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Kota Kinabalu: Many hotels are ramping up efforts to meet environment, social and governance (ESG) requirements to boost their desirability in competition with short-term rental accommodation (STRA) like the Airbnb platform and others as evident at Sutera Avenue, Jesselton Quay, and The Loft, besides others.

STRA has led to a decline in hotel occupancy rates, a situation that deteriorated since the Covid-19 outbreak. Hoteliers want official endorsement for their ESG efforts as well as steps to simplify the collection of tourism tax.

Malaysian Association of Hotels (MAH) CEO Isaac Raj said the lack of regulations to govern STRAs had given them an “unfair advantage over hotels in the affordable accommodation market as STRA providers are able to set lower rates in a price-sensitive environment. 

“This has triggered pricing competition among budget hotels, adversely affecting our overall business sustainability.” 

MAH reiterated that the tourism tax be collected at point of entry to ensure that those who opt for STRA are also not exempted from paying.

With more hotels and STRA has led to the decisions by some owners to sell off some hotels like Hotel 63 along Gaya Street for in excess of RM50 million.

This includes the Wushiba Apartments that was converted from the Hainan Association Building in the city to be renamed Polaris Suites.

The indecision of the site sold off that was planned for the Grand Promenade Hotel for under RM100 million consideration which was among the last large available sites in the CBD for development. 

A new hotel is coming up on the burnt down Cathay Cinema site, while the old Wisma Yakim in front of Hyatt Regency Kinabalu is being renovated into another hotel.

JSK Group led by its Managing Director, Datuk Johnny C.Y. Wong plans to build a capsule hotel or a pod hotel with rooftop recreation at Sadong Jaya, here. 

Wong also has plans for an international resort and entertainment centre at Jalan Lok Kawi, Beringgis in Papar, to cater to international tourists. 

Polaris Suite

Malaysia Budget and Business Hotel Association (MyBHA) President Sri Ganesh Michiel proposed that the service tax threshold for budget and business hotels be raised from RM500,000 to RM1.5 million but the industry has yet to receive a response from the government.

He said the increase in the sales and service tax (SST) from six to eight per cent in 2024 would raise operational costs further, compounding the challenge the industry faces. Ganesh urged the government to introduce stricter legislation to govern the operation of STRAs.

MAH and MyBHA want former Malaysian Association of Tour and Travel Agents (Matta) head Datuk Tan Kok Liang now helms the Malaysian Tourism Federation (MTF) that they joined as members to get the government to regulate STRA.

It is understood that Tan was an outspoken critic of the Airbnb-like businesses in the past. Tan said the federation fulfils a crucial role in the tourism industry by providing a platform for all member associations to come together and speak with a unified voice and advocate for policies that contribute to the overall development of the tourism industry.

This includes lobbying for favourable regulations, incentives, and infrastructure development that enhance the tourism environment to ensure sustainable tourism development that benefits all parties involved.

According to Sr Danny SK Yeo of CBRE/WTW, “Hotels and accommodations being amongst some of the oldest service-based businesses will need to adopt more technology for better efficiency and customer experience moving forward.

Client demand, human resources and inflationary pressures will be the main push factors towards this need. Ignoring this trend together with the much-needed human touch will prove detrimental to long-term bottom lines.”

If the KK One project is being revived over the abandoned Star City Mall, it is expected that more hotel or Airbnb commercial suites will be added to the city’s tourism accommodations, although there is now a dispute over its some 56-storey heights with a denial by the Civil Aviation Authority of Malaysia, previously known as the Department of Civil Aviation, that it had approved it after the Covid-19 construction hiatus.

Some buyers of the abandoned PacifiCity project opined that had the developer first built a hotel like its proposed Jen Hotel as part of the Shangri-La Group of Hotels, very successful in Singapore and Penang, and as the Traders Hotel at the Kuala Lumpur Convention Centre, the project would have been financially more viable rather than depending on sales to condominium, office, and mall retail space purchasers.