
- International visitation surged by 288% y-o-y to 98,053 visitors as at YTD March 2022, driven by all top source markets which saw substantial y-o-y growth, albeit from a significantly low base in 2021. Singapore was the top source market comprising 29.7% of total arrivals, followed by Thailand and Indonesia with 23.5% and 7.1% market share respectively.
- Despite a dismal 2021, there is growing optimism for a strong rebound in Malaysia’s tourism industry. The recovery in international visitation is anticipated to further accelerate for the rest of 2022, particularly after the reopening of international borders from April 2022.
Three new major openings in 2Q22
- While hotel openings have remained muted over the last two years on account of construction delays and uncertainties in demand due to COVID-19, improvement is expected in 2022 as travel confidence gradually picks up. There were three notable hotel openings in 2Q22, namely the 271-room Ascott Star KLCC, the 535-room PARKROYAL Collection Kuala Lumpur and the 300-room Le Meridien Petaling Jaya.
- A total of 1,931 keys are expected to enter the market in the second half of 2022, with the luxury segment accounting for just over half of the incoming room supply. Key upcoming openings include the 252-room Amari Kuala Lumpur, the 210-room Pan Pacific Serviced Suites and the 544-room Conrad Kuala Lumpur.
RevPAR expected to see continued strong growth 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 at YTD June 2022 however, RevPAR increased by 197.7% y-o-y to MYR 190, continuing an upward recovery trend. Growth was primarily driven by occupancy rates, which almost tripled to 35.3%.
- On a month-on-month basis, RevPAR has been trending upwards since October 2021 when the interstate travel bans were lifted. It has further increased since May 2022 after international borders were fully reopened. Monthly RevPAR reached a pandemic high of MYR 305 in June 2022, the highest since January 2020.
Outlook: Earlier reopening is expected to drive quicker recovery
- Malaysia recently revised and doubled its full year target to four million international visitors for 2022, after achieving its initial target in just over two months when borders fully reopened in April 2022. The reopening of neighbouring borders and wider reopening in the Asia Pacific region is expected to drive a quicker rebound in international visitation.
- Recovery for the rest of 2022 is expected to be driven by domestic travellers and visitors from neighbouring countries. 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.