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Monday, April 13, 2009

Luxury brands set to raise Malaysia's profile

Kuala Lumpur is on the shopping list of luxury brands in the likes of Four Seasons, St Regis and now Raffles - a welcome move for Malaysia to rid itself of the cheap destination tag.

The presence of these regal brands will help raise Malaysia's profile, improve service standards and room rates.

With the exception of possibly Langkawi, Malaysia is touted to have one of the world's lowest hotel room rates.

As market leaders, these prestigious hotels position themselves at a certain level which enables other hotels to follow suit and lift the bar for hotel rates.

"They help push room rates higher, which will be difficult to do without them ... and they help improve yield," Malaysian Association of Hotels (MAH) president Datuk Mohd Ilyas Zainol Abidin told Business Times.

Four Seasons Resort Langkawi's presence on the island, Mohd Ilyas said, helped to set a standard and boost the average room rate (ARR) of hotels there.

IIyas reckons that rates could be hiked by at least a quarter compared with current rates by five-star hotels of around US$120 (RM434) per night.

This provides the opportunity for other hotels to up their rates by between 10 per cent and 15 per cent.

Based on the hotel data from MIHR Consulting Sdn Bhd, Kuala Lumpur's rate leader is Mandarin Oriental, with an ARR of over RM600. Almost all other five-star hotels are below RM500 per night.

It has been a tough journey for Malaysian hoteliers since the 1997 crisis, as it took them seven years to start raising rates to current levels.

Hotels here are adopting a slightly different approach this global crisis, they do not plan to cut rates. Once rates fall, it is hard to raise them.

Instead, rates are maintained by value adding. Perks like breakfast, free Internet service, drop-offs and pick-ups are thrown in.

Mohd Ilyas added that big brands in Malaysia will bring in a new kind of business into the market.

"It positions Malaysia differently," he said.

Service will be at par with the premium they charge and the people employed are of a different caliber, he said.

Developer of Four Seasons Place in Kuala Lumpur Tan Sri Syed Yusof Syed Nasir is looking to net a 30 per cent higher ARR than the city-wide ARR when it opens in 2012.

"Four Seasons is a rate leader, the rate could be about RM800 per night," said Syed Yusof, who is chairman of Venus Assets Sdn Bhd, the hotel developer.

Meanwhile, the 200-room St. Regis Kuala Lumpur, a Starwood Hotels & Resorts brand, is expected to open at KL Sentral in 2014.

The owner, One IFC Sdn Bhd, were quoted as saying that it believes Kuala Lumpur is ready for the luxury brand.

As for Raffles Hotels & Resorts, sources say that its opening could be as early as 2011. And what other high-end hotel brands will Malaysia like to welcome?

Mohd Ilyas would love to see brands like Amanresorts, Banyan Tree and Bvlgari Hotels and Resorts as they cater to niche markets.

By Business Times (by Vasantha Ganesan)

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