MyBHA stresses that time is of the essence, and if these critical issues are not addressed immediately, the integrity, sustainability, and success of VMY2026 will be compromised.
A Parellel Economy: The Alarming Rise of Illegal Accommodations
The presence of unlicensed and unregulated STRA units, including apartments, condominiums, and private residences converted into transient lodging, has created a parallel and illegal accommodation economy. These entities operate outside of any legal framework, do not pay licensing fees or taxes, are not subject to safety inspections, and undermine legitimate hoteliers and tourism players who have invested significantly in complying with national and local laws and regulations.
Unlicensed STRA operators are eroding the credibility and sustainability of Malaysia’s tourism ecosystem.
The lack of oversight has resulted in numerous issues, including:
- Safety risks to tourists due to non-compliance with fire safety and health regulations;
- Disturbances to residential communities caused by unchecked transient occupancy;
- Lossoftaxrevenueforlocalcouncilsandthefederalgovernment;
- Distorted market pricing, disadvantaging law-abiding hotel operators;
- Weak consumer protection, leaving tourists vulnerable to scams and unsafe premises.
Digital Platforms Are Fuelling the Problem
The explosive growth of digital platforms and OTAs has exacerbated the problem. Despite multiple complaints and dialogues, unlicensed accommodations continue to be openly promoted and transacted online, including via major OTAs, classified sites, and increasingly on social media platforms such as Facebook, TikTok, and Instagram.
MyBHA finds it unacceptable that global and local digital platforms are profiting from illegal listings with no accountability or verification mechanisms in place. These platforms, driven by profits, have turned a blind eye to the presence of unlawful listings and are enabling illegal businesses to thrive while ignoring the harm caused to consumers and the licensed industry.
Call for Multi-Ministry Enforcement and Regulatory Action
MyBHA calls for a high-level inter-ministerial task force led by the Ministry of Housing and Local Government (KPKT) and the Ministry of Tourism, Arts and Culture (MOTAC) to:
- Introduce and enforce immediate regulations for all short-term rental accommodations (STRA);
- Empower local authorities to consistently and firmly enforce regulations and laws without negatively impacting licensedand registered hotel businesses;
- Establish minimum safety and operating standards for all accommodation providers.
Additionally, MyBHA urges the Ministry of Digital and the Ministry of Communications to:
- Hold digital platforms and OTAs accountable for listings published on their portals;
- Enforce legal responsibilities for verifying licensing status before allowing listings;
- Introduce digital governance standards and penalties for platforms enabling illegal trade;
- Prevent social media platforms from becoming black markets for unlicensed stays.
- Blacklist, ban and remove non-compliant properties (non hotels) from digital platforms.
Without robust digital enforcement, any on-the-ground licensing effort will be rendered ineffective.
GLOBAL CRACKDOWN ON SHORT TERM RENTALS HIGHLIGHTS NEED FOR LOCAL REGULATORY ACTION
Many countries around the world have already begun taking firm action to regulate Short Term Rental Accommodations (STRA) due to their impact on housing affordability, community well-being, and the formal hospitality sector. Countries and cities like Singapore, New York, Amsterdam, Barcelona, and Tokyo have introduced strict licensing requirements, limitations on the number of rental days, and enforcement mechanisms to curb illegal STRA activities. These global efforts reflect a growing recognition of the need to balance tourism growth with fair competition and sustainable urban development, an approach that Malaysia must also consider in addressing the challenges posed by unregulated STRA operators.
THE URGENCY TOWARDS VISIT MALAYSIA YEAR 2026
VMY2026 represents a once-in-a-decade opportunity to reintroduce Malaysia to the world as a premier, safe, and sustainable tourist destination. However, the current lack of control over STRA and illegal accommodations threatens to derail these aspirations.
Malaysia cannot afford to allow illegal operators to profit from national tourism campaigns funded by the government, while licensed hotels are left to bear the burden of compliance, fees, taxes, and inspections. This situation penalizes the honest and empowers the unscrupulous, sending a dangerous message to the tourism industry and damaging Malaysia’s international image.
