04 May 2022
Source: CBRE Asia Pacific Report
Historical Hotel Rooms and Number of Hotel Rooms Supply in KL 2010 to F2024
According to STR AM:PM, which tracks major hotel supply, 65 new hotels (about 14,000 keys) opened between 2011 and 2021, growing at a compounded annual growth rate (CAGR) of 3.8 per cent per year.
As of 2021, Kuala Lumpur hotel room supply included 23 per cent economy, 19 per cent midscale, 15 per cent upper midscale, 22 per cent upscale, 12 per cent upper-upscale, and eight per cent luxury.
According to the report, luxury and upper-upscale will account for more than 60 per cent of total new supply over the next three years.
There is a high level of brand penetration. Sixty per cent of the hotels are independently owned and operated, while fourty per cent are affiliated with a chain. Over the last ten years, the total number of chain-affiliated rooms has increased at a CAGR of 4.5 per cent.
Meanwhile, according to the report, five of the top ten operators in Kuala Lumpur are global hotel groups, accounting for about 26 per cent of the current hotel stock tracked by STR AM:PM. Accor and IHG have the most active pipelines, with 2,710 rooms across nine hotels and 2,158 rooms across seven hotels, respectively. These two brands together account for 36 per cent of the total pipeline.
Hotel deals to continue this year?
According to a CBRE Asia Pacific report, 11 hotel transactions totalling about RM2.3 billion (some US$549 million) were completed between 2017 and 2019, with interest from both international and domestic investors.
Kuala Lumpur had one of its best years in 2017, reflecting positive sentiment in the hotel market as tourism recovered from a weaker performance in 2015 and 2016. The 921-key Renaissance Kuala Lumpur (RM765 million) and 503-key Hilton Kuala Lumpur are among the major transactions (RM497 million).
“Similar to many markets worldwide, Covid-19 had caused challenges to the tourism industry. Consequently, Kuala Lumpur experienced a slowdown in transactions and investment volume in 2020,” according to CBRE Asia Pacific.
According to the report, the number of deals in 2020 increased, but total investment volume remained one-fifth of 2017 levels due to uncertainty about the pace of recovery. Smaller hotels and serviced apartments, such as the 158-key City Comfort Hotel, were sold in 2020, primarily to domestic investors. Foreign investment was limited as a result of pandemic-related obstacles such as border closures.
According to the firm, the lower investment volumes since 2020 are most likely the result of a pricing mismatch between sellers’ and buyers’ expectations.
“However, the recent completion of the 418-key Royale Chulan Bukit Bintang indicates that the gap is starting to narrow, and sellers and buyers may be adopting a more realistic view of the prices given the current market conditions,” it said.
The sale of the property was concluded at RM177 million in early 2021, a 10 per cent decline from the original indicated sale price of RM197 million in 2019.
“Price dislocation opportunities are limited on the back of positive sentiment of reopening borders. CBRE Hotels advises clients to focus on centrally located hotels with proven strong operating cash flows,” the firm said.
Source: New Straits Times, May 04 2022