Confident of demand, Ri-Yaz set to launch villa resort in Langkawi
The Edge Malaysia
June 17, 2020 17:00 pm +08
A staggering number of hotels have been forced to shut down, either temporarily or permanently, thanks to the Covid-19 pandemic and subsequent implementation of the Movement Control Order on March 18 to curb its spread.
Some of these hotels were long established, yet stood little chance against the ravages of the coronavirus, whose impact on the tourism sector has been particularly devastating.
Even though the sector’s recovery is projected to be long and protracted, one hotel operator appears to be throwing caution to the wind.
On July 1, hotel management firm Ri-Yaz Assets Sdn Bhd is set to launch the 5-star Ri-Yaz Lavanya Resort & Villas on a 6.3-acre site in Pantai Tengah
, Langkawi, Kedah. It is Ri-Yaz Assets’ second resort on the island, after the 108-room Dash Resort Langkawi.
Ri-Yaz Assets group managing director Datuk Seri Shaheen Shah Sidek tells that as enquiries to book Dash Resort’s sole villa unit had been positive, Ri-Yaz was encouraged to open Ri-Yaz Lavanya.
“The idea is to cater for families. They will have the option of preparing food on their own or have our chef prepare the meals in their unit. They will not have to dine with other guests. Butler service is also provided,” he points out.
Ri-Yaz Lavanya is developed by LD Global Sdn Bhd, a wholly-owned subsidiary of listed manufacturer and property developer Kobay Technology Bhd.
The first phase of Ri-Yaz Lavanya will include 37 pool villas with layouts of two-, three- and four-bedrooms and measuring 2,237 sq ft to 4,640 sq ft.
According to Kobay’s annual report for the financial year ended June 30, 2019, the company had chalked up total sales of RM52 million for the villas, which have a gross development value (GDV) of RM76 million. The units were sold on a sale-and-leaseback model, and eight are still available.
“The domestic market will be the focus for tourism in 2020. We believe guests will be more comfortable staying in a fully equipped villa with a private pool compared with a hotel room and having to share a common swimming pool,” Shaheen says of the decision to proceed with the resort’s opening when many others are closing or reducing inventory.
Interestingly, a recent survey by the Malaysian Association of Hotels reveals that hotels started receiving bookings last month, with July registering the highest number of hotels with bookings (see “Signs of recovery as Malaysians make holiday plans”).
As Ri-Yaz Lavanya is located in a less crowded part of Langkawi, Ri-Yaz Assets is confident it will be able to chalk up an average room rate of RM1,600 and occupancy of 45% this year, notwithstanding the uncertainties.
It is worth noting that Kedah has traditionally boasted the highest average room rate (ARR) in the country, thanks to the lure of duty-free Langkawi. Last year, the ARR for the state was RM440.71.
Ri-Yaz Assets is also working on packaging the villa stays with Langkawi Roro, a ferry service from Perlis that also transports private vehicles as Shaheen foresees that guests will prefer to drive to Langkawi with their families. “We are confident demand in Langkawi will pick up,” he says, noting that Langkawi is viewed as safe as there have been very few Covid-19 cases on the island. A small team of 25 will look after the 37 villas while other resources will be shared with Dash Resort, which is only 300m away.
Phase 2 of Ri-Yaz Lavanya, with a GDP of RM244 million, is scheduled to open in the first quarter of 2022. It will offer 90 two-bedroom serviced apartments measuring 1,377 sq ft to 2,700 sq ft. The larger units will have a private pool. There will also be 133 studio hotel rooms measuring 484 sq ft to 1,000 sq ft.
Ri-Yaz Assets operates four other hotels — the 81-room Dash Box Hotel and 88-room Tan’Yaa Hotel in Cyberjaya; the 139-room Dash Hotel Seminyak in Bali, Indonesia; and the 152-room Altara Suites by Ri-Yaz in Danang, Vietnam.
There are plans to increase the number of hotels to 15 and total room inventory to 3,926 by 2025. New openings are being planned in Malaysia and Vietnam.
The RM130 million 233-room Dash Hotel KLCC will be owned and operated by Ri-Yaz Assets. Located in Jalan Mayang near the Australian High Commission, the hotel is slated to open at the end of 2022. Ri-Yaz Assets purchased the plot from Holiday Villa Hotels & Resorts Sdn Bhd at the end of 2018, after the latter aborted plans to build a hotel on it.
For Ri-Yaz Assets, a listing on Bursa Malaysia is on the cards, albeit in a few years’ time. This follows the entry of a new partner, Tan Sri Abdul Rashid Abdul Manaf, who is a director and co-founder of Eco World Development Group Bhd. He was also a chairman of S P Setia Bhd.
In 2013, Shaheen sold a 60% stake in Ri-Yaz Assets to Abdul Rashid, and holds the remaining equity stake.
”The [initial] plan was to list the company in 2018, but we diversified our business into F&B, education, travel and tours, digital marketing, and design and development to incorporate a strong ecosystem that supports each business. We have spread out the opportunities and risks of each company as we are studying the most effective way to list the company,” Shaheen says.
The group operates four Dodo Dim Sum outlets and a hospitality and tourism college called Ri-Yaz College in Penang.
Shaheen sees 2023 as the earliest possible date for the listing. Alternatively, Ri-Yaz Assets is also looking at setting up a real estate investment trust as it will own four hospitality assets.
Previously, Ri-Yaz Assets managed the Cyberview Resort & Spa in Cyberjaya and The Heritage Resort in Terengganu.
Signs of recovery as Malaysians make holiday plans
There may be light at the end of the tunnel for hotels.
Since last month, Malaysian hotels have started to receive guests and forward bookings look promising, a recent survey by the Malaysian Association of Hotels (MAH) reveals.
“Overall, hotels surprisingly responded with demand recorded in the third and fourth quarter of 2020, indicating people’s need to travel and that they had taken advantage of promotions and packages hotels had likely introduced in advance,” MAH CEO Yap Lip Seng said in an industry report.
Steady demand is also seen in 2021, signalling confidence in recovery and the acceptance of the new norm in travel, Yap observed in the “Hotel Industry of Malaysia MAH: Moving Forward” report dated May 31, following a survey of 402 hotels.
“Kedah (mainland), Perak, Johor, Pahang and Kelantan are expecting short-term immediate demand while Langkawi and Negeri Sembilan are looking at year-end demand,” he states.
On the other hand, demand remains constant in the third and fourth quarter of 2020 for Terengganu, Selangor, Kuala Lumpur and Sarawak. Penang, Melaka and Sabah, meanwhile, are looking at steady growth until 1Q2021.
While this news is positive, there are concerns over average room rates and future room supply.
The report reveals that hotels are anticipating a 27% decline in average room rates over the next six months to a year. This, Yap says “is an unprecedented low of what was already low in comparison with the region”.
Only Melaka and Sarawak are expecting the decline to be below 20%.
As for future room supply, an estimated 149, or 37.06%, of the hotels surveyed plan to reduce the number of rooms available for booking. Of this total, 98 hotels plan to reduce room inventory by 50% or more.
Yap describes this as “a worrying trend” as it could have an impact on tourism in the future. It could also provide an opportunity for home-sharing or short-term rental providers to take advantage of a recovery in tourism. The reduction, however, is in line with the planned reduction in manpower.
Some 256 hotels representing 64% of the respondents say they plan to reduce headcount. Of this, 57 are planning to reduce staff by a whopping 50% or more.