By Angela Rao

Five- and four-star hotels are promoting rooms below their rack rates which seems to make good business sense during the economic downturn.

Meanwhile, three-star and below establishments are feeling the pinch from this competition as well as negative international media reports on the JE (japanese encephalitis) outbreak and the demonstration by the reformasi movement.

There is no regulation or price control for hotels.

All this is well and good for local and foreign consumers, travellers and holidaymakers, but not for the competitive world of the hospitality industry.

While the big boys say the promotion rates are a practical way to attract or retain customers under the current economic conditions, the not-so-big ones say it is an unfair war and wants something to be done - specifically for the Arts, Culture and Tourism Ministry to step in and end the price war.

The promotion rates now being offered by the four- and five-star hotels are 50 to 70 percent less than their rack rate.

For all logical reasons, the wide difference in the offered rates and original rate would give these hotels an edge over those which offer the same rate.

No surprises then that people get lured by "this great deal" where for the same price, they can enjoy the ambience of a five-star hotel.

The New Straits Times carried out a survey based oon the Malaysian Accomodation Guide 1998 issued by the Malaysian Tourism Board, an official collection of hotels in the Klang Valley and found the rates have been drastically slashed.

Five-star Hotel the Pan Pacific Hotel Kuala Lumpur, for example, states its room rates as RM480 for its deluxe room in the guide.

But the promotional price being quoted is RM160 with two free breakfasts.

Public relations executive Pauline Jansen said the lowest the hotel had gone was when they issued vouchers worth RM99 nett per room per night sold late last year valid from January to next month.

She said they were not sure if the hotel would continue with the promotional rate or revert to the rack rate.

Legend Hotel and Apartments has reduced its rates from RM300 to RM195 nett (without breakfast) while another luxury hotel - Shangri-La Kuala Lumpur is promoting its RM580 rooms for RM338 nett (without breakfast) and a weekend rate of RM200 nett with breakfast for two.

The Regent Kuala Lumpur is giving out RM150 discounts for its standard rooms, from RM450 to RM300 (without breakfast).

Concorde Hotel Kuala Lumpur is offering its single room for RM188 nett with daily breakfast and a complimentary limo pick up from the KLIA (Kuala Lumpur International Airport) to the hotel.

The normal room rates are RM220.

Pan Pacific Glenmarie's rack rate of RM440 single or RM480 for double occupancy has been reduced to between RM180 and RM200 nett without breakfast.

Business development manager Charlotte Tan said the market situation was such that hotels were forced to reduce their rates according to customers' spending power, which in this case, is lower than before.

"Corporate companies which used to pay RM250 for the same rooms have had budget cuts resulting from the economic downturn and now ask for the RM180 nett per room rate.

"We either lower the rate or lose them to our competitors," she said.

Asked whether five-star hotels which undersell rooms, deserve to maintain their five-star status, she said:

"There is no specific rule on our selling rate."

"The ministry does not have a ruling on this. But they should so that it would be better controlled.

"We are generally very flexible with our rates and are not running at a loss for offering these rates," she said.

Tan said the hotel was trying to tap other markets as the majority of exising guests were corporate and business people.

"We are trying to get into the tour and leisure market especially from the golf groups from Hong Kong, Taiwan, USA and Europe," she said.

Sheraton Imperial Kuala Lumpur public relations assistant Jeannie Choo said the rack rate for the cheapest room, the executive room is RM500++, but the promotional rate is RM199++ without breakfast.

She said the occupancy rate was between 30 to 40 percent.

Nothing could be tougher than fighting the biggies in the industry today.

Jackie Tor, senior operations executive at Hotel Orkid at Jalan Pudu called on the Tourism, Arts and Culture Ministry to step in and impose price control.

"Otherwise big hotels are going to kill us if this goes on."

Tor said that although the rack rate for the one-star hotel was RM105 nett for its standard room, they were forced to sell the room at RM70 nett with two breakfasts.

"We cannot survive for long. With some five-star hotels promoting their rooms for as low as RM99++, how can we compete?" she asked.

Tor said occupancy rate was at 20 percent, a far cry from its 70 to 80 percent for the same period last year.

She said smaller hotels such as Hotel Orkid could not address the issue through the Malaysian Association of Hotels as it was dominated by general managers of five- and four-star hotels.

"We are not even invited for anything and three-star, two-star and one-star hotels do not have a say in anything. It's like we don't exist," she said, adding that if nothing constructive was done, small hotels may be forced to retrench their staff or close down.

Kuala Lumpur Mandarin Hotel spokesman Vivien Boey said that the hotel was also affected by the stiff competition from the other hotels as well as the JE outbreak and haze problems "in a big way" as reservations by foreigners were cancelled because of these.

The hotel, like most others in its category, is having about 35 percent occupancy rate, which is low compared to its usual 60 to 70 percent.

But May, Boey said, is the hotel's best selling month every year.

Impiana Hotel Kuala Lumpur general Manager Syed Ahmad Nazri Syed Kamaruzaman said the so-called "price war" was a raging issue in the hotel industry that needs to be addressed urgently.

"Hoteliers have to sit down and come up with a sensible idea to end this issue, which is hard as they are all out for themselves.

Impiana Hotel Kuala Lumpur assistant director of sales Mohd Shukri Yusof said the three-star hotel, which opened its doors on February 28 (1999), has been offering its rooms at almost more than half the intended rate.

The introductory price for the standard room is RM90 nett, RM70 cheaper than intended while the other rooms - superior from RM190 to RM115, business club superior and business club suite are all less than RM150.

The rationale behind this drastic slash, Mohd Shukri said, was to introduce the hotel at affordable rates.

"We haven't decided if we are going to hike the rate yet. Even if we do implement an increase, rest assured it's not going to be very different from the present offer," he said.

Mohd Shukri said a survey conducted by the hotel showed that hotels within the three-star category, such as the Swiss Inn Hotel were selling its rooms at RM98++ and Karati (in Pudu and Medan Tuanku) which are two-star hotels are offering rooms at RM88.

"However, we found that although the rates were low, their facilities were not at edge with us.

"People will pay slightly more for value for money and better facilities, they would prefer our facilities even if they have to pay an extra RM10 as we are new, we have room service, internet facilities, satellite TV channels, a business centre, laundry and valet services and many other amenities," he said.

Mohd Shukri said since the opening, although only 150 of the 300 rooms were being sold, the occupancy has nevertheless been encouraging with almost 100 rooms sold on some nights.

Sun Inns hotel manager Ong Hang Kuang said the one-star hotel located at the Metari Plaza commercial area in Bandar Sunway was popular among factory staff and their families. It has an occupancy rate between 40 and 50 percent.

"We have families checking in from all over the country to go to the Sunway Lagoon Theme Park," he said.

Budget hotels

What are budget hotels?

They are the layman's term for three-star hotels and below.

Guests are mainly backpackers, businessmen, domestic travellers, families and groups from Asian countries on a budget.

These hotels are located all over the Klang Valley but are mainly concentrated in Jalan Petaling, Chow Kit, Jalan Tuanku Abdul Rahman and Jalan Bukit Bintang.

They offer basic amenities such as a bed, television sets and a bathroom. Some have small coffee houses and a bar.

Of the 1,300 Rumah Tumpangan in the country, only 200 are graded one-star. Others remain unrated.