Budget hotels seek exemption from tourism tax

Profits have dropped by 20% since the tax was introduced, says association president.

MyBHA president PK Leong says the tourism tax is unfair to budget hotels as the government does not distinguish between them and luxury establishments. (Facebook pic)

PETALING JAYA: Budget hotel operators have urged the government to exempt their patrons from the tourism tax introduced last year.

PK Leong, president of the Malaysia Budget Hotel Association (MyBHA), told FMT the industry had suffered a 20% drop in profits since the tax became effective last September.

He complained that the tax was unfair to budget hotels because the government made no distinction between them and luxury hotels.

“Whether it is a five-star hotel or no-star hotel, there is a flat rate of RM10 per room per night to be paid as tourism tax,” he said. “For budget hotels, if the room rate is RM50 per night, the tax would be 20% of the rate.

“People staying in non-budget hotels may not feel the pinch of the RM10, but it is still an added cost on a person’s travelling expenses.”

He claimed that many tourists had opted to either book their accommodations through Airbnb or not visit Malaysia at all because of the tax.

“The tourism tax is not applicable to Airbnb bookings. So eventually, all accommodation rental businesses are going to Airbnb. RM10 makes a huge difference to tourists who are on a tight travelling budget.”

Malaysian Association of Hotels (MAH) president Sam Cheah Swee Hee agreed that the tax was a bane on the tourism industry.

“The budget hotels are most affected because RM10 is quite a high amount to pay,” he said.

He said travel agents were even forking out the RM10 for their clients in order to save their businesses. “This is especially happening with travel packages that include hotel stays.”

In a previous statement, Cheah complained that rules governing the tax did not clearly address how unregistered accommodation providers, including those operating under Airbnb, would be brought into the system.

Since new Tourism, Arts and Culture Minister Mohamaddin Ketapi took office, there have been renewed calls for the removal of the tax.

Malaysian Association of Tour and Travel Agents president Tan Kok Liang said abolishing it would be as straightforward as the minister simply “saying the word”.

Last year, the government told the public the revenue from the tax would be used for marketing Malaysian tourism as well as for conservation of infrastructure.

Tan said people in the private sector were of the view that revenue from other sources would be more than enough for the purpose if the government was well managed.

Last week, Mohamaddin said the government would review the need for the tourism tax with a view to ensuring the health of the tourism industry.

He said the review would include a consideration of whether the flat rate of RM10 per room per night was reasonable. - FMT