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Hotels losing out to home-sharing

KUALA LUMPUR: DESPITE an increase in tourist arrivals last year, hotels around the country saw a drop in occupancy due to stiff competition from home-sharing accommodations.

The local hotel industry recorded a drop of 4.71 per cent (60.8 per cent) in occupancy last year, compared with 65.51 per cent in 2018, according to a study by the Malaysia Association of Hotels (MAH).

This figure was recorded on the heels of encouraging tourist figures, with a 3.7 per cent increase (20.1 million) in the first nine months of last year compared with 19.4 million during the same period in 2018.

“The result raised more doubts and concerns than praises because the industry is not enjoying the perceived growth in business,” said MAH executive officer Yap Lip Seng.

Yap said the home-sharing model that was taking a substantial share of the tourist accommodation market had distorted the value of tourist accommodation in Malaysia.

“There is a trend of tourists demanding home layout accommodation, and even if hotels provide options for such layouts, we are still at a competitive disadvantage due to pricing abuse by homes,” he said in an email interview.

While hopeful about the guidelines for regulations proposed through the Malaysian Productivity Corporation (MPC), Yap raised concerns on the implementation and enforcement.

“The guidelines are workable at this point where many of the proposed policies are based on proven initiatives in cities all over the world.

“However, we are concerned as it would require much enforcement efforts and the authorities need to be committed,” he said.

The association has been the main contributor to the proposed Short Term Residential Accommodation through MPC and has been championing the call for a level playing field.

“We have no intention to ban the home-sharing model, but all we demand is fair regulations and it is for the protection of locals and tourists alike,” Yap added.

First and foremost, Yap said, the industry and public need to differentiate between homestay and home-sharing.

“They are entirely different models and often mistaken.”

The homestay programme, as promoted by the Tourism, Arts and Culture Ministry and Tourism Malaysia, is for experiential stay, a community-based tourism product that allows rural areas to get involved in tourism.

“Not only are tourists offered a place to stay, but also an experience with the community and exposure to their daily activities and lives,” he said.

The home-sharing model, on the other hand, are homes turned into tourist accommodations, taking advantage of online platforms to market and sell on a daily basis.

“These are essentially residential homes operating commercial activities and they do not contribute taxes. They are driven by the need to settle home loans in comparison to hotels that need to ensure return to investors, cover operating costs, commit to legal compliances and, more importantly, generate income for employees.

“Hence the homes are able to offer prices that are much lower than the hotels,” Yap said.

A result from an internal survey done by Airbnb, an online marketplace that offers home-sharing accommodation, echoed Yap’s results.

According to Airbnb’s Compact Survey conducted in January last year, half of all its hosts said hosting had helped them afford their homes, and 40 per cent said Airbnb provided supplementary income that they relied on to make ends meet.

But one Airbnb host had a different motivation when he decided to put up his late father’s traditional Malay kampung house on the booking platform in May last year.

“I want to promote Lenggong as a tourist destination, which eventually will contribute to economic gain for the locals, while educating them to be the keeper and player in eco-tourism,” said Abdul Nasir Jalaludin.

Listed as Heritage Stay @ Rumah Tiang 16, his almost 100-year-old timber-and-brick house located in Kampung Kubang Jambu is a fusion of Perak’s Rumah Kutai and Bumbung Panjang design.

This pointed out to Airbnb’s claims that its community and hosts have made a large and increasingly important contribution to Malaysia’s economy.

“It is estimated that the Airbnb community generated approximately RM3 billion in direct economic impact in Malaysia in 2018. This significant economic impact is shared by families, businesses and communities across the country, including places that have traditionally missed out,” the online booking platform said in an email reply.

With an offering of 53,000 listings nationwide, Airbnb welcomed more than 3.25 million guests between July 2018 and July last year.

According to new survey findings and internal data, Airbnb’s guest community spent at least RM583 million at restaurants and cafes in Malaysia in 2018. If spending levels remained the same, Airbnb guests were estimated to spend over RM878 million last year.

On average, Airbnb guests in Malaysia said 45 per cent of their spending occurs in the neighbourhoods.

“We are proud to be able to bring tourists to off-the-beaten path destinations in Malaysia. Every state has so many unique things to offer and with Airbnb, we have made these places more accessible,” Airbnb said.

According to Airbnb, the number of guest arrivals visiting off-the-beaten path destinations in the country grew by 98 per cent year-on-year in 2018.

Some areas with the fastest growth included Sibu in Sarawak, Semporna in Sabah and Alor Star in Kedah.

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