TRADEWINDS Corp Bhd, which owns and operates four hotels, is looking at having a new brand name for its hospitality assets, including Hotel Istana Kuala Lumpur.

“I am deciding on two or three names as part of our transformation programme,” says Tradewinds group managing director Datuk Wira Azhar Abdul Hamid, stopping short of sharing the potential names.

He adds that Hotel Istana, located at the junction of Jalan Sultan Ismail and Jalan Raja Chulan, will not only see a name change but also undergo an extensive makeover. He points out that this asset will neither be torn down, as earlier reported, nor be sold. The 24-year-old hotel, in its early days, was best known for its numerous elaborate chandeliers.

Other hotels owned and operated by Tradewinds are The Danna Langkawi, Mutiara Johor Bahru and Mutiara Taman Negara, Pahang.

Four other hotels owned by Tradewinds are operated by international hotel operators. They include Meritus Pelangi Beach Resort & Spa in Langkawi, Hilton Petaling Jaya, Hilton Kuching and Batang Ai Longhouse Resort managed by Hilton in Sarawak.

With the exception of Batang Ai Longhouse Resort, which is under consideration for closure by Dec 31, Azhar describes the group’s other hotels as “cash positive”.

The group, which has a good number of five-star hospitality assets, may also venture into the three-star category to capture a bigger market. “The five-star hotel business is a tough market. Generally, we are looking at expanding into the three-star category,” he says.

Although five-star hotels command higher average room rates, it is not unusual for them to have lower gross operating profits compared with three-star assets. This is because the higher the category, the higher the costs to maintain larger lobbies and public space. And the two biggest costs for hotel operators are wages and electricity charges.

In Langkawi, where the average room rates are the highest in the country, Tradewinds is in the process of redeveloping the former Mutiara Burau Bay resort and expanding the luxury-class The Danna. These projects are part of the Perdana Quay Masterplan, which has now been scaled down. The project will no longer feature the residential components and the theme park.

“The focus will be on the attractions. I am redoing the retail area behind The Danna to transform it into a place that people want to come to. We are also going to tear down the car park [near The Danna] to enhance the retail area. We will have a development gallery to inform people about  what we are going to have there,” Azhar says, adding that a butterfly farm is taking shape.

“We still have a lot of land for future development. We may put in a three-star hotel to cover more markets.”

The Perdana Quay project, with a gross development value of RM4 billion, was launched in March last year. It was reported at that time that it would occupy over 240 acres in Pantai Kok-Teluk Burau.

On Mutiara Beach Resort in Penang, which has been closed for nine years, Azhar says, “If you look at the Batu Ferringhi beach, there are many hotels there, and some of them are not really getting the yield they should be getting. If I build one more hotel at the end (beyond Batu Ferringhi, in Teluk Bahang), it has got to be something to which the market will respond positively. We are looking at various options. Discussions with the Penang government are ongoing, to complement the state’s plan for economic growth.

“It is a very nice parcel of land. I have even thought about reopening the hotel. But reopening it will cost me RM200 million … [For that amount], I might as well build a new hotel.”

Projects in hand

This article first appeared in digitaledgeWeekly, on August 24 - 30, 2015.