Tuesday, July 29, 2008

Bad times for budget hotels

Business stories may not be headline grabbers for most of us. But the business pages of most newspapers reported today that a crisis is possibly looming in the food and beverage industry. When times are bad, it is natural for consumers to eat at home. Coffee house buffet is certainly not a priority. F & B, unfortunately, accounts for 30% of a hotel's overall revenue. When companies go on cost-cutting exercise, they would be reluctant to hold workshops outside their offices. Family camps would also be taken away from company budget and even government departments would be more prudent. But if this continues, the industry is worried that some 2,000 hotel staff could be laid off in the next two months and some 10,000 by year-end. The Malaysian Budget Hotels Association has predicted that the problems of budget hotels were compounded by a RM28mil drop in sales this month due to the cancellation of bookings by government agencies, presumably the result of an austerity drive. But if Malaysians decide to holiday domestically, it would help these hotels, and hopefully the marketing side of these hotels can generate sales during the fasting month. Jobs are at stake here and certainly the industry deserves our support.

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