PETALING JAYA: Hotel operators could suffer millions of ringgit in lost revenue from the cancellation of Ramadan buffets, as the government continues to impose strict social restriction rules to combat the Covid-19 pandemic.
Malaysian Association of Hotels (MAH) chief executive officer Yap Lip Seng said the Ramadan month, which helps generate good business for hoteliers, will be a write-off this year.
“The buka puasa market is significant for many hotels certified halal and with large capacity for food and beverage (F&B).
“During the Ramadan month every year, these hotels can earn over RM1mil in revenue and they can literally write-off this amount entirely in their budget for 2020.
“F&B can take up between 28% and 37% of hotel revenues and for those serving an extensive Ramadan buffet, the percentage inches up during the Raya month, ” he told StarBiz.
However, Yap added that F&B revenues were also high in cost, with the food cost alone generally taking up between 30% and 45% of revenue, with profits usually recorded with volume.
“The situation now, considering that it is almost impossible to operate any Ramadan buffet, would not only cost hotels losses in revenue directly, but will also translate into losses down the line, in particular jobs for F&B service staff, suppliers and vendors of F&B supplies.”
To tackle the Covid-19 pandemic, the government imposed the movement control order (MCO) on March 18, which has been extended until May 12.
It is still unclear if the MCO will be extended beyond that.
However, according to reports, the government may introduce a “soft landing” approach when removing the MCO.
Health director-general Datuk Dr Noor Hisham Abdullah was quoted as saying that this would mean social distancing rules and bans on large gatherings were likely to continue for the rest of the year.
“We may take some time, maybe three or six months. Our policies in terms of public gathering must change. Social distancing must remain, and we will continue reminding people to wash hands and stay at home, ” he said at a press conference early this week.
The MCO has had an adverse impact on the local hospitality sector, with MAH projecting that Malaysia’s hotel average occupancy rate may plummet to below 30% this year.
For now, Yap said the local hotel sector is projected to lose RM3.3bil in revenue by June 2020.
As of March 20, the local hotel industry had laid off 4% of its employees, with more taking unpaid leave and a pay cut as the sector buckles from the impact of the Covid-19 pandemic.
Out of a sample size of 56,299 hotel industry employees, 2,041 people have been laid off, 9,773 (17%) have been asked to take unpaid leave, and 5,054 (9%) have received pay cuts.
By state, Kuala Lumpur – with a sample size of 17,826 employees – has been the worst-hit, with 542 workers (3%) being laid off, 3,641 (20%) being asked to go on unpaid leave and 2,880 (16%) receiving pay cuts.
Source : https://www.thestar.com.my/business/business-news/2020/04/24/ramadan-revenue-woes