The Malaysian Budget and Business Hotels Association (MyBHA) has called on the government to temporarily suspend the enforcement of the new minimum wage of RM1,500.00 (US$341), which has been in place since May 1, until the survival challenges faced by budget hoteliers are resolved.
National vice-president Sri Ganesh Michiel said since 2017 the association had repeatedly asked the government to address threats to the industry, but the pleas fell on deaf ears.
In a press conference on May 12, Sri Ganesh said short-term accommodation is unregulated and thriving across the country.
“This is a major threat to budget hotels across the country because they operate illegally at low operating costs and don’t need to pay government taxes or even require any licences,” he said. Illegal business unwilling to act?”
MyBHA called on the government to immediately enforce the short-term accommodation guidelines and proposed changing the electricity tariffs paid by budget hotels from commercial tariffs to industrial tariffs, which have a lower rate. It was also suggested that the government could create special tariffs to help entrepreneurs in the tourism and hospitality industries.
MyBHA also urges the government to immediately enact a bill to regulate all types of OTAs.
Sri Ganesh explained: “OTAs set high commissions and this leads to losses or low revenue for the hotel industry. To survive, they have to follow the selling prices and promotions set by OTAs.
“In this post-pandemic period, budget hoteliers in Malaysia are now more reliant on online travel agencies to survive as bookings are mainly from OTAs. In addition, the service tax on digital services has placed a burden on hotel operators, with OTAs paying business tax.”
In his view, addressing these threats will help budget hotels survive and improve their services and products, enabling them to compete regionally.
He said: “We have no objection to the decision to look after the welfare of employees, but it must be implemented in a win-win mechanism for all parties – which is not the case.
“If the government doesn’t assist us, we will have no choice but to increase the tax rate by 60% to 70%, making Malaysia less competitive than our neighbours, Thailand and Indonesia.”
