KUALA LUMPUR: Impiana Hotels Bhd - a hospitality company with operations in Malaysia, Thailand and Indonesia - is on an upgrade mode as it works on renovating its hotels in Kuala Lumpur and Perak.
The budget for the upgrade would come from Impiana's RM150 million redeemable convertible notes (RCN) programme, according to its chief operating officer Azrin Kamaluddin.
The upgrades for Impiana Hotel KLCC and Impiana Hotel Ipoh are expected to cost aropund RM10 million-RM12 million.
"As for the company's hotel operations in Thailand and Indonesia, the respective hotel owners will bear any refurbishment and upgrading expenses as Impiana Hotels does not own the hotel properties in both countries," Azrin told the New Straits Times.
He said upgrades for the Impiana Hotel Ipoh are ongoing and expected to be completed by the end of the third quarter (Q3) of this year.
As for the Impiana Hotel KLCC, Azrin said partial upgrades had been completed, expedited by the KLCC flash floods in March 2022.
"The expenditure thus far, however, has focused solely on mechanical and electrical components damaged in the floods and is expected to be completed by the fourth quarter (Q4) of 2023.
"Upgrades to furniture, fixtures, and fittings for both hotels have been put on hold but are expected to commence soon. In general, the upgrades are focused on refreshing and renewing the older rooms that have not been refurbished," Azrin said.
Impiana undertook a five-to-one share consolidation and issuance of RCN in July last year to raise RM150 million, mainly for repayment of borrowings and working capital.
The RCN matures in 36 months with a 2.0 per cent interest rate annually, payable semi-annually.
Issued in four tranches, the notes were privately placed in Advance Opportunities Fund and Advance Opportunities Fund 1.
However, early this month, Advance Opportunities Fund 1 ceased to be a substantial shareholder of Impiana.
According to a Bursa Malaysia filing, the open-ended fund - established in the Cayman Islands- disposed of 3.13 million shares in Impiana on May 3 after acquiring 27.78 million shares or a 5.59 per cent stake in April this year.
Following the sale of 21.26 million shares earlier on April 14, Advance Opportunities Fund is no longer a significant shareholder of Impiana.
On its operations outside Malaysia, Azrin said Impiana has seen a positive rise in demand, particularly for its Indonesia and Thailand resort properties.
Nevertheless, the company's Malaysian operations, which are mainly in city centres and rely on business activities, have not witnessed the same surge in demand.
Azrin said hotel operations in Indonesia and Thailand had not faced many difficulties coping with the surge in demand as there is no apprehension about returning to the hospitality industry in these markets.
"With China, it is airlift. The deluge of China tourists into Malaysia, Indonesia and Thailand hasn't yet occurred because of a lack of direct scheduled flights.
"Our Bali and Thailand resorts are seeing some positive Chinese tour groups but far from pre-Covid-19 levels because these groups arrive via charter flights. I believe scheduled direct flights will start being added from June onwards, and that's when we hope to see large numbers of Chinese tourists."
He added that with a gradual but steady increase in demand, Impiana's operations have issues coping as the Malaysian hospitality workers are more cautious about returning to the hospitality industry after moving to other sectors during the pandemic.
"There is rather fierce competition for workers locally. However, we can mitigate this because we have learned to operate more efficiently during the pandemic. As a result, we can deliver the same with less staff and hire temporary staff to make up the numbers for large events," Azrin said.
On how Impiana mitigated foreign exchange risk in its hotel management agreements, Azrin said the overseas properties manage price offerings in US dollar but invoice them in local currency.
Therefore, he said the rooms will cost more in Thai baht and Indonesian rupiah when the dollar strengthens.
"Our management fees are calculated as a percentage of revenues and profits expressed in US dollar. Therefore, we are only exposed to ringgit-US dollar movements rather than the other local currencies. A strengthening US dollar means we get more in ringgit when converted on payment," Azrin said.
Elaborating further, Azrin said Impiana-branded hotels are all in good locations, allowing the company to better price offerings without affecting demand.
"Nevertheless, we are mindful to ensure our pricing remains attractive and monitor our competitor set pricing daily to maintain our competitiveness. A well-located hotel offering good quality at an attractive price must be marketed well to reach guests.
"Therefore, I would say all the above are very important indeed to help Impiana stay competitive, relevant and sought-after in the hospitality industry," Azrin said, adding that the company has moved significantly from traditional marketing to digital and social.
He said maintaining profitability and cash flow is currently the company's immediate objective.
"We are also looking at expansion and long-term growth through a less costly management contract route rather than acquisitions. We will still consider acquisitions that are earnings accretive but in smaller ticket sizes," Azrin added.
