Parkroyal Penang cautiously optimistic

PARKROYAL Penang expects performance at its hotel in 2008 and 2009 to be maintained at about last year's level, despite a reduction in international business this year and additional hotel openings next year.

Given the global economic uncertainties, the five-star beach-front property located on Batu Ferringhi has taken a cautious approach in its projections. It expects RM45.4 million in revenue compared with RM48 million in 2007.

The revenue, two-thirds of which is derived from rooms, will come from an average occupancy of 66.1 per cent and an average room rate (ARR) of RM330 per night. This compares with an average occupancy of 66.9 per cent and an ARR of RM336 per night in 2007.

"We are expecting some 2,000 room nights less," general manager Mark Losi told Business Times in an interview in Penang recently.

"In the first half of 2007, we were able to maintain our business level in line with projections. In the second half we see things dropping off. Today, things are not as rosy as previously thought," he said.

Losi explained that apart from the anticipated lower tourists arrivals at the island, its performance this year is also a result of its consolidation.

"There is a change in the mix of the business. We see a slight reduction of international visitors from Europe and the UK is our single biggest drop. We also see a shift in Scandinavians, choosing Sabah instead of Penang," he added.

Flight cancellation from Manchester to Penang also has had an impact on its performance.

Domestic business, which made up 27.4 per cent of its business in 2007, is expected to represent about 30 per cent by end-2008.

The impact of fuel price increase on the cost of air travel will see the hotel look more towards business from the domestic market, short-haul and intra-regional travellers.

The 18-year-old hotel has undergone two renovations since 2003, the first cost RM22 million and the second RM4 million.

The more recent renovation saw room inventory drop to 309 from 324, as it combined two rooms into one suite.

The hotel is owned by Parkroyal Hotels & Resorts Pte Ltd, a subsidiary of Singapore-listed Hotel Plaza Ltd.

Parkroyal, which also owns and runs the Parkroyal Kuala Lumpur, saw combined revenue contribution of S$41 million (RM98.4 million) to the group.

The Parkroyal brand has been in Malaysia since 1989.