PETALING JAYA: The unfavourable operating conditions are threatening the livelihood of the nation's budget hotels, representing 30,000 workers.
Already reeling from the effects of the devastating global Covid-19 pandemic, the 2,500 members of the Malaysia Budget and Business Hotel Association (MyBHA) see a bleak future.
Speaking on their behalf, MyBHA national deputy president-cum-legal and information, communications technology bureau chairman Sri Ganesh Michiel said many of them may be put out of business, if no government remedial measures were initiated.
He said the post-Covid-19 economic recovery was slow and it would take some considerable time for businesses to recover, let alone break-even.
The industry was burdened when Bank Negara Malaysia's Monetary Policy Committee (MPC) decided to raise the overnight policy rate by 25 basis points to 2.00 per cent, which caused banks to revise their base rate and base lending rate upwards.
"To make matters worse, we are shocked by the uncalled enforcement of the recent Minimum Wage Rate of RM1,500 per month announced by the government, unexpectedly without any engagement with the industry.
"This is something that is inappropriate at a time when budget hotels have incurred huge losses due to lack of business and increasing overheads and operating costs.
"What we need right now are solutions and realising the recovery of our businesses," he said at the MyBHA Selangor chapter annual general meeting at the One Avenue Hotel, Dataran Pelangi Utama in Bandar Utama Damansara.
Sri Ganesh added that MyBHA welcomed the enforcement of the minimum wage in efforts to protect the welfare of the employees of the hotel and tourism industry.
"We are not against the decision to look after our employees' welfare, but it must be done in a win-win manner for all parties, which is not the case at all.
"It must be done with solutions to get those in the hotel and tourism industry back to their feet," he said, calling on the Human Resources Ministry to temporarily suspend the new minimum wage policy for the hotel and tourism industry.
Sri Ganesh also shared MyBHA's concern over unlicensed and illegal short-term residential accomodation (STRA) operators that had been a threat to the budget hotels industry.
The STRA operators, he said, had caused enormous and unfair losses to hotel businesses that were fully licensed and subject to the law.
Sri Ganesh supported the move by the Penang state government to ban STRA operators.
"We also request the government to immediately enact an Act to regulate all types of Online Travel Agencies (OTA) who are offering unhealthy competition.
"Hotel operators have long been burdened by the absence of a law to regulate these OTAs who set high commissions, causing hoteliers to suffer losses.
"Their actions have reduced the hotels' income as we have to follow the selling prices and promotions that have been set by the OTAs for the sake of our survival," said Sri Ganesh, adding that OTAs offered rooms as low as RM30 a day as compared with the hotels' rate of RM80-RM200.
MyBHA also wanted the government to raise the annual Service Tax Threshold (SST) for the hotel industry, from RM500,000 to RM1.5 million a year.
Other requests were for a review on the electricity tariff imposed by Tenaga Nasional Bhd (for peninsular Malaysia), the Sabah Electricity Sdn Bhd and
Sarawak Energy Bhd.
"We propose that the tariff charged by the electricity suppliers be changed from commercial to the industrial tariff, or set it as a special tariff to assist us.
"We also want an exemption and revision of the service tax on digital services imposed by the OTAs on hotels, which has been a burden to us.
"This will have an impact on the selling price of the rooms and the income for hotel operators," he said.
Sri Ganesh also highlighted on the need to have a single music royalty licensing body. "The above matter has been raised for a long time. Hotel operators have been harassed and asked to make high payments or fees, by too many agencies."
Failure to resolve these issues and ever-increasing operating costs would cause the selling price for hotel and tourism services to be raised to maintain good and adequate facilities, he said.
"In turn, these higher costs will keep the international and domestic tourists away," said Sri Ganesh.
He added that owing to such hindrances, MyBHA members suffered reduced income, retrenched staff, deduction of salaries for executive employees or even terminated some of their services to remain in business.
Other measures instituted were cutting down on overtime and fringe benefits for their employees.