KOTA KINABALU.18 March 2025 – Amid rising concerns over escalating operational costs in the
hospitality sector, the Malaysian Association of Hotels (MAH) Sabah & Labuan Chapter
is formally appealing to the Sabah State Tourism and Kota Kinabalu City Hall (DBKK) for
an urgent reassessment of the recently reinstated hotel licensing fees. The abrupt
implementation of this fee hike is placing severe financial strain on hotels, the
consequences of which could set the tourism industry back decades.
“Recently, Sabah Tourism, Culture, and Environment (KePKAS) stated that it will take at
least six to eight months before the state Cabinet can review the re-implemented hotel
licensing fee structure, which took effect on January 1. While we appreciate the efforts
of the Sabah Tourism Ministry, this issue is too severe to wait that long and must be
resolved immediately before the damage becomes irreversible,” said Hafizan Wong,
Chairman of MAH Sabah & Labuan Chapter.
BLINDSIDED BY A DRASTIC FEE HIKE – HOTELS CRY OUT OVER SUDDEN BURDEN
The reinstated licensing fees have left hotel operators saddled with unprecedented
cost increases. Worse still, the industry has not been given a fair chance to adapt to
these changes. No business can withstand a sudden tenfold increase in its operating
costs per room without severe downsides. MAH once again calls on the government to
immediately suspend the fee reinstatement or, at the very least, implement it in
phases.
REINSTATED LICENSE FEES SEND THE WRONG MESSAGE – LEGAL HOTEL
OPERATORS PENALIZED WHILE ILLEGAL STRAS REMAIN UNCHECKED
The Kota Kinabalu City Council (DBKK) has justified the fee hike by reasoning that hotels
benefit the most from increased tourism and must contribute more. However, this
misrepresents the reality of the situation. Hotels already face numerous taxes,
licensing requirements, and operational costs, while many Short-Term Rental
Accommodations (STRA) operators remain unregulated and untaxed.
If city funds need strengthening, why should only licensed hotels bear the burden
while unlicensed operators continue to operate unchecked?” asked Hafizan Wong.
“We are not against contributing to Kota Kinabalu’s growth, but the government must
ensure fairness in its policies. STRA regulations must be enforced before imposing
extreme cost increases on law-abiding hotels.
DBKK has also attempted to justify the fee hike by comparing hotel licensing fees to
hawker licensing fees. This is a flawed comparison, as hotels operate on an entirely
different scale, managing complex infrastructure, large workforces, and substantial
investments in guest experiences. If a hotel closes due to financial distress, the ripple
effects will impact the local economy, including restaurants, transportation services,
retail businesses, tour operators and human resource.
Furthermore, authorities have pointed out that 99 hotels—over 50% of operators—have
already paid the new fees. However, this does not equate to endorsement or prove the
model’s viability. For many, non-payment was simply not an option, as withholding fees
would jeopardize their licenses and ability to operate due to potential suspension.
Authorities must not mistake compliance for agreement and should instead focus on
whether this model is truly sustainable for the industry in the long run.
A CONSTRUCTIVE PATH FORWARD: MAH SABAH & LABUAN CHAPTER’S
RECOMMENDATIONS
To ensure a fair and sustainable policy, MAH Sabah & Labuan Chapter urges the
following:
- Gradual Implementation – A phased or tiered increase to help hotels adjust
without financial distress. - Transparency in Fund Utilization – DBKK should clearly outline how these fees
will be reinvested into tourism development, infrastructure improvements, and
city maintenance. - Industry Consultation – Future policy changes should involve structured
discussions with hoteliers and tourism stakeholders to ensure realistic,
mutually beneficial solutions. - Enforcement of STRA Regulations – Before licensed hotels are required to
contribute more, the city must ensure fairness by properly regulating and taxing
STRA operators, who currently compete without the same legal and financial
obligations as hotels.
A WILLING INDUSTRY, READY TO COLLABORATE
The hotel industry has long been a pillar of Kota Kinabalu’s tourism success, and MAH
Sabah & Labuan Chapter remains committed to working alongside the government to
find a balanced and equitable solution that benefits all stakeholders.
We all want Sabah to thrive as a top-tier tourist destination,” added Hafizan Wong.
“But policies that undermine competitiveness, increase costs overnight, and burden
only one sector of the industry are counterproductive. The government must take
industry concerns seriously and ensure sustainable, balanced growth.
MAH Sabah & Labuan Chapter welcomes open discussions and remains ready to
collaborate with DBKK and Sabah’s tourism ministry to find a fair, long-term solution.
