Malaysia’s hotel sector is facing a slow start in 2025, with geopolitical tensions and cautious spending patterns dampening international travel demand, according to the Malaysian Association of Hotels (MAH).

MAH President Datin Christina Toh noted that while inbound visitors—particularly from China and India—have increased compared to previous years, hotel occupancy rates remain underwhelming. This comes despite visa-free policies and additional flights between Malaysia and China.

Data shows that Malaysia recorded 6.74 million visitor arrivals in January and February 2025, a 31.3% increase year-on-year. However, the average occupancy rate (AOR) for hotels dropped 1% to 54.3% in Q1 2025. Five-star hotels saw a 4.5% decline to 55.3%, while three-star hotels experienced a sharper 2.3% fall to 49.5%.

The average daily rate (ADR) for Malaysian hotels also fell by 6.6% to RM330.

Looking ahead, the sector remains cautious despite upcoming events like the ASEAN Summit, with expectations for a stronger recovery during the summer holiday season.

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