KUALA LUMPUR – Malaysian hoteliers are hoping foreign tourists will make up for any shortfall in hotel bookings by locals due to higher room rates as a result of the increase in the service tax.
The tax hike, from 6% to 8%, takes effect from today and will impact a host of services, including hotels, serviced apartments and accommodation bookings.
Malaysian Association of Hotel Owners (Maho) executive director Shaharuddin Saaid said the higher service tax is bound to affect bookings and revenue, especially in the short term due to lower domestic demand.
However, he expects this to be balanced by foreign tourists who would be less concerned about the tax increase, given that hotel rates here are considered cheap for foreigners thanks to the devalued ringgit.
“It is a great time to promote Malaysian hotels to foreign travellers as currently our currency is lower than theirs.
“As for the domestic market, hotels might include added-value stays with some perks, so that the tax increase is not felt so obviously,” Shaharuddin told Scoop.
The two percentage point increase to the service tax was announced during the tabling of Budget 2024 last year as part of moves to strengthen the government’s fiscal position.
Shaharuddin said various hotel associations had expressed their views to the government on the impact of the 8% service tax, which they felt would not help the sector reach full recovery from the Covid-19 pandemic.
Now that the tax hike is a reality, he hoped the government could support hoteliers by reducing some operating costs through rebates on utility bills and food and beverage supplies, or low interest financing.
With hopes pinned on foreign tourists, Shaharuddin also said the government should regulate short-term resident accommodation players more tightly to ensure fairer conditions on all tourist accommodation providers.
Malaysia received 26 million tourist arrivals from January 1 to mid-November 2023, according to Immigration Department figures. – March 1, 2024