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MALAYSIA'S HOTEL INDUSTRY AND LINK ANALYSIS: TABUNG HAJI HOTEL

SAMPLE BUSINESS PROJECT

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MALAYSIA’S HOTEL INDUSTRY AND LINK ANALYSIS: TABUNG
HAJI HOTEL SAMPLE

BUSINESS PROJECT

Alor Setar
2017
INTRODUCTION

The growth of tourism industry started way back in the 20th centuries. It then started from

visiting friends and families and later expanded to business and leisure trip overseas. These figures

clearly show that tourism is as important as agriculture or mining in the world economy. In 2008,

238.2 million jobs were created in tourism industry, 922 million tourist trips which involve overseas

and local trips. These facts reveal the importance of tourism in the world’s economy and its’ role as

a globalization agent (Weaver & Lauton, 2006).

As according to Muhammad and Henderson (2003), developing nations have taken advantage of

rapid development of this industry in terms of positive economic consequences like income and job

creation, foreign exchange earnings and inward investment. Tourism brings in substantial revenues

for governments whilst stimulating greater investments in infrastructure which ultimately

contributes to overall improved living of the related countries. This includes Malaysia where

tourism has becoming the top foreign exchange sector next to manufacturing (Malaysia Budget,

2009). It is believed that in the future, tourism will be the biggest foreign exchange earner surpass

manufacturing sector. The expansion of the tourism industry, through its linkages, has contributed

to growth in other related activities, particularly food and beverage, accommodation, entertainment

and shopping (Poon & Low, 2005).

This paper presents the overview of Malaysian tourism and hospitality industry and highlight

issues, challenges and trends surrounding this industry in Malaysia. Using snowball sampling, this

study conducts in-depth interviews with the experts of hotel industry who are from government

officials, hoteliers and hotel associations represent hotels industry in Malaysia and giving Tabung

Haji Hotel sample.

METHODOLOGY

The research will be take place at the Islamic hotel around Alor Setar. This study focused on

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Islamic hotel in Alor Setar because Alor Setar has the new development state compare to other

states in Malaysia. For the study population, this research use sample of Islamic hotels employees in

Alor Setar. In this sense, I was using literature review, internet research, books and academic report

in this studies.

1.MALAYSIA’S HOTEL INDUSTRY

​Malaysian hospitality industry grows rapidly consistent with its tourism industry. This is seen in

the increasing numbers of new hotels open and rooms offered in Malaysia. For the past 9 years the

supply of hotels in Malaysia grew 60 per cent from 1992 in year of 2000 to 2000 in 2009. The

supply of rooms increased from 124.413 to 168.844 in the respective year. Currently, the hotels

industry supplies more than 160,000 rooms for the guests. The average occupancy rate for hotels in

Malaysia is 60 per cent and at top tourist spot places like Langkawi, Penang, Pahang and Labuan

the occupancy rate goes up to 70 per cent (Malaysia, 2009). Also, domestic tourism is an important

component of Malaysian tourism with nearly 90% of the domestic trips made for leisure purposes.

Source: Malaysia Tourism Office

These numbers are fuelled by 3 factors:

1. The weakened Malaysian Ringgit—which encourages an influx of international tourists but

3
discourages domestic traveller spend, as shown in statistics from The Department of Statistics

Malaysia (DOSM).

2. The increased accessibility from China and India— which makes Malaysia a holiday destination

of choice for tourists from these two countries. Flights between India and Malaysia have seen an

increase of 20,000 seats per week, while the newly-introduced 15-day visa-free travel from China

to Malaysia will continue to encourage travel from this dense population.

3. The advancements in local infrastructure—which has inflated overall hotel and room demand, to

create the growth in supply that we see in the market today. Malaysia Tourism Data reports room

supply growth going up by as much as 81% from 2010 to 2015.

Malaysia’s hospitality industry is high, so is the attrition rate. Across all support staff in the hotel

and hospitality industry, the attrition rate of 18% is double that of the general Malaysian workforce.

Employees cite better external opportunities, work-life balance, and further studies as the top three

reasons for leaving their jobs—all reasons to drive HR to focus on overcoming talent attraction and

retention issues in the coming year. Secondly, the Malaysian government recently put the Minimum

Wages Order 2016 into effect, which mandates that all organisations provide a minimum wage of

RM 1,000 a month to all employees in Peninsular Malaysia, and RM 920 to all employees in East

Malaysia & Labuan. As a result, the escalating people cost has driven hotels to shift from a basic

salary structure supplemented by service points to a clean wage structure. In the Aon Hewitt

Malaysia 2016 Hotels & Hospitality Survey, we discovered that 33% of hotels have made the shift

this year—a significant increase from 7% just one year ago.

Finally, disruption has increased competition for the hospitality industry from both a talent and

business standpoint. With better opportunities and work-life balance in other industries, talent

attraction and retention continues to be a critical people challenge. At the same time, homestays

with the ‘AirBnB model’ pose a threat to hoteliers’ market share—with 5,542 registered homestays

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in Malaysia as at May 2016 and Brickfields in Kuala Lumpur ranking third in the world as a top

growth neighbourhood (1,230% growth).

1.1.Hotel Demand And Supply Relation In Malaysia

The hotel industry in Malaysia witnessed about 72 million people staying at properties across the

country in 2015, nearly 69,87% included domestic visitors. Commercial accommodations, such as

hostels, bed & breakfast, etc., are top of the choice for international travellers to Malaysia with

about 94% of the arrivals using commercial accommodations in 2015.

Though hotel demand in 2016 slowed down together with the decline in arrivals, the long-term

demand for hotels remains resilient given that the country is still an attractive destination with

several gateway cities such as Kuala Lumpur, George Town, and Johor Bahru. Previously, the

Commercial and MICE travel segment was fuelled by large primary and secondary industries that

specialised in oil and petroleum products. However, shifts may be formed due to the weak

performance in the oil market and the new drivers are expected to be from the financial sector.

​
Source: HVS Research, Malaysia Tourism Office

According to ​Malaysian Tourism Office, in 2015 total of 4827 classified hotels, which account for

284,415 rooms were recorded. During 2013-2015, Malaysia hotel supply grew by CAGR of 13,7%

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term of hotel. Of the existing hotel supply (by number of hotels) in Malaysia, 22.7% is branded and

affiliated with an international company while the rest comprises of independently run operations.

The branded hotels are mostly located in Kuala Lumpur, along famous tourist attractions in coastal

areas such as Langkawi, Penang and the key cities of East Malaysia such as Kota Kinabalu and

Kuching(HVS,2016).

This is expected to lead to an increasingly competitive upscale and luxury hotel landscape, putting

pressure on occupancy and average daily rate (ADR). However, these tilt developments are also

expected to induce fresh demand into the market as they reach out to their core consumers across

the globe in the luxury end of the consumer segment and market Malaysia as a target to them.

1.2.Hotel Performance

Hotels in Malaysia during 2014 experienced mixed results in the three key performance metrics

tracked by STR Global, sister company of ‘HotelNewsNow.com’ Occupancy decreased 0.6% to

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66.7%, average daily rate was up 3% to 340.96 Malaysian ringgits ($110.07) and revenue per

available room increased 2.3% to 227.36 ringgits ($73.40). Hotel supply is expected to increase 7%

by 2015, according to STR Global.

1.3.Problem Statement To The Malaysian Hotel Industry

In general, Malaysian will have perception saying that things made by western countries and

Japan have higher quality, things from China have no quality and so forth. This is partially true in

reality, majority of the Malaysians opt to buy import goods where there is an option for them.

Therefore, local made products are usually having less supports from Malaysian as it has been

perceived to be low quality in terms of unreliable and unattractive. This shows that local made

products have lesser competency even in local market. Consequently, government encourages both

the manufacturer and services provider to look seriously in quality issue by giving several

incentives (Malaysian Rubber Export Promotion Council (MREPC,2009). However, the outcomes

of it are not up to the expectation. This may due to the inadequate research carry out in Malaysia.

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Thus, organizations especially the small size ones will definitely lack of information when trying to

implement quality management system.

Kuala Lumpur is one of the major cities in Malaysia with an estimated of 1.6 million of

population at the year 2005 (KL City Plan 2020, 2009) and it is to be said as the fastest growing

region in Malaysia. This figure says that Kuala Lumpur is the most densely populated district in

Malaysia. Moreover, Kuala Lumpur has a vast number of tourists and it increases over years. Just to

name a few, its major tourist destinations include Dataran Merdeka (the Independence Square),

House of Parliament, the Istana Budaya, the Istana Negara (National Palace), the Kuala Lumpur

Tower, the Muzium Negara (National Museum), Petaling Street and etc (Tourism Malaysia, 2009).

With the limited land that Kuala Lumpur has, it is almost impossible to build more hotels in order to

cater the increasing number of tourist in the near future. Therefore, several actions have to be taken

in order to best serve the tourists with the limited number of hotels in Kuala Lumpur. This is to

ensure that the receipts from tourism will not be negatively affected while the hotel industry can

continuously contribute significantly to GDP.

As time goes by, Human Resource Management (HRM) has become a popular topic than ever

before. Organizations have understood the importance of employees (human resources). At the

same time, empirical research studies have been done by researchers to further understand and

prove those theories related to motivate and compensate employees. Dessler (2005) says that

employee' satisfaction and performance are positively related. Therefore, hoteliers must understand

the importance to maximize their employee' satisfaction as this could lead to greater business

performance. However, by solely compensating employees with both monetary and non-monetary

rewards has its limitation. Performance will stop increasing when the problem arises are not come

from employees but the management. For instance, it could be lacking a well-planned system in

executing tasks, ineffective communications in organization and so forth. In other countries, TQM

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has been so popular for a period of time as it helps organizations to achieve even higher of

performance. In other countries, plenty of research studies have been carried out to investigate

which TQM factors are the most influential to the particular country. Unlike in Malaysia, the

number of TQM study that can be applied is limited and lacking of guidelines for hoteliers is still a

major problem.

Someone could say that innkeeper can simply use the findings from other countries as a guideline

for implementing the TQM. But, there is always a high possibility that those mentioned as

important factors are not important in Malaysia, when compared to the original country that the

research is carried out. In other words, it is imperative to understand the applicability of the findings

from other countries. The applicability of some of the findings from research still remains

questionable. For example, information and analysis, one of the TQM factors is said to be extremely

important to developed and developing countries but it is not persuasive enough to apply on third

world countries. This is because they probably lack of necessary infrastructure. Therefore, it can be

said that Malaysia's hoteliers are actually lack of a blueprint when initially applying TQM to their

respective hotels. In other words, hoteliers may not known which factors of TQM can generally

lead to better performance in the Malaysian. Furthermore, with the limited of number of such

research available to Malaysia, it has nothing to show hoteliers how strong the impact of TQM

factors is to labor productivity, thus lack of motivation to change their routine and ways of doing

business. When this occurs, Malaysia hotel industry can never be improved, previously owned

competitiveness can be competed away and GDP can be affected. 

2.TABUNG HAJI HOTEL : ISLAMIC HOTEL CONCEPTS AND OPPORTUNITIES

Tabung Haji Hotel(THH) is a wholly owned subsidiary of Lembaga Tabung Haji in Malaysia,

consigned to spear head the Group’s business involvement in both the hospitality and service

industry,both nationally and internationally. Tabung Haji Hotel and Investment Group’s

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management composition consists of professionals who have cumulatively over 50 years of

Hospitality & Service Industry experience and expertise​. TH Group’s has got five hotel and

different type of investment and they want to open new two hotel - Kelantan and Sarawak- in this

year. But now Group’s managing five properties in Malaysia.

● TH Hotel & Convention Centre Alor Setar, KEDAH

● TH Hotel & Convention Centre Terengganu, TERENGGANU

● TH Hotel Kota Kinabalu, SABAH

● TH Hotel Penang, PENANG

● Hajj Complex Kelana Jaya, SELANGOR

The team at all TH Hotels are committed to their 3Cs principles- CONVENIENCE, COMFORT

and CONFIDENCE- through their arrays of facilities and service delivery, with spacious rooms,

banquet halls, restaurants, meeting rooms and other services namely airport transfer, car park, room

service, laundry, concierge, scheduled shuttle to the city centre and amenities for the disable. It is

indeed a privilege to be associated with their organization and they are ready to extend their

services to people.

Tabung Haji Hotel Group’s has got more and more important motto, which is the hospitality and

service industry, operating locally and internationally, in major cities of the world, contributing to

the economic of the ummah. At the same the this motto giving shape their visions and missions. TH

Hotel & Residence under its TH HOTEL brand, will be an Islamic Shariah Compliance leader in

the hospitality and services industry, operating both locally and internationally in major cities of the

world as one of the pillars of economy for the Ummah.

Tabung Haji Hotel and Residence brand will be the preferred choice by customers, stakeholders

and associates.They uphold the values of Islamic Maqasid Syariah (Goal & Purpose) compliance in

all operations and services.With the hallmark service culture Salam, they would be promoting

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Islamic hospitality values, with efficiency and effectiveness.

With a pool of talent and resources created, TH Hotel & Residence will provide a conducive

working environment guided by the motto;

Blessing of Almighty Allah

Grow Together Seeking For Excellence

Integrity with Trust

Ideas for Innovation

Halal & Toyyiban

2.1.Opportunities

TH Hotel & Convention Centre Alor Setar is situated only 5 minutes from Sultan Abdul Halim

and 10 kilometres from the state capital of Kedah, Alor Setar is a 3 star hotel including 207 rooms

including Superior, Deluxe, and Family Suite designed with Shariah Compliancy in mind. Tabung

Haji hotel is suitable for events and banquets including with an event hall accommodating a

capacity of up to 1000 persons at a time and for meetings there are 8 meeting rooms from which

one can choose from.TH Hotel Alor Setar also has a cozy swimming pool for those who fancy a

refreshing swim. Being situated in the heart of Kedah Tabung Haji hotel is also in close proximity

to attractive sites to visit such as the State Art Gallery which is along Lebuhraya Darul Aman and is

13 minutes away from TH Hotel Alor Setar.

TH Hotel & Convention Centre Alor Setar provides other facilities such as a 24-hour room

service, airport transfer, car park, coffee shop, concierge, elevator, facilities for disabled guests,

laundry service, meeting facilities, restaurant, room service, safety deposit boxes, and smoking area.

For sports and recreation there's a fitness centre, outdoor pool, pool for kids, sauna, and steamroom.

There are also internet facilities such as Wi-Fi in public areas and of course a wide area car park.

● Technology: ​Nowadays most of the hotels use online reservation system is to enable

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 customers make their reservation online. One respondent (D) highlighted that recently,

there were complaints by tourists on reliability of online reservation system for hotels in

Malaysia. They did the reservation and pay in the internet through the online reservation

system, but when they come to the hotel, they cannot find their reservation and payment.

This tarnished the image of Malaysia as most independent travelers use online reservation

system to get their hotel in advance. Tabung Haji Hotel used to virtual portal, such as

Booking.com, Hotels.com, etc., and they to accept online reservation through this sites.

National and international travellers do reservation and pay easily with using this

sites.THHR won the '2014 Gold Circle Award' last year from Agoda.com after online users

voted it the four-star hotel of choice. Its acting CEO, Tuan Hj Adly Mohamed said in Kota

Kinabalu, guests described the rooms in the hotel as large, modern looking and clean. They

also found the environment quiet and serene.

Over 86 per cent of the bookings received are online. They are proud to say that most of

our bookings are from guests overseas, some of whom are non-Muslims.

● Halal Restaurant: ​The encouragement for hotel to obtain Halal certificate for its restaurant

or F&B outlet is seen as a good one at the right time. Recently, Malaysian government

announced that only hotel with Halal certificate for restaurant can cater the government

functions. The effect of the announcement shows many hotels would like to obtain Halal

certificate as to not losing opportunities with the government events. Tabung Haji Hotel’s

has got Halal certificate and this move will boost Malaysia's image as one of top tourist

country among Muslim tourists for example from Middle East since their preferred tourist

destination change from holidaying in the West before to East nowadays, and Malaysia is

second in the list of Muslim tourist destination.

Besides providing halal food and beverages, THHR also provides a separate swimming

pool, sauna room and locker for women, as well as a separate entrance to the facilities. As

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 for the gymnasium, male guests would be barred from entering while female guests are

using the facility. The hotels also provide in its room, among others, Quranic verses and

supplications, a copy of the Quran, a prayer mat and a schedule of prayer times. Guests also

need not worry that the complimentary bath set are made from animal ingredients that are

haram (unlawful) as every soap and shampoo is halal-certified by the Malaysian Islamic

Development Department (Jakim).

● Market Potential: ​THHR offers over 700 rooms through its five hotels and will reach the

1000 mark when the Sepang Hotel and Convention Centre is launched next year. As the

hotels are relatively new, Adly admitted that every plan and promotion had to be creative

and appealing to the online community as most of the bookings were made online.

THHR is confident that with the right marketing technique, the hotel chain would

continue to expand and become the choice of not only Muslims but others as well. It is

expecting to come up with up to 10 more hotels in the next four years before expanding

overseas.

Islamic tourism is a large and growing market. According to the Thomson Reuters report,
​

the global Islamic spending on outbound tourism stood at $140 billion in 2013 [excluding

Hajj and Umrah], representing a 12 per cent of the world’s tourism market. The overall size

of the Islamic tourism market is estimated to be quite large, considering that more than one

million people undertake the Hajj pilgrimage each year to Makkah. The growth in Islamic

tourism has been well supported by the rapid rise in Muslim population and the propensity

of Muslims toward travelling, not only for religious purpose, but also for visiting family and

friends.In addition to the religious principles of Islam, which encourage travel, Islamic

tourism supports other Islamic services. For instance, the travel segment provides flights

where no alcohol and pork are served, prayer timings are announced, and religious

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 programmes are broadcast as part of the entertainment offered on board.

In the hospitality segment, hotels in many destinations across the globe provide separate

swimming pools, dining, and spa facilities for men and women. For instance, the

Ritz-Carlton offers Quran, prayer carpets, halal food, and bidets at select locations as part of

its strategy to cater to the global multi-cultural travellers. These supporting factors have

appealed to the religious sentiment of the Muslim population, thus aiding and encouraging

Islamic tourism.

Apart from Arab nations, countries such as Australia, India, Malaysia, and Turkey are

also making efforts to attract Muslim tourists by offering facilities in accordance with

Islamic religious beliefs. Malaysia, a favourite Muslim tourist destination, has taken

numerous measures such as developing the Halal Master Plan (2008–20), hosting the first

OIC Global Islamic Tourism Conference and Exhibition, and establishing the Islamic

Tourism centre (ITC), coupled with the nation’s multi-cultural setting, cuisine, and heritage,

in an attempt to establish itself as a popular Muslim center.

3.CONCLUSION

In general, hotels in Malaysia are being challenged in maximizing revenue, government

regulations which lead to new and old hotel dilemma, minimum room charged rate at USD80 and

also tax incentive in renovation of old hotels and human resource management especially on

employee motivation and shortage of labour and lastly, on hotel operations (concierge). Among the

issues found in this study are firstly, increasing demand on Green hotel, secondly, hotel restaurant

in getting Halal certificate and lastly, the usage of technology specifically online reservation

system. Competition in hospitality is stiff at national level, it is also very hard in the region of

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Southeast Asia hence, and Malaysian government has to stay alert and provide solutions to the

challenges hotels faced for example, give more attractive tax incentive to improve old hotel's

facilities, universities and colleges should create awareness on hotel working environment for fresh

graduates so as to improve labor shortages and supply of highly skilled employee in hotels,

government need to look back at the minimum room charges and raise it at the acceptance level at

par with the international rate. Some issues mentioned above require attention from the specific

government agency like Jakim on the Halal certification issues and MOTOUR to improve on

legislation of online reservation system in Malaysia. Addressing these issues and challenges will

make Malaysia as a top in the list of the chosen destination for tourist internationally.

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ABBREVIATIONS

ADR Average Daily Rate

DOSM The Department Of Statistic Malaysia

GDP Gross Domestic Product

HR Human Resources

HRM Human Resources Management

THHR Tabung Haji Hotel and Residence

TQM Total Quality Management

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