Penang Hospitality Market Growth
The tourism industry is one of the major catalysts of economic growth. Over the years, the state has tremendously drawn a high number of visitors both nationally and globally, particularly after the inscription of George Town as the Unesco World Heritage Site on the 7th July 2008.
Above:George Town as the Unesco World Heritage Site on the 7th July 2008.
The international and domestic arrivals of tourists at Penang International Airport saw an increase of 10.1% in 2014 compared with 2013 with international arrivals registered at 2.571 million in 2014 and 2.425 million in 2013 while domestic arrivals in Penang also increased to 3.465 million in 2014 from 3.061 million in 2013.
Malaysia is currently ranked among the world’s top health tourism destinations thanks to its affordable, high quality medical treatment, with over 60% of health tourists making Penang their preferred destination. The rise of health tourists in the recent years has contributed strong revenue for Penang’s health tourism sector. For health tourism alone, Penang generated RM370 million and RM320 million in revenue in 2013 and in 2012, respectively. Malaysia is targeting to reach RM9.6 billion in revenue from medical tourism by 2020.
Malaysia’s international business tourism visitors have increased by estimated 140% since 2003. Malaysia Convention and Exhibition Bureau (MyCEB) is targeting a growth of tourist arrivals.
In line with MyCEB’s goal, Penang will have two Meetings, Incentives, Conventions & Exhibition (MICE) once the Subterranean Penang International Convention and Exhibition Centre (SPICE) completes in 2015 and the Penang Waterfront Convention Centre (PWCC) in 2017.
Both will drive up demand for hotel rooms in Penang as the number of visitors is expected to increase. As at to date, there is a shortage of hotel rooms.
Above:Owing to the high flow of domestic and international tourists to Penang Island, it needs to have ample supply of hotels to cope with the increasing tourism growth.
There are only 14,000 rooms as of last year. Owing to the high flow of domestic and international tourists to Penang Island, it needs to have ample supply of hotels to cope with the increasing tourism growth.
There are eight (8) hotel developments located on Penang Island that are either under construction or yet to be officially opened for operation. Upon completion, these hotel developments will contribute 1,598 rooms of different types, rates, sizes and designs with different themes.
Generally, hotels on Penang Island recorded an average occupancy rates between 55% and 65% over the last 5 years. In term of occupancy rate by type, City hotels is found to achieve the most outstanding performance with an average occupancy rate of about 70% over the last 5 years. One of the main reasons that contributed to the success of City hotels is due to the inscription of George Town City as the Unesco’s prestigious World Cultural Heritage Site on 7th July 2008.
For Beach hotels, it recorded an average occupancy rate of 63% over the last 5 years. Demand for Beach hotels increase continuously from 2009 to September 2013, recording at 58%, 59%, 63%, 65% and 68% respectively.