The easing of travel restrictions has brought much-needed relief to the hospitality industry.

Hotels – from five-star accommodation to budget outfits – have reported increases in occupancy, some rising to as high as 80% from 20% to 30% previously.

Malaysian Association of Hotels president Christina Toh attributed the significant growth in occupancy to higher demand, especially from Asean countries.

Since travel restrictions were lifted on April 1, more than 2.3 million international arrivals have been recorded, primarily from India, the Philippines, Singapore, Thailand and Saudi Arabia.

Big promotional packages and significantly reduced rates, coupled with the resumption of various events such as the Penang Festival this month, have been cited as factors that are helping to pack hotel rooms.

The big winners, according to real estate consultant Knight Frank Malaysia, are the higher-end hotels, thanks largely also to major promotional efforts.

Malaysian Association of Hotel Owners executive director Shaharuddin M Saaid told FMT Business that Melaka has benefited most from the freedom to travel, with hotel occupancy rates rising as high as 61.35%.

In Johor, the occupancy rate has reached an average of 45.72%, while in Kuala Lumpur, it has climbed to 44%. “Overall, the occupancy rate is now hovering at 35% to 40% (across the country),” he said.

Hotels in Penang have already reported bookings of up to 80% for its Penang Festival that begins on Saturday.

The annual festival is back after a two-year hiatus because of the Covid-19 pandemic.

However, the prognosis for budget hotels is mixed.

Knight Frank executive director for capital markets James Buckley told FMT Business  the budget hotels in Kuala Lumpur were already seeing occupancy rates of 50% during the weekdays, with one hotel even reporting an average of 70% occupancy in June.

Buckley said these hotels had benefited from their location and quality offerings.

“We have spoken to several hotel owners who reported a strong rebound in occupancy and accounting rate of return,” he said.

“Since international borders were opened, one hotel in Melaka has doubled its monthly revenue, driven by a strong rebound in domestic travel and influx of visitors from Singapore.”

However, Malaysia Budget and Business Hotel Association national president Sri Ganesh Michiel said the response had been less than encouraging, given that a large number of tourists now preferred short-term rentals, such as Airbnb.

Buckley agreed that this could be true for families travelling together, but pointed out that most people travel alone or just with a partner, and they usually prefer the convenience, location and better amenities provided at hotels.

“Still, the challenge that most hotels face now is not competition from Airbnb but a lack of manpower to deal with the increased demand,” he said.