The Malaysian Budget Hotel Association (MYBHA) Penang chapter weighed-in the current issue of hotel fees currently being debated in the state with some of its own input.
It expressed concerns over the proposed 50% increase in hotel fees and the lack of transparency in the usage of funds collected from tourists.
A press statement was issued by its chairman, Andy Lau Eng Leong, to this regard –
“These developments raise significant questions about the fairness, accountability, and effectiveness of the fee management process. He explained that –
Background of Hotel Fees – Introduced in 2014, hotel fees were intended to support tourism promotion. Fees collected—RM3 per room per night for four-star hotels and above, and RM2 for three-star
hotels and below—were deposited into a dedicated hotel fee account managed by a committee comprising industry stakeholders and local authorities. These funds were exclusively used for tourism-related events and promotions, with transparent reporting on the amounts collected and disbursed. However, recent changes have diverted these funds into the state’s consolidated revenue account, compromising transparency and the original intent of the fees.
Erosion of Transparency – The lack of transparency in fund allocation has caused frustration among hoteliers. While hotel operators have consistently acted as collection agents since 2014, recent
developments have left stakeholders uninformed about how much has been collected, how it has been utilized, and whether it benefits tourism promotion as intended.
Challenges for Hotels – As collection agents, hotels bear the operational burdens of managing these fees. This includes upgrading property management systems (PMS), training staff to handle guest
inquiries about the fees, and allocating resources to process payments to local councils. These added responsibilities increase costs and operational strain, particularly during a time when the industry is recovering from the pandemic.
Moreover, the fees were introduced to support tourism promotion, not infrastructure or operational costs, which should remain the responsibility of the state government.
Fairness in Fee Enforcement – Fee enforcement must be consistent across the industry. While hotels are held accountable for these fees, short-term rental (STR) operators, including homestays and Airbnb
accommodations, have not been consistently required to collect or contribute. Under MBPP regulations, STR operations in commercial properties are now legalized and licensed. The Chief Minister’s statement of decision not to impose fees on short-term rental (STR) operators because they were “unlicensed” fails to address the concerns regarding fairness and accountability. STR operations in commercial properties have since been legalized and licensed under the Penang Island City Council (MBPP). Therefore, the same fee structure and enforcement should be enforced to STR operators to ensure consistency and equity across all accommodation providers.
Rough estimation including STR operators in the fee structure could generate an additional RM3 million annually, reducing the need for a fee increase. The state government must address this imbalance to ensure fair competition and equal contributions from all benefiting from the tourism industry.
The Need for Stakeholder Engagement – Hoteliers bring valuable industry insights that can guide effective allocation of these funds. A collaborative approach involving all stakeholders ensures funds are used strategically to maximize their impact on Penang’s tourism. The proposed fee hike, however, has come as a surprise to industry players, as no prior discussions were held. The lack of consultation
disregards stakeholder expertise and risks creating further discontent.
Commitment to the Industry – MYBHA Penang reiterates that it does not object to the collection of hotel fees and has consistently assisted in the process since 2014. However, transparency and accountability in managing these funds are crucial. Fees must be used exclusively for tourism promotion as initially agreed, and any changes to the fee structure must involve input from industry stakeholders to ensure effective utilization. Additionally, equitable enforcement across all accommodation providers is vital for a thriving and sustainable tourism sector.
MYBHA Penang remains committed to working with the state government to refine the fee collection process and ensure the funds are used effectively to support Penang’s tourism growth.