Nearly 3,000 budget hotel operators are said to be incurring heavy losses as customers increasingly opt for cheaper rooms offered through online platforms, many of which operate without proper registration or licensing, Utusan Malaysia reported.
Data released by service providers show that about 53,000 premises are listed on such platforms, with roughly 39,000 active units generating close to RM134 million in monthly income.
The issue has persisted for more than a decade despite repeated complaints lodged with relevant ministries and local authorities, forcing some budget hotel owners to sell their businesses in order to continue operations.
Budget & Business Hotel Association of Malaysia (MyBHA) president Dr Sri Ganesh Michiel said the situation has created an uneven playing field, with licensed hotels bearing regulatory and tax burdens while unregistered operators continue to profit.
“This massive loss has resulted in unfair competition and is killing law-abiding budget hotels,” he told Utusan Malaysia.
Sri Ganesh said licensed hotels are required to pay an 8% sales and services tax (SST), RM1,500 annually for business licence renewal, and additional costs for fire safety compliance, insurance and commercial electricity tariffs.
“In Sabah and Sarawak, licence renewal fees can reach tens of thousands of ringgit annually.
“In contrast, unregistered platforms appear to operate without any obligation. They freely advertise short-term rental units without undergoing registration or regulatory compliance,” he said.
He added that many short-term rental operators use residential electricity and internet tariffs, which are significantly cheaper, and are not required to comply with safety requirements such as fire escape plans, extinguishers or proper guest registration systems.
As these accommodations are not registered with authorities, rental rates can be up to 50% lower than licensed hotels, further disadvantages compliant operators.
“Is it fair that licensed hotels comply with regulations and pay taxes, while short-term rental providers operating from residential units are not penalised despite openly conducting illegal commercial activities?” Sri Ganesh said.
He also raised concerns over safety and personal data protection, warning that unregulated accommodations could facilitate criminal activities due to the lack of proper guest monitoring.
“We are concerned about crime and immoral activities occurring without oversight, as some operators manage check-ins through lockboxes and mobile applications without any legitimate verification,” he said.
