This article first appeared in The Edge Malaysia Weekly on August 7, 2023 - August 13, 2023
HOTEL Equatorial Penang — which ceased operations on April 1, 2021, after operating for 32 years — is gearing up to reopen for business in a couple of years, on the back of booming tourism and business activities in the state. The hotel, located in Bukit Jambul near the Bayan Lepas Free Industrial Zone (FIZ) on Penang Island, is scheduled for a relaunch in 2025, after an extensive makeover.
Details of the planned renovations remain sketchy, however. It is also not clear how much will be spent to revitalise the hotel, whether its room inventory will remain at 662 rooms or if new components will be added. When contacted for information, an Equatorial Group official declined to comment.
“The hotel is being prepared for a reopening in about two years’ time. Plans are underway for this,” a source tells The Edge.
It is understood that while the 12-storey building, which sits majestically atop Bukit Jambul, will undergo an extreme makeover, it will not be torn down. The Edge has learnt that the last time the hotel underwent a renovation and/or refurbishment exercise was prior to the pandemic.
One source suggested the possibility of office space being added to the hotel.
The brand is well known in Kuala Lumpur, having operated for decades on Jalan Sultan Ismail before closing its doors. In 2012, after operating for 39 years, Hotel Equatorial Kuala Lumpur shut down and the entire building was demolished and rebuilt. The property reopened in 2019 as the 52-storey Equatorial Plaza, comprising 21 floors offering 440 hotel rooms and 23 floors with 460,000 sq ft of office space, after a RM1 billion redevelopment. The hotel was renamed EQ Hotel Kuala Lumpur. Incidentally, the hotel turns 50 this year.
In Penang, the hotel is owned by Bukit Jambul Hotel Development Sdn Bhd. A search on the Companies Commission of Malaysia (SSM) website reveals that the shareholders of Bukit Jambul Hotel are Hotel Equatorial (M) Sdn Bhd (60%), Arishah Sdn Bhd (30%) and Twintrees Hotels Sdn Bhd (10%).
According to reports, Hotel Equatorial Penang commenced operations in 1989. At the time, it was the first five-star hotel on the south of the island. It is worth noting that the hotel is located adjacent to the 18-hole Penang Golf Club and just 5km from the Penang International Airport.
In 2021, the owners decided to shut down the hotel, citing adverse business conditions caused by the Covid-19 pandemic. In an internal memo dated January 2021, the hotel informed its employees that it would close its doors effective March 31, 2021. Noting that the closure of the hotel was a “sad and difficult decision”, the owners said despite the huge losses suffered by the company, it would pay severance benefits to the staff.
Based on the latest data available on the SSM website, in the financial year ended Dec 31, 2021, Bukit Jambul Hotel’s revenue fell 43.7% to RM10.22 million from RM18.15 million in FY2020. It also posted a net loss of RM8.57 million in FY2021 compared with a net loss of RM14.47 million in the previous year.
As at Dec 31, 2021, it had total liabilities of RM17.56 million, of which RM1.95 million were current. Total assets stood at RM84.23 million. The company also saw its accumulated profit decline to RM56.67 million from RM82.71 million in FY2019, before the pandemic.
But things appear to be improving for the hospitality sector. According to the Malaysian Association of Hotels (MAH), Penang was among the top five states that experienced the quickest recovery in average occupancy rate (AOR) in 2022 compared with 2021. Penang was also the top performing state in terms of average daily rate (ADR).
In March, the Association of Tourist Attractions Penang and MAH’s Penang chapter were quoted as saying that Penang will reach 100% recovery by the end of this year. In fact, some hotels have already recovered the funds used to cover costs during the pandemic. Seventy per cent of hotel guests are domestic travellers while foreign visitors are flocking in from India, Singapore, Thailand, Taiwan and Vietnam. The Indonesians, meanwhile, are going to Penang for medical tourism.
Hotel Equatorial Penang’s location in Bukit Jambul means its target market is not tourism. Rather, its target is the tech/manufacturing sector in the vicinity.
Asked to comment, MAH Penang chapter chairman Tony Goh says the existing hotels near the Bayan Lepas FIZ are performing well. He cites the examples of Eastin Hotel Penang and AC Hotel by Marriott Penang. He expects Equatorial Penang to also benefit from the overall improvement in the performance of hotels in the state. He adds that the hotel may not just benefit from business guests, but also from tourists who fancy a weekend retreat, as the hotel, which is located near a golf course, also offers a beautiful landscape.
Goh says the performance of the hotels in the area is further supported by industrial developments in Batu Kawan, on the mainland. The Sultan Abdul Halim Muadzam Shah Bridge connects Batu Kawan on the mainland to Bayan Lepas FIZ on the island.
Thanks to the state’s aggressive tourism promotion activity, Goh says hotels in Penang are benefiting from leisure tourists as well as from medical tourists, the business crowd from the multinational corporations and industrial zones as well as the meetings, incentives, conventions and exhibitions market.
Moreover, activity in the industrial zone is expected to pick up. In April, Air Products and Chemicals Inc — a provider of industrial gases — announced that it will construct two nitrogen plants, one of which will be located in the Bayan Lepas FIZ while the other will be at Batu Kawan Industrial Park.
Advanced Semiconductor Engineering Inc, meanwhile, is constructing a new semiconductor assembly and testing facility comprising two buildings with a built-up area of 982,000 sq ft in Bayan Lepas FIZ.
Elsewhere, the Equatorial group used to operate the Hotel Equatorial Melaka, owned by Permodalan Nasional Bhd, before the hotel shut permanently in 2019. Currently, apart from EQ Kuala Lumpur, the Equatorial Group operates the Equatorial Ho Chi Minh City in Vietnam.
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