Hotel Room Price Hikes Driven By Increasing Costs, Not SST Rate, Clarifies MyBHA President

The recent introduction of the new Sales and Service Tax (SST) rate, effective March 1, has not emerged as the primary contributor to the escalation of hotel room prices. Dr. Sri Ganesh Michiel, President of the Malaysian Budget and Business Hotel Association (MyBHA), emphasised that the surge in hotel room rates is chiefly influenced by the rising costs of goods and services, which in turn affect hotel operation expenses.

Ganesh clarified to a local media that the decision by hotel operators to adjust room prices is not driven by profit-seeking motives or opportunism but rather by the necessity to sustain their businesses amidst prevailing economic challenges.

“The current issue regarding the increase in hotel room prices is not solely due to the SST but is rather a consequence of the escalating costs of goods and services. For instance, air conditioning maintenance companies are raising their service charges from an estimated RM80 to RM150 due to cost increases. Similarly, laundry services are increasing their fees due to higher detergent prices. Consequently, hotels are compelled to raise room rates to cope with the surge in operational costs. This adjustment is not intentional, and we hope the public will understand,” he explained.

Ganesh, who also serves as the Secretary-General of the Federation of Malaysian Tourism Associations (MTF), suggested several initiatives that the government could introduce to assist hotel operators in reducing operational costs.

“One such initiative is the introduction of special electricity tariffs for the hotel industry. We have already requested the government to enforce the Short-Term Residential Accommodation (STRA) Guidelines to ensure the sustainability of the hotel industry. Prompt resolution of this matter will lead to increased hotel revenue. Moreover, if the Online Travel Agency is regulated, it can help reduce hotel operational costs. Additionally, the government could consider raising the SST tax threshold to enable hotel operators to provide savings to the public. Government support is crucial in facilitating discussions with industry stakeholders to achieve the best solutions,” he added.

Previously set at six percent, the new SST tax rate will increase to eight percent, effective March 1.

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