The Malaysian Association of Hotels (MAH) is urging lawmakers in Kota Kinabalu to reconsider the recent hike in hotel licensing fees, which poses a significant financial strain on hotels of all categories, from budget accommodations to five-star establishments.
Following the reinstatement of the Hotel & Lodging Houses By-Laws 1966, hotels in Kota Kinabalu are experiencing a steep increase in operational costs due to the transition from the 1989 Cabinet Licensing Fees Structure to the 1966 rates.
Escalating Operational Costs: A Challenge for the Hospitality Sector
The shift to the reinstated fee structure has led to a sharp rise in licensing costs:
| 1989 Cabinet Licensing Fees Structure | 1966 Reinstated Fees Structure |
|---|---|
| Class 1: RM10 per room per annum | Class 1: RM4.65 per room per day |
| Class 2: RM2.65 per room per day | |
| Class 3: RM1.30 per room per day |
Under the new structure, fees are charged per occupied room per month based on hotel classification.
Mr. Hafizan Wong, Chapter Chairman of MAH Sabah/Labuan Chapter, stated:
“Previously, hotel operators were required to pay a licensing fee of only RM10 per room per annum. Under the new fee structure, they now have to pay rates per occupied room per month, based on DBKK’s hotel classification category of first, second, and third class. Such a steep increase in costs may force some of us to reduce our services, lay off staff, or, in extreme cases, cease operations.”
To illustrate the impact, a 100-room hotel classified as 2nd Class with a 60% occupancy rate (1,860 room nights per month) would now face a monthly licensing fee of RM4,800, amounting to RM57,600 annually—a drastic increase from the previous RM1,000 per year.
Ensuring Fairness: Addressing the Unregulated Market
While MAH acknowledges the city’s objective of sustainable economic growth, it stresses the importance of fair and balanced regulations. Licensed hotels are already subject to strict compliance measures, taxes, and operational costs, whereas many unregulated Short-Term Rental Accommodations (STRA) continue to operate without similar obligations.
Datin Christina Toh, President of MAH, emphasized:
“If Kota Kinabalu is seeking to increase its funds for city upkeep, let’s work together to close the gaps on unlicensed accommodations instead of punishing licensed hotels for playing by the rules. We are not against contributing to the city’s development, but fairness must prevail. Law-abiding hotels should not bear the financial weight alone while others continue to operate without proper licensing and financial contributions.”
Potential Impact on the Tourism Economy
If left unaddressed, the new fee structure could have severe repercussions on the local hospitality and tourism sectors:
Higher room rates, making Kota Kinabalu a less competitive destination.
Declining domestic tourism, as Malaysian travelers opt for more affordable alternatives in neighboring countries.
Job losses and reduced investments, with small and mid-sized hotels struggling to sustain operations.
Public misperception, where guests may blame hotels for price hikes without realising the impact of government-imposed fees.
A Call for Dialogue and Sustainable Solutions
MAH urges the Sabah State Government and DBKK to reconsider the implementation of the revised fees and engage in constructive dialogue with industry stakeholders.
Proposed Recommendations:
Suspend the fee increase until a transparent consultation process takes place.
Revise the licensing fee structure to ensure a fair and sustainable approach.
Regulate STRA operators to create a level playing field.
Introduce a transitional plan to help hotels gradually adapt to any fee adjustments.
Datin Christina Toh further emphasised:
“While we support the city’s vision for progress, we strongly advocate for an approach that ensures fairness and sustainability for all accommodation providers. A thriving hospitality industry benefits the entire economy, and any regulatory changes must be implemented with due consideration for long-term viability.”
MAH remains committed to working closely with the relevant authorities to find a balanced solution that supports both the growth of Kota Kinabalu’s tourism industry and the sustainability of its hospitality sector.