Challenges continue ahead of VMY$2025.$

Even as Toh expects the hotel industry to improve in $2023,$ she anticipates that international arrivals wil be affected due to global economic and political headwinds. Indeed, this year's arrival target is $16\mathrm{.}1$ million tourists and RM$49\mathrm{.}2$ billion in receipts. In comparison, Malaysia welcomed $26\mathrm{.}1$ million tourists and RM$86\mathrm{.}1$ billion in receipts in $2019.$

For $2025,$ which has been declared "Visit Malaysia Year" $($VMY$),$ the government has set a goal of $23\mathrm{.}5$ million international tourist arrivals and income of RM$76\mathrm{.}8$ billion. While encouraging, ti is still a far cry from $2019\text{'}$s achievements. But ti is a start.

$"$On the local front, domestic travel is also seeing a slowdown due to economic conditions," Toh adds. $"[$Overall$,]$ based on data analytics for $2023$ and our Al $[$artificial intelligence$]$ projections, AOR will improve slightly $[$in $2023]$ versus $2022$ and ti is expected to be range bound at $50\%$ to $55\%."$

ADR for the year is expected to be between RM$280$ and RM$298.$

MAH has its own official data service provider called ADATA that tracks the performance of hotels in Malaysia. ADATA's Al engine combines historical data and live room pricing data to predict demand and supply.

Interestingly, Toh says the opening of new hotels does not hamper the recovery in AOR and ADR.

"The opening of new hotels reflects investors' confidence in the industry and should not impact the recovery trend in the medium$-$ and long$-$term horizon. With continuous growth of international arrivals and domestic travel supported by active tourism promotion locally and abroad, the industry wil continue to recover. With what Malaysia has to offer in terms of tourism attractions, the industry has lots of room for growth beyond just recovery from the pandemic," she says.

Given more than $2,600$ rooms are soon to be added just in Kuala Lumpur alone, Toh's confidence is assuring.

Among the upcoming hotel openings in Kuala Lumpur with a sizeable number of room inventory is The Renaissance Kuala Lumpur, which will reopen after renovation as a dual brand $$ the Renaissance and the Four Points by Sheraton.

The Renaissance will offer $400$ rooms while the Four Points by Sheraton will feature $513$ rooms. Other openings include the $544-$room Conrad Kuala Lumpur, $450-$room Hyatt Regency Kuala Lumpur@TRX and the $232-$room Park Hyatt Kuala Lumpur.

Meanwhile, labour crunch, high operational costs, unregulated short$-$term rental accommodation $($STRA$)$ and music licensing payments continue to pose challenges.

"The industry$-$wide labour shortage remains unresolved despite engaging in meaningful discussion and consultation with various ministries," Toh says, adding that the request to expedite the process for foreign labour applications has gone unnoticed, which will have an impact on the quality of service.

Should the issue not be adequately addressed, she opines to could be a major setback for the industry ahead of VMY$2025,$ which is just $112$ years away. A shortage of staff in critical departments like housekeeping is already impacting the ability of hotels to maintain the desired quality of service standards, she says.

$"$As demand for accommodation is expected to increase significantly leading up to and during VMY$2025,$ the issue is likely to worsen.

"The industry continues to face significant challenges due to high operational costs. This issue was worsened by the fourfold electricity tariff hike, which increased from three to $20$ Sen at the beginning of the year. The sudden surge in electricity expenses has put additional burden on hotels and other hospitality establishments," Toh emphasises.

Another area of concern is unregulated STRA, which continues to place pressure on the hotel industry.

"Platforms such as Airbnb and similar services have introduced intense competition for hotels," she says.

However, Toh notes that there have been positive developments in Penang and Perak, which have taken steps to regulate the STRA segment. $"$We are currently working to have the rest of the states follow suit on this encouraging progress."

In March, the Penang government said it had issued separate guidelines for short$-$term stays in nigh$-$rise accommodation and in landed properties. Stratified projects must obtain approval from the joint management body $($JMB$)$ or management corporation $($MC$),$ and short$-$term stays must not be longer than three days per reservation. In addition, each unit cannot be booked for more than $180$ days in a year.

On May $25,$ the Penang Island City Council $($MBPP$)$ provided further details and said that all forms of STRA at private residential units on the island were banned with immediate effect. Serviced apartments; small office$/$home office $($SoHo$),$ small office$/$flexible office $($SoFo$)$ and small office$/$versatile office $($SoVo$)$ units; office suites and duplex offices could operate fi they had the approval of the JMB or MC$,$ with $75\%$ of owners voting in favour of the scheme.

The JMBs and MCs are also to collect RM$250$ to RM$500$ a year in fees per uni