A dozen luxury hotels will enter the market before 2021
Kuala Lumpur’s hotel market has had a tough 2015 with a drop in occupancy levels and a declining arrivals rate, but it is bracing itself for further turbulence in 2016 as a slew of new luxury supply is expected to enter the market in the next six years, reveals a new joint study from C9 Hotelworks and Horwath HTL.
After performing solidly in 2014 with occupancy rates sat at over 70 percent, the Malaysian capital’s hotel segment spluttered as the fallout of the two Malaysian Airlines tragedies and the global slump in oil prices caught up with it.
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Arrivals declined by 9.4 percent, year-on-year, in the first semester of 2015, while arrivals from China declined a full 12 percent in the year to June 2015, although the Mainland still remained as the third biggest source market.
The average daily rate (ADR) has been relatively stagnant over the past couple of years, just growing around the rate of inflation, which the report attributes to the relatively aged facilities in Kuala Lumpur’s market limiting the price growth potential and the lack of new luxury brands attracting top tier visitors.
This latter issue is about to be tackled head-on as an unprecedented 12 new luxury hotels are scheduled to enter the market between now and 2021.
Source: Horwath HTL
Inevitably, this slew of new supply is expected to trigger a further short term decline in occupancy levels.
Average room rates, however, should start to rebound and grow at a healthy pace as the new supply is believed to position their room rates aligned to their product and brand standards – they won’t be artificially discounting rates just to fit in with the rest of the market.
More: Why the Kuala Lumpur market is on the cusp
This should bring up room rates all over the city as luxury hotels in Kuala Lumpur generally set the barometer for the market as a whole; the middle and lower tier hotels will then position their own room rates with a certain gap behind them.
Other efforts are being made to increase the attractiveness of the city and hotel market for both leisure and business travellers.
The Kuala Lumpur International Airport will be greatly expanded into a economic hub for logistics and aerospace development, as well as leisure and recreational facilities over the next 15 to 25 years.
The city’s infrastructure is also being improved in line with Malaysia’s Economic Transformation Programme and Kuala Lumpur Master Plan, including a high speed rail link built between the capital and Singapore, which will reduce travel time between the cities to just 90 minutes.
Image is by WarzauWynn and used under a Creative Commons licence
Source : property-report.com
Read more…Will KL’s new luxury supply revive the city’s spluttering hotel segment?
