Budget 2025: Hoteliers Urge Govt To Address Low Room Rates Despite Rising Operational Costs

By Norsyafawati Ab Wahab

KUALA LUMPUR, Oct 3 (Bernama) -- The hotel industry is calling on the government to address persistently low room rates and rising operational costs for the upcoming Budget 2025 to be tabled on Oct 18.

Malaysian Association of Hotel Owners (MAHO) executive director Shaharuddin M Saaid said Malaysian hotel room rates have been significantly lower than neighbouring countries.

For instance, he said that while five-star hotels in the region charge US$400-500 per night (US$1 = RM4.15), Malaysian hotels in the same category only charge RM320-450, which is not equivalent. 

"The association contends that room rates must reflect the standards and reputation of hotel brands in Malaysia to remain competitive," he told Bernama. 

In its Budget 2025 memorandum submitted to the Finance Ministry, Shaharuddin said MAHO has proposed that Malaysian hotels consider charging foreign tourists in US dollars to match the rates charged in similar hotel brands overseas. 

However, he added that local tourists would continue to enjoy the current room rates in ringgit.

Shaharuddin said this move would help hotels generate higher yields, enabling them to allocate more resources for maintenance, renovation and employee remuneration.

In addition, he said MAHO also raised concerns about the increasing cost of doing business. 

One of the major operational challenges is the rise in electricity costs, exacerbated by the 20 sen/kilowatt hours (kWh) Imbalance Cost Pass-Through (ICPT) surcharge implemented earlier this year, leading to a 35 to 50 per cent surge in hotel energy expenses.

Despite a recent reduction in the surcharge to 0.17 sen/kWh, Shaharuddin noted the burden on hotels remains significant. 

He said another pressing issue is the increase in the minimum wage to RM1,500, coupled with the reduction in weekly working hours under the Employment Act amendments, further strained hotel finances. 

Hence, Shaharuddin said MAHO is appealing for a freeze on wage increases until at least 2026 to allow the industry to recover fully from the impacts of the Covid-19 pandemic.

He said the association is also seeking a revision of the Pioneer Status and Investment Tax Allowance incentives, which currently only apply to new one to three-star hotel developments. 

"MAHO is also pushing for the inclusion of four and five-star hotels in the incentive to promote high-end tourism and attract high-spending tourists," he added.

--BERNAMA