APPD Market Report Article

Kuala Lumpur

November 29, 2022

Mike Batchelor, CEO - Hotels & Hospitality Group, Asia Pacific


MYR 237


Continuous upward trend supported by corporate demand

  • According to the Malaysia Tourism Data, international visitation surged by 4113% y-o-y to 2,312,160 visitors as at YTD June 2022, after Malaysia fully reopened borders from April 1, allowing quarantine-free entry to vaccinated travellers. Singapore remained the top source market, comprising 59.5% of total international arrivals, followed by Indonesia (12.7%) and Thailand (5.6%).
  • Corporate demand and bookings for in-person events have increased significantly in Q2 2022, as event organizers snapped up event spaces in KLCC and surrounding hotels in the region, with minimal negotiation of prices, in order to secure their preferred venues.

New supply totalling 1,700 rooms enters the market

  • Four hotels offering around 1,350 rooms have opened so far in 2022. Key openings included the 535-key PARKROYAL Collection Kuala Lumpur and the 300-key Le Meridien Petaling Jaya.
  • Other notable openings to come in late-2022 and 2023 include the 544-room Conrad Kuala Lumpur and the 232-room Park Hyatt Kuala Lumpur. New hotel developments in 2022 and 2023 are spread out across the state with the majority being in KLCC, Bukit Bintang and Pudu.

RevPAR growth stunted by labour crunch in the short term

  • While revenue per available room (RevPAR) has grown by 326.1% y-o-y as at YTD September 2022, occupancy remained muted at 41.9%, 28.9 percentage points (ppts) lower than the same period in 2019. Operators have pointed to the labour shortage as the main cause preventing many hotels from operating at full capacity.
  • Mismatch of demand and supply has driven average daily rate (ADR) up by 13% y-o-y to MYR 566, following an upward trend of ADR since international borders fully reopened. However, RevPAR has recovered to only 57% of 2019 levels, indicating that full recovery will likely take time, and be contingent on the recovery of international corporate demand and improvement in the labour shortage situation.

Outlook: Progressive recovery expected to continue

  • After doubling its initial target in July 2022, Malaysia has once again revised its target upwards to 9.2 million on the back of a quicker-than-expected rebound in visitation. This should help ease supply-side pressures that is likely to surface in 2023, which could impact trading performance.
  • In the short term, the depreciation of the Malaysian ringgit against major currencies has increased travel affordability for international visitors, allowing Malaysia to better compete with other regional destinations which have also opened in recent months.

Note: Kuala Lumpur Hotels refers to Kuala Lumpur's luxury and upscale hotel market.

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