Sabah Hotels Struggling To Stay Afloat Amid Worsening Health Crisis

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Some 40% of members of the Malaysian Association of Hotels (MAH) Sabah and Labuan chapter are temporarily closed due to the lack of guests, according to its chairman Hafizan Wong. (Bernama pic)KOTA KINABALU: Like many in the hospitality industry, hotelier Foo Ngee Kee has been doing what he can to keep going amid the Covid-19 pandemic which has left the sector in tatters.
Foo had a thriving business after opening his three-star hotel here some 13 years ago, but is now finding it tougher by the day to keep his business afloat.
With very limited revenue coming due to the pandemic and ensuing lockdowns but still plenty of business expenses to settle, he has even contemplated calling it a day.
“Yes, that is always on my mind,” he told FMT, “But I have many things to consider including my staff because if I do close, there will be more than 30 people who will suffer more.”
Foo had some 70 employees to help manage his 150-room hotel before Covid-19 struck but had to gradually cut the numbers down after business was severely affected following the first movement control order (MCO 1.0) between March and May last year.
He has also reduced the number of available rooms to 90, just so he can cut his operating expenditure.
Each hotel has its own set of expenses according to its rating. He has to spend somewhere close to RM100,000 a month to maintain his establishment but can’t expect to cover the costs because of limited clientele due to the SOP restrictions.
“We have a lot of fixed costs. There are property costs – meaning rental, assessment payments and quit rent – and licence fees depending on your business, besides paying salaries to your staff.
“The staffing expenditure is heavy, despite the reduction in manpower, because we operate 24/7 for 365 days. This means the staff work on shifts. Hence, for every position you need at least three people to work over the 24 hours,” he said.
Foo said the payroll cost for his current workforce, after including Employees Provident Fund (EPF) contributions, was roughly about RM40,000.
“And then you have to pay for the property licence, depending on the number of rooms you operate and the location. So every month the total expenses would be in the high five figures.
“But what we make now is not enough. We’ve been bleeding since March last year. The general rule for hotels to break even is you should have about 60% room occupancy.
“That means, for a 100-room hotel, for instance, you need to have 60 rooms occupied on average every day. But how are we supposed to get those kinds of numbers now?” he asked.
Foo said many hotels have had to dig deeper into their ever-shrinking pockets to cover the costs.
“The government’s wage subsidy helps somewhat but the problem is that the payment is slow. Many hotels have not received the subsidy since January (this year) and some even from last year.
“The wage subsidy 3.0 has also yet to be paid out, so this is also causing further financial stress on hotel operators,” he said.
Food delivery
Promenade Hotel general manager Hafizan Wong said with hotels only able to receive guests who were either on SOP-permitted official business or medical purposes, they have had to resort to other methods to survive.
MAH Sabah and Labuan chapter chairman Hafizan Wong.“Most hotels, like ours, are doing food delivery, trying to make more food and beverage sales in order to get cash rolling.
“Basically, we still have to find a way to sustain ourselves. We are hoping tourism can reopen soon to help generate extra revenue for the hospitality industry,” he said.
Hafizan, who is the chairman of the Malaysian Association of Hotels (MAH) Sabah and Labuan chapter, said if the current situation dragged on any further, many hotels would be in danger of closing.
“We believe they can close down anytime because most of them are just trying to sustain, trying to pay running costs like Astro subscriptions and electricity (among others),” he said.
He added that the MAH Sabah and Labuan chapter had 99 member hotels, including 11 in Labuan, most of them rated between three and five stars.
According to Hafizan, since MCO 1.0, only one hotel, namely the Four Points by Sheraton Hotel in Sandakan, had closed down but that some 40% of its other members were temporarily closed due to the lack of guests.
James Ong, who runs the Seaside Travelers Inn, said at least RM500 was still needed on a daily basis to maintain his budget establishment in Kinarut near here.
“We still need skeleton staff to do administration and accounts, maintain the ground and even housekeeping, say once a week or at least once in two weeks even if rooms are empty.
“We also need security personnel, and utilities like electricity and telecommunication bills still need to be paid. Of course, we are bleeding.
“It’s hard to tell how long we can go on like this. It will be a success story if we can make it through 2021,” he told FMT.
Like Foo, Ong said business would pick up if the authorities allowed inter-district travel once again as out-of-town guests made the bulk of their business.
Foo added that the hospitality industry in Sabah was also suffering because high infections in the peninsula prevented people from visiting Sabah.
“People who come from the peninsula on business trips will look for hotels but now they can’t come over at all. So whatever happens to Sabah or Peninsular Malaysia, it will hit us here,” he said. - FMT

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