We are also an active player in the Budget Hotel M&A space in Malaysia. We do have budget hotels for sale in Kuala Lumpur (Hotels for sale KL) and Budget Hotels for Sale in Malaysia.
As of 1Q 2012, the total supply of budget hotel rooms in Kuala Lumpur stood at 5,964. There was no completion of new hotels under this category during this particular period.
Occupancy for budget hotels in Kuala Lumpur during 1Q 2012 improved from 51.38% in 1Q 2011 to 57.35% but declined from 69.33% that was recorded during previous quarter. Meanwhile the Average Room Rate (ARR) for budget hotels revolved around the range of RM100 during the first quarter of both 2012 and 2011 as well as in fourth quarter of 2011.
Budget Hotels, long associated in Malaysia with cheap day stay rates and hourly use, is set to be the next growth market in Malaysia and Asia. With comfortable, clean accommodation and convenient service at an inexpensive price, budget hotels are becoming increasingly popular. The term also refers to hotels which provide limited but professional services, and satisfy customers' basic accommodation demands with reasonable prices. Unlike star hotels, budget hotels do not provide business or entertainment facilities such as business centres, conference halls, swimming pools and health-centres. The major features of the budget hotel are economical price, cleanliness, safety and convenience.
In foreign markets like the European Union and the United States, the budget hotel is a major business model, accounting for 70 per cent of the hotel industry. For example, the international hotel giant Accor has 71 Ibis inns in Paris, a city with a population of some 4 million as compared to a grand total of only 25 budget hotels in Kuala Lumpur. In fact, the total room count of budget hotels in Malaysia is a total of 5,801 rooms amounting to 3.99% of total hotel rooms available in Malaysia.
Notwithstanding the current size of the market, both regional and global hotel groups are already targeting budget travelers with the launch of economy brands and this new sector will spur intra-regional and inbound travel. There is at present huge gap in the market for branded budget hotels that I believe are essential to maintain visitor growth to Asia.
At Zerin Properties, we have noted the growth in the mid-scale segment in Asia as well as a boom in pan-Asian tourism – which made us realise that it is viable for investors to invest in budget hotels in Asia to provide quality service with value for money. The budget hotel sector, which taps the growing number of business class travelers and tourists who want economical but comfortable accommodation in cities, has much more room to develop. There are many budget hotels for sale in Kuala Lumpur (Hotels for sale KL) and Budget Hotels for Sale in Malaysia.
And this opportunity gap has not escaped the bigger brands in the region. The first Express by Holiday Inn has already opened at Knowledge Village in Dubai last year with 240 rooms, and there are plans for up to 20 properties in the Asia, as well as a further 20 in Middle East, an expansion plan also taken by Centro by Rotana, the UAE hotel group’s new economy brand.