Immediate Intervention Required On Exorbitant Licensing Fees For Hotels In Kota Kinabalu

KOTA KINABALU 3 March 2025 -The Malaysia Budget & Business Hotel Association (MyBHA) strongly objects to the
sudden and exorbitant increase in licensing fees imposed on hotels and lodging
houses in Kota Kinabalu. This decision, which reinstates the 1966 licensing rates as
per the “Undang-Undang Kecil (Hotel dan Rumah Lojing) Bandaraya Kota Kinabalu,
is highly unreasonable and threatens the survival of hotels in the locality and state.

SEVERE FINANCIAL IMPACT ON HOTELS For decades, hotels in Kota Kinabalu have been paying a fair and reasonable
licensing fee of RM10 per room per year, as directed by the Cabinet in 1989. However,
the recent decision to revert to the 1966 rates ranging from RM40 to RM140 per room
per month based on hotel classification and occupancy has placed an unbearable
financial burden on hotel operators.

For example, under the new rate structure:

• A 100-room hotel classified as a 2nd Class Hotel would now have to pay
  RM80 per occupied room per month.
• If the hotel achieves an occupancy of 60% or 1,860 room nights per month,
  the monthly licensing fee would be a staggering RM4,800 a month or
  RM57,600 peryear—a drastic increase from the previous RM1,000 annual
  fee.

This is an unjustified and unsustainable cost increase that will lead to the closure
of many hotels in Kota Kinabalu, causing job losses and reducing affordable
accommodation options for travelers

Unfair Treatment Compared To Short-Term Rental
Accommodation
The increase in licensing fees is made even more unfair by the lack of enforcement
on unlicensed short-term rental accommodations (STRA), such as those
operating through online platforms.

• Hotels are heavily regulated, requiring licenses, tax payments, and
  adherence to strict health and safety regulations.
• In contrast, STRA operators face no similar enforcement or taxation,
  despite competing directly with hotels and benefiting from the same tourism
  market.
• This creates an unlevel playing field, where legal hotels are punished with
  high fees, while unlicensed accommodations operate freely without any
  financial burden.

MyBHA has repeatedly urged the State Government, local authorities, and the
Ministry of Tourism, Culture, and Environment Sabah (KePKAS) to address the
STRA issue, yet no significant action has been taken. This double standard is
pushing hotels to the brink of collapse

URGENT REQUESTS TO THE STATE GOVERNMENT AND DBKK
Given the dire consequences of this decision, MyBHA urgently calls upon the State
Government of Sabah, Dewan Bandaraya Kota Kinabalu (DBKK), and all relevant
stakeholders to take the following actions immediately:

1. Reinstate the RM10 per room per year licensing fee that has been in place
   since 1989, ensuring affordability and sustainability for the hotel industry.
2. Immediately suspend the enforcement of the increased licensing fees to
   prevent undue financial distress and allow proper engagement with industry
   stakeholders.
3. Provide a grace period and consult industry players before implementing
   any drastic policy changes that impact hotel operators.
4. Strictly regulate and tax STRA operators to create a fair business
   environment and prevent hotels from being disadvantaged.

Negative Impact On Investment and Tourism
If this issue is not addressed, it will have serious repercussions on Kota Kinabalu’s
tourism industry. Investors will avoid the city due to unfavorable business
conditions, and hotels which are essential for attracting domestic and international
travelers will continue to suffer

Sabah has always been a premier tourism destination, and affordable
accommodations play a crucial role in supporting the state’s tourism growth.
Punishing hotels with excessive fees while allowing unregulated STRA to
flourish contradicts the government’s commitment to fair business practices
and tourism development.

Call To Action – Unite Against Unjust Licensing Fees
MyBHA urges all hotel operators, tourism stakeholders, and elected
representatives (wakil rakyat) to voice their objections against this unfair policy.
We call upon the Sabah State Government to act swiftly in resolving this crisis
before it causes irreparable damage to the hospitality industry.
We stand firm in defending the rights of hotel operators and ensuring a fair,
competitive, and thriving tourism ecosystem in Kota Kinabalu.