Kota Kinabalu: The Malaysian Association of Hotels wants the new licensing fees for hotels in effect since Jan. 1, 2025 to be suspended pending discussions with stakeholders for a fair and sustainable rate.
It also wants elected representatives to play their part to prevent hotel closures and layoffs. Earlier, the Malaysia Budget & Business Hotel Association expressed similar sentiment.
“Hotels in Kota Kinabalu have been experiencing severe operational costs increase following the State’s reinstatement of hotel licensing rates by the Hotel and Lodging Houses By-Laws of 1966,” its President Datin Christina Toh said.
The shift from the 1989 Cabinet Licensing Fees Structure to the 1966 rates has resulted in a sharp increase in costs for hotel operators.
The 1989 Cabinet Licensing Fees structure for first, second and third class is RM10 per room annum, while the 1966 reinstated fees structure for first class is RM4.65 per room per day, second class is RM2.65 per room per day and third class is RM1.30 per room per day.
“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,” said MAH Sabah Labuan Chapter Chairman Hafizan Wong.
“Such a steep increase in costs may force some of us to reduce our services, lay off staff, or, in extreme cases, cease operations,” he said.
Under the reinstated fee structure, a 100-room hotel classified as a 2nd Class Hotel would now have to pay RM80 per occupied room per month.
If the hotel achieves an occupancy of 60 per cent or 1,860 room nights per month, the monthly licensing fee would be a staggering RM4,800 a month or RM57,600 per year, a drastic increase from the previous RM1,000 annual fee.
While MAH acknowledges Kota Kinabalu’s efforts to balance economic growth with environmental responsibility, the association emphasises that true shared prosperity can only be achieved when all accommodation providers, including Short-Term Rental Accommodations (STRA), are held to the same standards.
The current fee hike disproportionately affects licensed hotels that already comply with strict regulations, taxes, and operational costs, while many unlicensed STRA operators continue to operate unchecked. This creates an uneven playing field and places an unjust financial burden on law-abiding hotels.
“If Kota Kinabalu is seeking to increase its funds for city upkeep, let us work together to close the gaps on unlicensed accommodations instead of punishing licensed hotels for playing by the rules,” said Toh.
“We are not just against the fees increasing. We understand the need to contribute to ensure the city’s prosperity but this must be done fairly. “Law-abiding hotels should not bear the financial weight alone while others continue to operate without proper licensing and financial contributions,” she said.
“While we support regulations that elevate the hospitality sector, policies must be both practical and progressive. “Lawmakers needs to take into account industry stakeholders as we are the ones doing business on the ground, keeping close to the heartbeat of this industry.”
The sudden increase in licensing fees could have far-reaching consequences for Kota Kinabalu’s hospitality sector and tourism economy.
Hotels may be forced to raise prices to offset costs, making local stays less attractive for domestic and international tourists. Rising costs could drive Malaysian travellers to seek cheaper holidays abroad, undermining local tourism campaigns.
Small and mid-sized hotels may struggle to survive, leading to layoffs and stalling future investments in the hospitality sector. Guests may mistakenly blame hotels for price hikes, unaware that these increases stem from government-imposed fees, further eroding trust in the industry.