The former Equatorial Melaka, once a prestigious five-star hotel, is now on the market with an asking price ranging from RM125 million to RM135 million, according to insider sources. This 22-storey property has been closed since 2019 and is conveniently located adjacent to the Dataran Pahlawan Mall and just a short stroll from the historic A Famosa site.
Documents reviewed by The Edge reveal that this hotel boasts 494 rooms and occupies three parcels of commercial leasehold land totaling 136,077 square feet, with lease expirations scheduled between 2080 and 2116.
Permodalan Nasional Bhd (PNB) purchased the hotel in 2016 when it acquired Syarikat Malacca Straits Inn Sdn Bhd (SMSI) from its previous owners, which included Sime Darby Bhd, Perbadanan Kemajuan Negeri Melaka, and Hotel Equatorial (M) Sdn Bhd. This transaction was finalized in June of that year.
Prior to its demerger, Sime Darby held a 55% stake in SMSI, along with a substantial 78.6% interest in its redeemable preference shares, all of which PNB acquired for RM55.36 million. However, the total amount PNB paid for the remaining shares of SMSI—primarily owned by Perbadanan Kemajuan Negeri Melaka (22.17%) and Hotel Equatorial (16.67%)—remains undisclosed.
The hotel shut its doors at the end of June 2019 for a comprehensive renovation but has not reopened since. When approached by The Edge, PNB stated that the hotel halted operations following the expiration of its management agreement with Equatorial. They also indicated their inability to comment on market speculations regarding specific transactions. PNB emphasized that it regularly assesses its investments, including its real asset portfolio, to ensure sustainable value creation for its unitholders. This process may involve evaluating interest in the assets and their valuation or deciding whether monetizing these assets for capital recycling is the most strategic option available.
Interestingly, the former Equatorial Melaka isn’t the only hotel currently on the market in the state. According to Teh Hong Chua, associate director at CBRE | WTW Melaka, several other hotels are also available for sale, including the Axteria Melaka Hotel with 241 rooms located in Kota Laksamana, the owner-operated MidCity Hotel featuring 96 rooms in Melaka Raya, and the four-star Mahkota Hotel that comprises 419 rooms in the city center.
The Axteria Melaka Hotel, which has an asking price of RM65 million, is part of a mixed-use development known as Axteria Melaka, owned by Axteria Assets Sdn Bhd, a subsidiary of Axteria Group Bhd. The decision to sell is said to be part of the group’s strategic divestment plan.
This development also includes two residential towers—one with 255 serviced apartments and another with 306 serviced suites—as well as a four-storey commercial hub and a two-storey retail section.
Teh mentions that there are three additional hotels in the four- and five-star categories, each offering between 180 and 270 rooms, that might also be positioned for sale. The current increase in hotels on the market highlights the intensifying competition within Melaka's hospitality sector, reflecting challenges associated with the oversupply of accommodation options.
Despite these challenges, Teh notes that such divestments are strategic adjustments concerning accommodation assets and are unlikely to significantly impact the overall recovery of tourism in the city.
Although Melaka’s tourism industry has witnessed a robust recovery in visitor numbers and spending following the Covid-19 pandemic, the accommodation market remains highly competitive and diversified compared to the pre-pandemic era, Teh explains. Currently, the hotel occupancy rate hovers around 50%, markedly lower than the 66% recorded in 2016. This decrease can be attributed to two key structural factors: a considerable rise in the availability of hotel rooms over the last decade and the rapid proliferation of alternative lodging options, such as homestays and short-term rentals, which have diversified visitor choices.
In spite of the fierce competition, Melaka continues to see new hotel openings. Among the latest additions are the 294-room Dusit Princess Hotel Melaka, previously known as Plaza Ramada, which opened in December last year under the Dusit International brand, and the five-star Parkroyal A’Famosa Melaka Resort, which welcomed guests in January 2024. Additionally, the newly established 526-room Birkin International Hotel, located in Klebang, commenced operations in July this year.
Teh points out that there are currently no other hotels under construction or set to open imminently. He emphasizes that the recent hotel launches have enriched the variety of high-quality accommodations available in Melaka, further supporting the city’s ongoing tourism revival.
"Visitor arrivals reached 15 million in 2024 and are projected to reach 16.5 million this year," Teh notes. This growth has been bolstered by increasing visitor expenditures, a gradual uptick in the duration of stays, and enhanced international marketing initiatives, including the appointment of celebrity Fan Bingbing as Melaka’s tourism ambassador, which has significantly raised the destination's profile in key Asian markets.
