Sabah hotels may hike rates over DBKK's 'unreasonable' licensing fee

Borneo Post

09-05-2025

KOTA KINABALU (May 9): Hotels in Sabah may increase rates if the State Cabinet is adamant to uphold the decision made by the Kota Kinabalu City Hall (DBKK) to charge hotel licensing fees on a per-room-per-night basis for occupied rooms.
Malaysia Budget & Business Hotel Association (MyBHA) Sabah chairman James Ong Kim Loke said the move is unreasonable, as such fees should be considered fixed operational expenses.
He said that it is not appropriate to pass these charges on to hotel guests.
Ong described the DBKK licensing fees under the Hotel and Lodging Act 1966 as outdated and noted that the by-law is not set in stone and can be amended if there is the political will to do so.
He added that the MyBHA Sabah Chapter was invited to two engagements with Kota Kinabalu City Hall (DBKK) last year regarding the hotel licensing fees.
However, both meetings were one-sided — hotel members were merely informed about the lifting of the 1989 directive, which had set the licensing fee at RM10 per room per year, he said in a statement on Friday.
He also said that their members were told that the original rates would be reinstated effective 1 January 2025, giving the impression that the decision was non-negotiable.
'A hotel member mentioned that their hotel has yet to pay the 2025 DBKK licensing fees to date as this member is still waiting for the outcome of MyBHA's request for an urgent meeting with DBKK to try to find an amicable solution before further damage is done to the hospitality industry. The member concerned said that if the payment is made their business will run at a loss as the hotel licensing fee is to be absorbed by the hotel,' he said.
He reminded that in Melaka, hotel licensing fees is called business license fees and is paid once a year together with signage fees to the Majlis Perbandaraan Melaka.
'These are operational expenses and are absorbed by the hotel. Just like Penang, hotels in Melaka collect Heritage Tax which is used for matters related to promotion of Melaka tourism and investments and also development as a whole within Malaysia and worldwide. Spending of the funds collected through Heritage Tax is made transparent and the MyBHA Melaka chapter is one of the bodies that sits in the Melaka State EXCO meeting which is held two times a year,' he said.
Ong also reminded that the hotel businesses have been hit hard during the Covid-19 pandemic.
'We were the first to be affected and the last to recover. We need all the support and help we can get especially in this stage of recovery,' he said.
He added that during a recent tourism engagement with Sabah Tourism, one of our hotel members noticed that the presentation shows an increase in tourist arrivals but there was a drop in the receipts of hotels during the same period.
'We wonder whether there is a correlation between higher arrivals but lower hotel income due to those tourists staying at unregulated Short Term Rental Accommodation (STRA) which the government has no way of capturing any of the data/income and in reality, this is seriously hurting the hotel industry and Sabah's economy as a whole,' he said.
He also said that the DBKK's method of calculating licensing fees based on hotel revenue divided daily effectively transforms this fee into a fluctuating tax rather than a standard administrative cost.
'This approach unfairly penalizes hotels based on their business performance, creating an unpredictable financial strain that discourages growth and investment in Kota Kinabalu's hospitality sector. A 100-room hotel classified as a second class hotel under the original hotel licensing fee rate would now have to pay RM80 per occupied room per month and at an occupancy rate of 60% or RM1860 room nights per month, the monthly licensing fee would be a staggering RM4800 a month or RM57600 per year. This is ridiculous and just too much to pay for a hotel licensing fee for small fellas like us. Why single us out? Are hotel operators the only one occupying Kota Kinabalu city? If the State Cabinet is adamant to uphold the decision made by DBKK, our member hotels have no choice but to increase their room rates making us less attractive and this will further be to the advantage of unregulated STRA and illegal accommodation operators. Maybe lawmakers should try running a hotel after they retire and live under the law that they have passed,' he said.
Nevertheless, the association also commended DBKK for its recent crackdown on 207 unlicensed STRA operators under their jurisdiction.
'We hope that DBKK continues to sustain this type of operation and hope that the government will expand the operation throughout Sabah. Much can be learned from Penang which is the first State Government that has taken firm initiative on ensuring that STRA businesses are regulated,' he said.
He also said that perhaps, they should seek to meet up with Finance Minister, Datuk Seri Panglima Masidi Manjun, who is the ex-Tourism, Culture and Environment Minister.
'He should understand our predicament better. Our hotel members manage their properties quite well, but again please strive to ensure fair governance and a more conducive business environment for us in 2025,' said Ong.