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FEER: Malaysia's Next Big Thing
By Lorien Holland

9/3/2001 4:52 am Fri

[Lagi satu rekod mega ingin dicatat di negeri Pahang yang memang layak digelar darul kasino. Dengan membina bilik yang sebegitu banyak siap dengan kemudahan hiburan dan perjudian, Pahang akan dibanjiri oleh lebih lebih ramai kaki judi - termasuk yang baru mahu menjadi kaki. Mungkin hanya mereka yang singgah ditapak judi tetapi famili yang dibawa bersama akan terasa bahang judi. Apa nak buat kerajaan lebih mementingkan untung dari rugi walaupun ia membawa budaya yang tentu merugi. Jangan lupa ada yang menggadai tubuh bila sudah terlalu rugi... - Editor]

Source: The Far Eastern Economic Review Issue cover-dated 15th March 2001

Malaysia's Next Big Thing

By Lorien Holland

MALAYSIA HAS ALWAYS BEEN obsessed with superlatives, whether it's the tallest flagpole or the highest twin towers in the world. But its latest global first takes the biscuit--the mother of all hotels, with a mind-boggling 6,300 rooms that will put monsters like the MGM Grand in Las Vegas in the shade.

The hotel, called the First World, is the newest addition to the Genting gambling and entertainment enclave in the highlands north of Kuala Lumpur. Some 1,000 rooms have been open since December 15, and when the entire complex is complete in around 2004, it will more than double available accommodation at Genting's self-styled "City of Entertainment" to around 10,000 rooms.

While Genting is well known in Asia, it has none of the international market draw or brand recognition of Las Vegas. It has the advantage of holding the only casino licence in Malaysia, but it is also situated in a Muslim-majority country (Islamic teaching outlaws gambling), and therefore cannot count on a large and dedicated domestic visitor base. So filling those 12,600 extra beds (assuming two to a room) is not going to be an easy task. "It's a little ambitious. We haven't seen anything of this scale anywhere in Asia before," says David Ling, senior vice-president of Jones Lang LaSalle Hotels in Singapore.

While the "mega-hotel" business model is untested in this region, Genting--which topped the REVIEW's 2000 survey of best-managed companies in Malaysia--is in no doubt that the market potential is there. Its confidence is based on the emergence of new tourist bases, particularly in mainland China, where punters may not have a fortune to spend but have plenty of compatriots. In consequence, the entire First World Hotel is budget accommodation. The current rack rate for a twin room is 50 ringgit ($13) and profits, when they come, will be based on volume, not hefty profit margins.

The emphasis on volume is clear from the 32 check-in desks in the cavernous lobby, and the 1,338-seat coffee shop. Even the bowling alley has 34 lanes, and work is under way to widen the winding access road that brings visitors up to the resort, some 50 kilometres north of Kuala Lumpur. "We have a nice large five-star lobby for the ambience and then basic, clean rooms. In the current economic conditions this kind of budget hotel fits in very well, as it's in reach of the medium-to-low income group," says B.M. Wong, assistant vice-president of the First World Hotel.

Gambling remains the bread and butter of the Genting resort--besides the First World Hotel, there already is a slew of luxury hotels and helicopter landing pads for the high-rollers--but its new expansion into the budget market comes with a greater diversification into other forms of entertainment. Like the MGM Grand and other major hotels in Las Vegas, Genting is attempting to re-brand itself as a family destination, and the First World development comes along with Southeast Asia's biggest indoor theme park, an ice-skating rink and snow house, replete with toboggan run.

"Genting has always maintained a recreation centre as a secondary attraction to the gambling, but building so many more rooms to bring more and more people up means you need good entertainment that will make people stay longer than one day," says Michael Greenall, head of sales at BNP Paribas Peregrine in Kuala Lumpur.

Even though the new theme park is still under construction, the First World Hotel has been running at 84%-86% occupation rates since its opening. With the prospect of another 2,300 rooms by the end of 2001, hoteliers in Kuala Lumpur--especially those running two- and three-star establishments--are looking nervously at the development.

The Malaysian capital suffers from significant oversupply of hotel rooms and occupancy is wavering around a miserable 60%, despite some of the lowest room rates in the region. If Genting manages to capture most of the emerging Chinese tourism market and bus people direct to the First World from Kuala Lumpur's airport, then there will be little excess business for those establishments in the city.

But Lim Eng Chong, director of Henry, Butcher, Lim & Long, a Malaysia-based property consultancy says there will not be significant fallout in the Kuala Lumpur hotel market. "Kuala Lumpur and Genting are two very different places and they attract very different people. Genting is a very special market and it could well be in Timbuktu for the amount of influence it has on Kuala Lumpur."