MAH Calls for Immediate Review of Hotel Licensing Fee Hike in Kota Kinabalu

6 March 2025

KUALA LUMPUR: The Malaysian Association of Hotels (MAH) has urged local lawmakers to urgently review the newly reinstated hotel licensing fees, warning that the drastic increase could cripple the local hospitality sector.

In a statement, MAH said the reinstatement of the Hotel & Lodging Houses By-Laws of 1966 has led to an exponential rise in operational costs for hotels of all categories.

MAH Sabah/Labuan chapter chairman Hafizan Wong explained that hotel operators were previously required to pay a licensing fee of only RM10 per room per annum under the 1989 Cabinet Licensing Fees Structure.

“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 categories of first, second, and third class,” he said.

“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 emphasised.

Under the reinstated fee structure, a 100-room hotel classified as 2nd Class would now have to pay RM80 per occupied room per month.

If the hotel achieves a 60% occupancy rate, the monthly licensing fee would amount to RM4,800 or a staggering RM57,600 per year a drastic increase from the previous RM1,000 annual fee.

While MAH acknowledges the city’s aim to generate revenue for development, it argues that the financial burden should be distributed fairly across all accommodation providers, including unregulated Short-Term Rental Accommodations (STRA).

“If Kota Kinabalu is seeking to increase its funds for city upkeep, let’s work together to close the gaps on unlicensed accommodations instead of punishing licensed hotels for playing by the rules,” said MAH President Datin Christina Toh.

“We understand the need to contribute to the city’s prosperity, but this must be done fairly. Law-abiding hotels should not bear the financial burden alone while others continue to operate without proper licensing and financial contributions,” she added.

MAH highlighted that the increased cost could have severe consequences for Kota Kinabalu’s hospitality sector and tourism economy.

“Hotels may be forced to increase room rates to offset rising costs, making local accommodations less competitive for both domestic and international tourists.”

“Small and mid-sized hotels may struggle to survive under the financial strain, leading to job losses and reduced investments in the hospitality sector.”

MAH also expressed concern that guests might wrongly blame hotels for price increases, unaware that these hikes stem from government-imposed fees, further eroding trust in the industry.

Toh called for constructive dialogue and solutions, urging state authorities to suspend the new fee until proper consultation with stakeholders occurs.

She also advocated for a review of the licensing fee structure to support tourism growth and hotel operations, clearer regulations for STRA operators, and transitional measures to prevent financial shocks.

“While we support regulations that elevate the hospitality sector, policies must be both practical and progressive. Lawmakers need to take into account industry stakeholders, as we are the ones operating on the ground, staying close to the heartbeat of this industry,” she said.