Tourism boost for hotel operations

Higher international tourist arrivals to contribute towards improved hotel occupancy rates

PETALING JAYA: The sustained recovery in the business and leisure tourism markets in Malaysia, on the back of improving global economic conditions, augurs well for the local hotel and resort operators.

Industry observers told StarBiz in general, the number of international tourist arrivals in Malaysia was set to grow further, and local hotel and resort operators were well-positioned to benefit from this favourable trend.

Latest data from the Tourism Ministry showed that international tourist arrivals between January and September this year grew to 16.18 million from 15.38 million in the same period last year.

The number of international tourist arrivals for the whole of 2010 is expected to touch 24 million, up from 23.65 million in 2009.

The United Nations World Tourism Organisation recently said the increasing government support and rising promotional activities would continue to boost international tourist arrivals in Malaysia.

The international body, which listed Malaysia among the top 10 tourist destinations across the globe for 2009, projected international tourist arrivals in the country to grow at a compounded annual growth rate of around 8% between 2011 and 2013.

Providing further impetus to the Malaysian tourism market is the growing number of domestic travellers or interstate tourists.

"Such encouraging trend will contribute to improved hotel occupancy rates in the country going forward," an analyst said.

Statistics from the Malaysian Association of Hotels showed that the overall hotel occupancy rate for the nine months to September this year stood at 62%.

That's a slight improvement from the average 60% for the same period last year, but still below the average of 65% for the first nine months of 2008, before the effects of the global financial crisis were felt in Malaysia.

"With improved business and consumer sentiments following the recovery of the global economy, it won't be surprising to see local hotel and resort operators chart strengthening operating performance over the medium term," the analyst said, pointing to the encouraging results of Shangri-La Hotels (M) Bhd as an example.

Shangri-La is among the few hotel and resort operators listed on Bursa Malaysia.

Announcing its financial results on Tuesday, the company said its net profit for the third quarter ended Sept 30 grew to RM26.7mil on group revenue of RM111.95mil, compared with a net profit of RM15.89mil on group revenue of RM93.06mil in the previous corresponding period.

In its statement, Shangri-La attributed its stronger financial performance to extensive renovations to the guestrooms and facilities at both its Shangri-La Hotel Kuala Lumpur and Golden Sands Resort late last year and better operating performances of its Rasa Ria Resort in Sabah and Golden Sands Resort in Penang, as a result of good improvements in both occupancy and average room rates.

"On the whole, market conditions for the company as well as the industry have only gotten better; and that will be reflected in the results of the company and ultimately, its share price," an analyst said.

Shangri-La's share price has been rising steadily since the start of the year. From RM1.80 to its closing price at RM2.84 yesterday, the counter made a year-to-date gain of 58%. The average target price for the stock is RM3.