OYO not as badly hit as other hotel operators

By Doreenn Leong

The global pandemic and the imposition of the movement control order (MCO) in March had caused the tourism and hospitality sector to come to a screeching halt. This has caused many hotel operators to close down or downsize their operations.

While hotel chain OYO Hotels & Homes was not spared from the Covid-19 onslaught, it did not see as great a decline in revenue and occupancies compared with the bigger hotel chain operators.

“Revenues and occupancies in Malaysia dropped by 70%-80%. This is lower than the industry benchmark where global leading hotel chains experienced drops in revenues by as much as 90%,” its country head, Malaysia & Singapore, Tan Ming Luk tells FocusM.

“In fact, in Malaysia, while our available capacity has almost doubled from April, our revenue per available room is 44% higher in May.

“OYO has been able to support its partners by capturing new pockets of demand that emerged due to the pandemic. These included extending the stay for customers who couldn’t return home, special deals for stranded travellers and office employees, campaigns to support medical professionals, as well as tie-ups with hospitals and corporates.

“In Malaysia, we partnered with the Ministry of Health and other NGOs to offer free rooms to medical frontline workers serving at the busiest hotels in the country. We also worked with the National Security Council to open our hotels as quarantine centres throughout Malaysia,” he said.

He added that OYO continued to accept reservations and check-ins from foreign guests, employees of government agencies and anyone employed in any of the essential services during the MCO period.

“Across Southeast Asia, we offered our hotels to embassies to accommodate stranded nationals until travel restrictions are lifted. Supporting our partners and the community through these initiatives will continue to be a priority in the short term,” Tan said.

Like most companies, OYO Malaysia had to undertake cost-cutting measures such as a pay cut for its leadership team, who saw a 25% reduction in salary from April-July this year. It has a current workforce of over 100 people.

“To mitigate the impact on the business and reduce further stress on our balance sheets, we cut any insignificant fixed costs that have minimal or zero impact on our operations. These include travel, printing, utilities and stationery expenses,” Tan added.

Businesses in the tourism sector have a reason to cheer with the government allocating RM1 bil Penjana Tourism Financing (PTF) facility recently.

“The allocation of the PTF facility serves as a ray of hope to the tourism sector, to support the transformation initiatives for small and medium-sized enterprises (SMEs) in the tourism sector to remain viable and competitive in the new normal,” said Knight Frank Malaysia managing director Sarkunan Subramaniam.

“Boosting domestic tourism is crucially important as well during this challenging time as the tourism sector was the biggest contributor to some of the states’ GDP. The personal income tax relief of RM1,000 for domestic tourism expenses until Dec 31, 2021 will help to encourage more domestic travel and revive the country’s tourism sector in the short to medium term.

“In addition, the existing service tax exemption for hotels will be extended to June 30, 2021, and a new exemption for tourism tax from July 1, 2020 to June 30, 2021 has been introduced. This will most likely encourage more tourism activities in the country for the next 12 months, as the exemption of both tourism tax and service tax will certainly reduce the cost of hotel stays for both local and foreign travellers,” Sarkunan added.

Meanwhile, Tan sees three trends emerging amid the pandemic.

“Some of the trends we’ve observed in Malaysia include travel destinations near larger cities showing very high occupancies during weekends, long stays, especially with offline partners and customers are very keen to understand safety and sanitisation protocols.

“We have studied trends and data in countries that have lifted isolation protocols and we see as many as 90% of those ready to travel want to start domestically, as experts point to safety fears and the desire to be near the security of home as driving forces in consumer decisions.

“We expect the same pattern in Malaysia and we see domestic travel whether for business or leisure kickstarting the recovery for the hospitality sector in the region. We also see a preference towards independent travel, with travellers avoiding large tour groups but opting for smaller hotels,” Tan added.

Although the government has eased its restrictions on domestic travel, it will not bring back tourists in droves as they may still be cautious on the possibility of contracting the virus.

To ensure its guests have a peace of mind when staying at OYO, it has recently launched “Sanitized Stays” in Malaysia.

“Under the Sanitized Stays with minimal touch initiative, OYO will implement comprehensive hygiene protocols and step up vigilance measures pre- and post-check-in and throughout its customer journey, to curb any potential spread of Covid-19.

“OYO has developed a standard operating procedure to ensure the highest level of hygiene and health protocols are in place for our guests and hotel staff. These include minimal touch check-in and check-out systems, robust hygiene and safety training for staff, strict enforcement of social distancing norms, etc, to give our customers complete confidence that their safety is our priority,” Tan explained

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