Despite looming regulations over AirBnb rentals, the number of units on offer is set to rise over the next few years, partly fuelled by rising vacancies in high-end condominiums.
In 2018, Malaysia was ranked as the third most visited country in Asia with arrivals of 26.8 mil, ahead of Hong Kong’s 26.6 mil. “Tourism contributes about 15% to our economy, hence it’s becoming a trend to own tourism-related properties. Although the government will soon require AirBnb operators to register their units, the opportunities are still there,” Founder of Wealth Momentum, Dr Ivan Kok said during a recent forum in Kuala Lumpur.
Within Malaysia, the city with the best quality of life is its capital, Kuala Lumpur. It ranks just behind Singapore as Southeast Asia’s city with the best quality of life, according to Mercer Quality of Living City Ranking 2019 survey.
KL is also the air transport hub for Asia’s largest low budget airline, Air Asia, with millions transiting at the KLIA2 airport annually. Most people around the world now know about KL and arrivals are due to rise in the coming years. The depreciating ringgit also makes it a bargain to travel here with KL having one of the cheapest rates for 5-star hotels in the world.
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Malaysia is also one of the top destinations in the world for medical tourism with about 1.05 mil foreigners seeking medical treatment there in 2017.
All these mean that the demand for short-term accommodation will continue to drive more owners to convert their units into homestays or home- sharing units under AirBnb or other home sharing platforms.
Thus , it doesn’t come as a surprise that Malaysia is the fastest growing market for AirBnb in Southeast Asia, chalking up a 60 % year on year increase, according to reports. The latest data showed 44,000 listings in Malaysia on AirBnb and this figure is set to grow significantly over the next few years. This is despite the government’s plan to regulate the industry by requiring AirBnb operators to register their properties.
“The overwhelming results proved that this industry has successfully created a 3-party win- win solution – for the AirBnb host, owner and the market,” say brothers Elvin Wong and Eric Wong, founders of Sync Management which operates several AirBnb units.
As ‘Ambassadors’ of AirBnb in Malaysia, the brothers are committed to helping Malaysian AirBnb hosts upgrade their homestay service to international standards. They hold workshops and seminars to educate host or potential hosts on how to be the best hosts while at the same time earning extra income. “You must treat AirBnb as a business and learn the professional way to run your homestay if you want this to be a long-term viable income generator,” advises Eric.
With the Malaysian property market currently experiencing a supply glut especially with high-end condominiums, resorting to short-term rentals is becoming a trend among owners unable to rent out long-term.
Sync Management guides these owners and operators on how to convert their empty units into a popular AirBnb short term lodging.
“It may sound simple but to get a high ranking listing with high occupancy rate, you need to know some tips apart from the basics. After all, almost everyone is in it for the income as well as the experience of interacting with global travellers,” says Elvin.
“It’s also a mistake to think that guests will always choose the lower priced unit; what matters more is the quality of your listing and the reviews,” says Eric, adding that providing good customer service and excellent cleanliness are the two top factors that guests look at.
“The environment must also be peaceful and the accommodation must be located near all the conveniences like shops, eateries, public transportation, etc, unless it is a countryside homestay.”
Some of the tips include how to prepare the house rules and how to communicate with guests. The biggest issue of concern for hosts however is losses and damages to their unit. Fortunately, AirBnb provides host protection insurance which insures the property for up to USD$1 million against injury or property damage claims.
WILL LONG-TERM WIN?
Indeed, even as the home sharing trend gains more traction in Malaysia, there is a risk of homeowners preferring to rent out on lucrative short-term rentals instead of long-term. In Langkawi for example, it is becoming very challenging to find long-term rentals as everyone wants to rent out short-term due to it being more profitable. And in Kota Kinabalu, apparently AirBnb has been banned but it is still being offered due to weak enforcement.
In Paris and New York, AirBnb has been banned as it is preventing a lot of residents from finding long- term rentals.
This has prompted some in the industry to remark that ultimately, the [accommodation rental] game is still long term. “Short-term rentals are more for the practical purposes of paying the loan instalments and waiting for the property to appreciate in value,” opines serial entrepreneur Dr Alan Poon.
Poon doesn’t believe short-term rentals can disrupt the hotel industry because the latter caters to a different segment, to which Akmal Nizam, founder of MyCribBooking.com agrees.
In Akmal’s view, there are some guests for whom hotels are not private enough for private events or family gatherings. They prefer to rent villas or bungalows with swimming pools. “The price tag of RM1,000 per night is not an issue for them. In fact, in 2018, villas and bungalows with swimming pool are the most sought-after property in the short-term rental category.”
Poon concedes that there is a niche market for such non-hotel accommodation but this is considered a different market segment from hotels with the latter providing many of the services not available in private accommodations.”Short-term rentals and the sharing economy with their underlying technology platform are here to stay but so will traditional hotels. This is due to their different clientele demands.”
The conclusion? The outlook for short-term rentals in 2019 is still very bright in Malaysia. There is still a lot of upside to more of such units coming into the market. Although tourist arrivals from China has declined in recent years, it has not impacted the short term market much due to demand from other source countries.
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