The Malaysia Budget & Business Hotel Association (MYBHA) expresses concern over Kota Kinabalu City Hall’s (DBKK) recent announcement regarding the reinstatement of hotel licensing fees from 1966. MYBHA argues that this sudden fee hike imposes an undue financial burden, especially on budget hotels and smaller establishments, undermining their ability to compete and grow.
DBKK’s method of calculating hotel licensing fees based on revenue creates a fluctuating tax rather than a standard administrative cost. This results in unpredictable financial pressure on hoteliers, penalizing them based on performance and deterring investment in Kota Kinabalu’s hospitality sector. MYBHA believes that such an approach is neither sustainable nor fair.
Key Issues That Need Immediate Attention:
- Unequal Treatment of Hotels and Short-Term Rentals (STRA)
- While licensed hotels are heavily regulated and taxed, unlicensed Short-Term Rental Accommodations (STRA) operate freely, putting legitimate hotel businesses at a competitive disadvantage. MYBHA calls for DBKK to enforce equal regulatory measures on STRA operators to ensure fair competition and suggests banning STRA in areas with established hotels.
- Licensing Fee Hike Puts Hotels at a Disadvantage
- DBKK’s revenue-based licensing fees result in fluctuating costs, which are unsustainable for hotel operations. Hotels already contribute significantly to tourism taxes and business operation taxes, making this additional fee excessive. Unlike in other states, where fees are fixed and predictable, the DBKK model sets a dangerous precedent for the entire country, potentially burdening hoteliers nationwide.
- Proposed Solution: Statewide Tourism Tax
- MYBHA proposes the introduction of a transparent, predictable statewide tourism tax that benefits the entire industry. The funds collected should be allocated to Sabah’s tourism development, infrastructure, and marketing, ensuring fair distribution of resources. A state-level taxation model would better serve tourism growth and industry fairness than the current local council-dependent approach.
- Tourism Benefits Everyone—Why Should Hotels Bear the Full Cost?
- Tourism supports a wide range of industries, including restaurants, transportation, and retail, not just hotels. Yet, hotels are unfairly burdened with excessive fees while unregulated STRA options remain unchallenged. If hotel prices rise due to increased fees, tourists may turn to cheaper, unlicensed STRA, exacerbating the issue. This creates an uneven playing field and risks compromising safety, taxation, and quality standards within Sabah’s hospitality sector.
- Protecting Affordable Accommodation for Locals and the B40 Community
- Budget hotels play a crucial role in supporting domestic tourism by providing affordable lodging for local travelers, particularly those from lower-income groups (B40). An increase in licensing fees will lead to higher room rates, making it harder for Malaysians to access affordable accommodation. This could discourage domestic travel and negatively impact local businesses that depend on budget-friendly lodging options.
MYBHA acknowledges the historical context behind the original hotel licensing fees but emphasizes that the hospitality landscape has changed drastically. The rise of online travel agencies (OTAs) and unregulated STRA has introduced new challenges for licensed hotels, making the previous system outdated. Hoteliers now face increased operational costs and competition from unlicensed STRA, which do not contribute to regulatory fees.
While DBKK argues that hoteliers have benefited from low licensing fees for decades, MYBHA contends that the industry is now facing entirely different challenges. The imposition of fluctuating fees based on outdated models does not account for the current economic and competitive landscape.
MYBHA is calling for an urgent meeting with DBKK to address these issues and find a fair and sustainable solution for the hospitality industry. The association emphasizes that the increased licensing fees are unjust and threaten the survival of budget hotels, especially in Kota Kinabalu. The lack of regulation for STRA further exacerbates the problem, and MYBHA urges DBKK to work collaboratively to ensure a level playing field for all operators.
“The increase in hotel licensing fees is unfair, unjustified, and puts the future of many budget hotels in jeopardy. At the same time, the lack of regulation for STRA worsens the situation. We urge DBKK to collaborate with us to create a fair and sustainable solution for the hospitality sector,” said MYBHA.
The hospitality sector is a cornerstone of Sabah’s economy. MYBHA calls on DBKK to take immediate corrective action to ensure the survival of hotels, foster fair competition, and guarantee the long-term sustainability of Kota Kinabalu’s tourism industry. The success of the industry depends on fair regulations that support both established businesses and new market entrants alike.
