Tourism Comes to a Standstill with Losses Amounting to RM68 Million

Tourism industry crippled as government issues movement control order


The movement control order issued by the Government on 16th March 2020 is seen as a much needed move to control the spread of COVID-19 but it comes with a hefty price tag. The order only allows essential services to operate as usual for the period of 18th to 31st March 2020 and that does not include hotels. The hotel industry was not addressed specifically and is given only one day to be ready for the control.

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In the Tourism Recovery Action Council (TRAC) with the Ministry of Tourism, Arts and Culture (MOTAC) earlier this afternoon, the Malaysian Association of Hotels (MAH) sought for clarifications on hotel operations during this period, especially hotels with in-house and long-stay guests and as to what services are allowed for these guests.

According to MOTAC, pending approval from the Malaysian National Security Council, hotels are allowed to operate on limited services, that includes allowing in-house guests whom had checked-in (before 18th March 2020) to stay until its intended check-out date. In-house guests however, are advised to remain in the room throughout the movement control period. Other services in the hotel on the other hand, are not allowed to operate except for food & beverages but only for room service. No new check-ins are allowed from the 18th till the 31st of March for all, including local Malaysians.

In the TRAC meeting, Yap Lip Seng, Chief Executive Officer of MAH also presented the updated cancellation report of hotel room bookings as of 16th March, amounting to 170,085 room nights, valued at RM68 million. “The cancellation of bookings represents the current impact caused by the COVID-19 but we are more concerned with the loss of demand for the coming months. We foresee that the losses will double by end of the year,” Yap said.

*MAH R&D: Cancellations reported up to 16th March 2020 (for bookings since 22nd Jan till March 2020)

MAH also presented a series of proposals for the second economic stimulus, partly to assist tourism rebound but more focused on easing cash flow of industry stakeholders. Key proposals include reduction of employers’ contribution to EPF, increasing discount for electricity to 30%, extending the discount for water, waiver of quit rent and assessment for tourism properties and also a monthly payroll subsidy for employees earning RM2,000 and below.

“We are also repeating our call for the Minister to review the rate of Tourism Tax to RM1 from the existing rate of RM10, which is within the power of the Minister (of Finance) under the Tourism Tax Act 2017,” Yap added. The proposals are to address current burden faced by the industry, as well as to plan ahead mid and long term for tourism recovery.

Apart from requests presented to the Government, MAH is also pursuing negotiations with local service providers and suppliers to hotels, to extend a fair discount to hotels for this period. “We are in talks with key vendors such as Astro, for a reduction in fees and discount for the period up to December 2020. Hotels are currently paying them for empty rooms and services not utilised,” explained Yap.