SOME quarters within the hospitality industry in Penang are concerned over an oversupply of rooms in the state despite reports of robust tourism activities.
This is following the recent dismayed hotel occupancy rates in Penang during the Hari Raya Adil Fitri period, which usually generates huge tourism inflows.
There are reportedly over a million registered hotel rooms, and Penang is one state, which has recorded an impressive rise of new hotels, led by the Singaporean owner - operator hospitality group of Ascott Limited.
But hotelier Adrian Praveen who manages the Arrowood (Hospitality) Group, said that too many rooms could be emerging in the state.
He shared that in Bali, Indonesia, unchecked development of hotels and villas led to crashing occupancy rates among the hoteliers there.
It also causes a strain on the environment and losses to investors until the authorities there froze approvals for new hotel permits, Praveen said.
In Barcelona, Span, where short - term rental growth spiralled out of control until the local residents were priced out of owning homes, said Praveen.
"What's happening in Penang is a softer version of what happened in both similar tourism destinations."
Praveen said that Penang does regulate short - term stays such as licensing the Airbnb accommodation sharing operators, which is a good thing.
"But it is no longer about regulating but the issue of supply and demand."
When an inevitable price war brews, especially through online travel agents, rooms become cheaper but the operating costs sparked by inflation remains high.
"This is why hoteliers continue to struggle in hiring experienced trained hoteliers. Instead, they rely on young and foreign workers or interns," said Praveen.
He urged the authorities in Penang, including the local city council to incorporate a monitoring system called accommodation development rights (ADR).
ADR is a framework that helps the authorities to increase bona fide rooms at the right pace; not too fast or too slow, said Praveen.
"Whether an operator runs a five - star property to a boutique, guesthouses or Airbnb or budget hotels, the ADR applies to each one."
ADR works when the authorities can use it to review the annual average hotel occupancy rate in Penang.
If such rate is below 80% then it is obvious that the hotels are not fully utilising their room inventories.
For example, if Penang has around 13,000 rooms and the annual occupancy rate was below 72%, it means that nearly 3,600 rooms went unoccupied every night.
"Allowing for more rooms under such conditions isn't growing the industry."
Praveen also stated that a regulated Airbnb continues to attract clients, namely because they market their properties at below what hotels can offer.
Several hoteliers also echoed Praveen's call on better control over the supply and demand.
They also pointed out that due to the existing interconnected infrastructure, there are many day trippers travelling by road to Penang.
They come in the day but overnight elsewhere namely in Kedah or Perak, where room charges are relatively lower than Penang, the hoteliers said. - May 2, 2025.
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