Hoteliers in Sabah are urging lawmakers to reconsider the new hotel licensing fees imposed last month, which have significantly increased operational costs and put hotel businesses at risk.

Hafizan Wong, chairman of the Malaysian Association of Hotels (MAH) Sabah and Labuan Chapter, stated that hotels in Kota Kinabalu are facing substantial cost hikes due to the reinstatement of licensing fees under the Hotel and Lodging Houses By-Laws 1966.

“This new licensing fee is a serious threat to the survival of hotel businesses, from budget accommodations to five-star establishments,” he said.

Under the previous system, hotel operators paid RM10 per room annually. However, the new fee structure is based on the City Hall hotel classification and is charged per occupied room each month.

For instance, a 100-room hotel classified as second-class now pays RM80 per occupied room per month. If the hotel maintains a 60% occupancy rate, the monthly fee totals RM4,800, or RM57,600 annually—up from the previous RM1,000 annual fee.

Hafizan warned that the steep increase in costs could force hotels to cut services, lay off staff, or even close their operations.

He called for a more balanced approach, urging authorities to first address the unregulated market.

“MAH understands the city’s desire to balance economic growth with environmental responsibility. However, hotels, benefiting from the influx of tourists, should contribute more,” he said.

Hafizan also emphasized that shared prosperity requires all accommodation providers, including Short-Term Rental Accommodations (STRA), to adhere to the same standards. He pointed out that the fee hike disproportionately affects licensed hotels, which are already complying with regulations, while many unlicensed STRAs operate without oversight.

Christina Toh, president of MAH, echoed Hafizan's concerns, suggesting that if Kota Kinabalu seeks more funds for city upkeep, the focus should be on closing the gaps with unlicensed accommodations instead of penalizing licensed hotels.

She argued that law-abiding hotels should not bear the financial burden alone, as legitimate businesses already face significant costs, including taxes, licenses, and wages.

A decrease in revenue, she warned, could threaten the sustainability of these businesses, negatively impacting the industry and the tourism sector.

Toh also raised concerns about the potential for public misperception if hotel guests blame hotels for higher prices without understanding the government-imposed fees.

She called for constructive dialogue and a pause on the new fee until stakeholders have had an opportunity for consultation. Additionally, she advocated for a review of the licensing fee structure to better support tourism growth and hotel operations, clearer regulations for STRA operators, and transitional measures to prevent financial shocks.