This article first appeared in The Edge Malaysia Weekly on December 8, 2025 - December 14, 2025
A 22-storey hotel, which was previously the five-star Equatorial Melaka, is currently on the market at an asking price of RM125 million to RM135 million, according to sources. Owned by Permodalan Nasional Bhd (PNB), the hotel, which has been closed since 2019, is located next to Dataran Pahlawan Mall and within walking distance of the historic A Famosa site.
According to documents sighted by The Edge, the 494-room hotel sits on three parcels of commercial leasehold land measuring a total of 136,077 sq ft, with the leases expiring between 2080 and 2116.
PNB acquired the hotel in 2016 when it bought Syarikat Malacca Straits Inn Sdn Bhd (SMSI) from its previous owners Sime Darby Bhd, Perbadanan Kemajuan Negeri Melaka and Hotel Equatorial (M) Sdn Bhd. The transaction was completed in June that year.
Sime Darby, prior to its demerger, held a 55% stake in SMSI, along with 78.6% interest in its redeemable preference shares, which PNB bought for RM55.36 million. It is not known how much PNB paid for the remaining stake in SMSI — mostly held by Perbadanan Kemajuan Negeri Melaka (22.17%) and Hotel Equatorial (16.67%) — as these transactions were not publicly disclosed.
The hotel closed at end-June 2019 to undergo an extensive makeover but has remained shuttered since. When contacted by The Edge, PNB says the hotel ceased operations upon expiry of the management contract with Equatorial.
It also says it is unable to comment on any market speculation on specific transactions. It adds that it continually reviews its investments, including its real asset portfolio to ensure long-term value creation for its unitholders. This may involve identifying interest and the value of its assets or deciding if monetising the assets for capital recycling is the optimal course of action to take.
Market observers note that the site of the former Equatorial Melaka is not the only hotel property currently available for sale in the state.
According to Teh Hong Chua, associate director of CBRE | WTW Melaka, the hotels that are on the market include the 241-room Axteria Melaka Hotel in Kota Laksamana; the three-star, owner-operated, 96-room MidCity Hotel in Melaka Raya; and the four-star 419-room Mahkota Hotel in town.
The Axteria Melaka Hotel (asking price: RM65 million) is part of the mixed-use development known as Axteria Melaka by Axteria Assets Sdn Bhd, a wholly-owned subsidiary of Axteria Group Bhd (KL:AXTERIA). The disposal is said to be part of a strategic divestment by the group.
Axteria Melaka also includes a 39-storey residential tower with 255 serviced apartments, a 44-storey residential tower with 306 serviced suites, a four-storey commercial hub and a two-storey retail podium.
Teh says there are three other hotels in the four- and five-star category, each with about 180 to 270 rooms, that potentially could be up for sale. The number of hotels being put on the market underscores the increasingly competitive environment in Melaka’s hospitality sector, indicating challenges in absorbing the oversupply of rooms.
However, Teh points out that such divestments represent targeted adjustments in accommodation assets and are not expected to have a significant impact on the city’s overall tourism recovery.
Tourism recovery yet to keep up with available rooms
Melaka’s tourism sector has staged a strong recovery in terms of visitor arrivals and spending since the outbreak of Covid-19. The accommodation market, however, remains competitive and more diversified than before the pandemic, says Teh.
The hotel occupancy rate is currently at about 50%, significantly below the 66% recorded in 2016. This decline is attributed to two structural factors — a significant increase in the supply of hotel rooms over the past decade and the rapid growth of alternative accommodation such as homestay and short-term rental, which have redistributed visitor demand across a wider range of options.
Despite the intense competition, Melaka has continued to see new hotels being opened in the past two years (see table).
Among them is the 294-room Dusit Princess Hotel Melaka — formerly Plaza Ramada — in Lorong Bendahara, which opened in December last year under the Dusit International brand. There is also the five-star, 428-room Parkroyal A’Famosa Melaka Resort which started welcoming guests in January 2024. And more recently, the 526-room Birkin International Hotel which opened in Klebang in July this year.
According to Teh, there are currently no other hotels under construction or scheduled to open in the near term. He says the new hotel openings have added to the diversity of high-quality accommodation available in Melaka and further support the city’s ongoing tourism recovery.
“Tourist arrivals reached 15 million in 2024 and are on track to hit 16.5 million this year, supported by rising visitor spending, a gradual improvement in the length of stay and stronger international marketing efforts, including the appointment of Fan Bingbing as Melaka’s tourism ambassador, which has helped boost visibility in key Asian markets,” he adds.
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