Call For Level Playing Field In Disrupted Hospitality Market

Low Yat Group, a pioneer in Malaysian hospitality has called for more stringent and fair regulations for short term stay booking platforms who have grown to over 40,000 property listings in Malaysia alone.

The Group’s Executive Director, Ms. Low Su Ming commented, “Major cities around the world like New York, Paris, Japan and more have built a stringent regulatory framework which includes limited stay days, need for owner’s to be present in the residence, fire and safety certification requirements and tax declarations for the short term stays that occur through these digital platforms.

“These markets differ in many ways with the number of properties listed and the reasons for regulations but they have paved the way for countries like ours to observe and build our own regulatory framework.

“The technology disruption has been great in the last few years transforming the travel industry but the short term stay trend has affected licensed hospitality players. We want to urge the government to introduce deeper regulation for these booking platforms and properties listed on it as they are currently not subject to service, delivery, quality and safety standards that we are subject to as licensed providers.”

The hospitality industry is vibrant and a key contributor to the nation’s economy. The industry needs to increase its value in the region especially in terms of our hotel value. While affordable options will always be available, there is also a need to create a premier market in line with the nation’s journey towards becoming a high income nation.

“These efforts are now hampered as licensed hospitality players are now focused on maintaining their revenue in a continuously tough environment. We make long term investments into our properties and the value & rating are based on the yields we achieve. We appreciate fair competition and entry of more options into the market as it makes for a robust environment, but this is not a balanced space,” added Ms Low.

Hospitality players have got numerous considerations when setting the price per night for licensed accommodations. Contrary to belief that prices are driven by brand perception only, industry players have licenses, marketing, workforce, facilities, services, refurbishment, maintenance, location and local taxes to weigh in before they can determine per night rates.

Despite high investments and stringent regulations, hospitality players are now subject to competition from a growing number of home owners who list their properties for short term stays without any need for license and certifications.

 The Government has taken a step in the right direction with calls for property owners who list their properties for short term stays to register their units but this is to understand the size of the market and enforcement of this is subject to local councils.

“More needs to be done in terms of regulatory framework. We need to consider the reason behind the high listing, hot spots for short term stays, the impact on the hotel industry and the price war,” shared  Low.

As for home owners besides the benefit of occupancy and income for mortgage, there is a flipside to the situation.

“An article in The Star dated 3rd July 2019 talks about the short term stay rentals enabling mortgage payments. As property owners, investors also have to note that mortgage payments are not the only thing you need to fulfill.

“We have to look at the wear and tear of the property with the high amount of occupancy by guests, maintenance costs in the long run, local property taxes to fulfill, personal tax issues when there is additional income from rental and also due to absence of check in registration, the security threats that can occur to other residents in the vicinity stemming from illegal activities by rogue guests,” concluded Low.

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