Nonetheless, the travel restrictions in place for nearly two years during the COVID-19 pandemic resulted in a sharp decrease in foreign tourist arrivals in the country. Ultimately, this impacted the amount of revenue generated by the industry. At the end of 2021, the accommodation industry in Malaysia recorded a gross output value of approximately 6.75 billion Malaysian ringgit, around 60 percent lower compared to the revenue before the pandemic.
The focus on the hotel industry
Due to the rapid development of travel accommodation in popular destinations, including Penang, Sabah, and Sarawak, travelers in Malaysia are spoiled with a wide array of accommodations to choose from. The hotel industry currently has the largest market share compared to other types of accommodation. In Sabah and Sarawak in East Malaysia, there are 587 and 574 hotels available in each state.Facilities offered by hotels at considerably lower prices in Malaysia are also the obvious choice for travelers, including those within a budget. The average daily rate of a four-star hotel in Malaysia was approximately 221 Malaysian ringgit in 2022. There are also large international hotel chains operating in the country. Malaysian-owned hotel and resort company, Genting Malaysia Berhad, is currently the second most valuable brand in Malaysia.
Another accommodation type that is gaining popularity in Malaysia is vacation rentals. Consumers who dislike staying in hotels can now book private holiday homes or apartments for short-term periods. Online portals, such as Airbnb, have made vacation rentals easier to access. Although it is still incomparable with the number of hotel guests, the vacation rental industry in Malaysia had more than eight million users in 2022.
Nevertheless, the lack of regulations for vacation rentals in most states in Malaysia has prompted the Tourism, Arts, and Culture Ministry to devise a comprehensive guideline for short-term rentals, including for Airbnb, in February this year.
Recovery in the post-pandemic era
The easing of travel restrictions has brought back international tourists to Malaysia, allowing the accommodation industry to slowly recover from the COVID-19 pandemic. The hotel market was forecasted to grow by 18 percent in 2023, with the industry also expecting nearly 40 percent growth in the vacation rental segment in the same year.While in recovery, the accommodation industry would still need support from the Malaysian government, especially to bring it back to its pre-pandemic state. However, industry associations, including the Malaysian Association of Hotels (MAH), lamented the limited allocation for the tourism sector in the Budget 2023. This might have an impact on how fast the accommodation industry can recover from the two years of border closures.