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Year of more hotels and lodgings
Published on: Monday, December 31, 2018

Kota Kinabalu: The year 2018 was a year of boom for the hotel industry in Sabah with the construction of more international class hotels aiming towards 10,000 5-star rooms in tandem with the flourishing tourism bloom, amidst strong growth in the peer-to-peer accommodation business with booking sites like Airbnb.Examples like Holiday Inn opposite the Kota Kinabalu Hilton, the Pullman Hotel next to the Sabah International Convention Centre and the opening of the Marriot at Oceanus Mall block come to mind to try to meet a projected future three million tourist influx that is almost equal to the number of documented people occupying Sabah now.

In the midst of these developments, the conversion and renovation of shophouses or shoplots into hotels or hostels continue and the latest is the planned conversion of a heritage building – the Harrisons Sabah S/B office block into a hotel starting 2019.

Another major downturn in the hospitality industry will affect these operators drastically in a period of global economic recession threatened by a trade war.

Even the Daily Express advertisement office block in Gaya Street is being converted into a hotel annex for the state capital's oldest premier boutique hotel – Jesselton Hotel.

The rapid growth of tourism industry in recent years has stimulated the growth of small and medium-sized accommodation (SMSA) in Sabah, but not all of them are doing well despite the above 70 per cent occupancy rate reported by many top hotel brands above the 4-star ratings in the state capital and resort islands.

The DBKK was noted to be long supportive of non-Sabahans in the hotel industry with the influx of Sarawakian investors and others into the business.

Many backpackers' hostels currently face a price cutting war as occupancy rates dropped to 30 per cent as news of wildlife deaths reached a global audience and affect the pristine destination of the state, as extreme eco-warriors groups like Greenpeace highlighted the negatives of the oil palm deforestation. According to UMS Prof. Jennifer Chan and Ministry of Education researcher Quah Wei Boon, unlike bigger hotels with attractive pay packages and working conditions and promotional opportunities, "the main problems faced by the majority of the small and medium-sized accommodation operators are related to human resource issues – the negative attitudes and mentality of employees, the high turnover of employees; the lack of communication, language and computer skills."

Others problems faced are related to the accessibility to the hotels and cancellation of bookings and damaging and missing items from the hotels by guests, mostly from the domestic market.

On the other hand, the main challenges faced by operators are related to competition among the small and medium-sized accommodation due to the excessive supplies of small and medium-sized accommodation; and the lack of sufficient capital to sustain or to compete with new competitors.

Others challenges include maintaining the accommodation occupancy, satisfying the guests' needs and training of the employees.

They said the government, "should look into the problems faced by small and medium size accommodation operators; and perhaps to provide some kind of assistances to the small and medium-sized accommodation operation in order to improve their operation."

Clearly, the rapid growth in the number of accommodations in Sabah poses different challenges to small and medium sized accommodation (SMSA) operators in many ways. Previous studies reported limited financial assistance, competition or overcapacity, lower room occupancy rates and lack of government support as challenges identified by the hotel operators.

Some condominium management long complained over the Airbnb business. Technology and digital platforms are disrupting the way the tourism sector operates from end to end affects low-income markets striving to leverage tourism for development impacts.

Digital platforms, in particular, provide both opportunities and challenges for countries looking to harness tourism to help achieve the twin goals of ending extreme poverty and boosting shared prosperity.

In 2018, for Sabah, the one disruptive force in the tourism industry is the emergence of peer-to-peer (P2P) accommodation, which the Sabah Hotels Association leader spokesman Christopher Can wanted the local authorities to curb for public safety from fire peril, insisting that all fire and safety codes be adhered to for licensing purposes with registration for tax collection.

One of the most poignant criticisms of P2P accommodation websites is that the network's decentralized nature leads to slack standards as far as hospitality. The argument is that such a large collection of independent contractors acting as hoteliers can lead to an inconsistent experience that ultimately impacts the Sabah reputation.

Indeed, this is a significant challenge for tech-heavy startups seeking to create full-on hospitality businesses. Companies like Airbnb started as a technological solution to a real-world problem, and focused heavily on the technology side of the business. As both individual companies scaled and the larger market for P2P accommodations grew, providing a consistent hospitality experience became much more important.

2018 was also a dispute year over the collection and sharing of the Tourism Tax by the former BN government among the Sabah government and industry players versus the Federal Ministry of Tourism. Only homestay accommodations were exempted and after much heated exchanges, Malaysians were exempted from paying the tourism tax to boost domestic tourism.

With the change of the Federal government post May 9, the BN Tourism Minister was not called to account for the demanded 50 per cent Tourism Tax that he promised collected from Sabah or about RM10 per room. DBKK promised a comprehensive set of guidelines and rules for the Airbnb business.

P2P accommodation like Airbnb occurs when individuals offer, in exchange for money, a room or an entire house for short-term accommodation. The rapid growth of this new product is shaking up the hotel industry and creating a new way to travel and interact with a destination and its community.

This must be seen encouraged by budget airlines which also brought into dispute the closure of Terminal 2 and the collection of higher Airport Tax.

Globally, developments in digital platforms, arti?cial intelligence, blockchain, robotics, driverless cars, and smart cities are disrupting the way the tourism sector operates from end to end, impacting the way destinations facilitate tourism, develop product, gather data, access markets, and attract visitors.

In Sabah only the taxi drivers, airport limousines versus the Grab drivers whose parent company had taken over rival Uber, was evident of anger on disruptive technology that affected lifelihood.

The outgoing BN government had encouraged people to increase their income by being entrepreneurial as Grab drivers. - David Thien



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