Hotel Prices in Msia Expected Increase by Up to 30% After SST Increment

Due to a surge in global airfares and rising costs associated with international travel, many Malaysians have opted for local holidays instead. However, domestic staycations and travel packages will soon be more costly, with hotel prices expected to rise between 10% to 30% due to the increment of the Sales and Services Tax (SST) to 8% in March.

This follows Prime Minister Dato’ Seri Anwar Ibrahim’s announcement in October 2023 to raise the SST rate from 6% to 8%, excluding certain services such as food & beverages.  During the Budget 2024 announcements, Anwar also said Putrajaya will also expand the scope of taxable services to include brokerage, underwriting, and karaoke.

As reported by Sinar Harian, Malaysian Hotel Association (MAH) president Datin Christina Toh said that despite this, Malaysia boasts some of the lowest hotel room rates in the Southeast Asian region.

“In terms of prices within the ASEAN countries, Malaysia is among those with the lowest hotel room rates in the market. For instance, in Laos, we have to pay US$130, equivalent to RM619, for a five-star hotel room, while for a four-star hotel room, it’s US$100, approximately RM476. When compared to our country, it is still more affordable,” Datin Christina added.

Besides the SST, she added that peak season factors such as school holidays and celebrations could also contribute to the price hike.

Datin Christina assured this price hike would not hinder hotel bookings due to the upcoming promotions to attract visitors and emphasised government support, including visa-free entry for tourists from China, India, and other ASEAN countries.

It May Even Go Up by 50%

According to Malaysia Budget & Business Hotel Association (MyBHA) national president Ganesh Michiel, hotel prices are expected to soar by up to 50% due to the cascading effects of the new SST rate on the entire supply chain of the industry.

He added that the SST rate has an impact on the costs of cleaning services, electricity, water, and transportation. Consequentially, hotel operators are compelled to raise prices to ensure their operations remain unaffected, thereby ensuring the long-term sustainability of their businesses.

“The price increase is a result of actions that escalate operational costs, such as tax hikes. For example, suppliers providing products to hotels are also affected by the SST increase. Similarly, laundry services, if they pay SST, are undoubtedly compelled to raise the costs of washing towels, bed sheets, pillowcases, and hotel blankets,” Ganesh said.

It seems like we Malaysians can just enjoy the views from our windows soon *cries*.

Image credit: Marten Bjork on Unsplash, Febrian Zakaria on Unsplash