Will Sabah hotels raise rates due to new DBKK licensing fees?

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Sabah Hotels May Increase Rates Due to New DBKK Licensing Fees

Hotels in Sabah are considering raising their room rates if the state cabinet approves the Kota Kinabalu City Hall's (DBKK) decision to implement a per-room-per-night licensing fee for occupied rooms. This proposed fee structure is viewed by the Malaysia Budget & Business Hotel Association (MyBHA) Sabah as an unreasonable operational expense that would inevitably be passed on to consumers. The association argues that the current licensing fees, governed by the outdated Hotel and Lodging Act 1966, are being unfairly revised.
New Fee Structure and Financial Impact

Under the proposed model, DBKK intends to reinstate original licensing rates, effective January 1, 2025, after lifting a 1989 directive that capped fees at RM10 per room annually. For a 100-room hotel classified as second-class, this change would translate to a monthly licensing fee of RM4,800, assuming a 60% occupancy rate. This amounts to an annual cost of RM57,600, a significant increase that MyBHA contends unfairly penalises hotels based on their occupancy and revenue, creating unpredictable financial strain.
MyBHA's Opposition to the Fee Model

The Malaysia Budget & Business Hotel Association (MyBHA) Sabah chairman, James Ong Kim Loke, has labelled the DBKK licensing fees as outdated and has expressed that such charges should be treated as fixed operational expenses, not variable costs to be transferred to guests. He highlighted that while DBKK has engaged with the association, these meetings have largely been one-sided, with members being informed of the decision to reinstate original rates as non-negotiable. MyBHA argues that this new fee structure would make hotels less competitive, particularly against unregulated Short Term Rental Accommodation (STRA) operators.
Impact on Competitiveness and Industry Recovery

If the state cabinet upholds DBKK's decision, member hotels will likely be compelled to increase their room rates. This would make them less attractive to potential guests, potentially benefiting unregulated STRA providers who do not face similar licensing burdens. The association also points to the challenging recovery period for the hotel industry following the COVID-19 pandemic, emphasizing the need for support rather than increased financial pressure. The current economic climate, with reports of increased tourist arrivals but a drop in hotel receipts, suggests that higher operational costs could exacerbate the industry's difficulties.

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Will Sabah hotels raise rates due to new DBKK licensing fees?

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