Kota Kinabalu: The Malaysia Budget & Business Hotel Association (MyBHA) said the drastic increase in hotel licensing fees in the city could lead to widespread closures, threatening jobs and the city’s tourism industry.
The association is urging the Sabah Government and City Hall (DBKK) to intervene before the situation spirals out of control.
For decades, hotels in Kota Kinabalu have been paying a licensing fee of RM10 per room per year, a rate that was implemented by the Cabinet in 1989.
However, the sudden enforcement of the 1966 licensing rates now imposes fees ranging from RM40 to RM140 per room per month, depending on hotel classification and occupancy levels.
The financial impact is severe. Under the new structure, a 100-room hotel classified as a Second Class Hotel with a 60pc occupancy rate would see its annual licensing fee jump from RM1,000 to RM57,600, an unsustainable increase that MyBHA says will force many hotels to cease operations.
According to Dr Sri Ganesh Michiel, National President of MyBHA and Secretary General of the Malaysian Tourism Federation (MTF), the new fee structure places an unbearable burden on hotel operators.
“This is an unjustified and unsustainable cost increase that will lead to the closure of many hotels in Kota Kinabalu, causing job losses and reducing affordable accommodation options for travellers,” he said.
He also criticised what he described as unfair treatment of licensed hotels compared to short-term rental accommodations (STRA), which continue to operate freely through online platforms.
“Hotels are heavily regulated, requiring licences, tax payments and adherence to strict health and safety regulations. In contrast, STRA operators face no similar enforcement or taxation, despite competing directly with hotels and benefiting from the same tourism market,” he said.
Ganesh also urged local authorities to regulate and tax STRA operators to prevent an uneven playing field that unfairly penalises licensed hotel businesses.
Given the financial strain on the hospitality sector, he called on the Sabah Government and DBKK to take immediate action, including suspending the increased licensing fees, reinstating the RM10 per room per year rate and consulting industry players before implementing major policy changes.
“We stand firm in defending the rights of hotel operators and ensuring a fair, competitive, and thriving tourism ecosystem in Kota Kinabalu,” he added.
The association warned that failure to act would deter investment in the local hospitality sector, making Kota Kinabalu an unattractive destination for hotel businesses.
With the city being one of Malaysia’s top tourist destinations, the collapse of budget and business hotels due to excessive costs could severely impact Sabah’s tourism industry, reducing affordable accommodation options and potentially driving tourists elsewhere.
Ganesh urged hotel operators, tourism stakeholders, and elected representatives to voice their objections against the unfair policy before it causes irreparable damage to the hospitality sector.
