THE Penang government should engage with industry stakeholders before drawing up rules on short-term rentals or homestays in high-rise buildings, the Malaysia Homestay Operators’ Association (MHOA) said.

Its vice-president, Elvin Wong, told The Malaysian Insight that the authorities should speak to all affected stakeholders to get their views before coming to a decision.

“Every coin has two sides. The authorities should give a chance and a proper channel for everyone, including business owners, property owners, property investors, developers and others to voice out their opinion,” he said.

“It is important for even ministries to consider this.”

The issue of homestays in Penang, especially in high-rise residential buildings, recently made the headlines after the state government said it would issue a ban on short-term rental homes.

Last month, state housing committee chairman Jagdeep Singh Deo announced plans for the ban, which will be in the form of guidelines for local councils to implement.

Jagdeep said the decision was made due to frequent complaints from residents about short-term tenants disturbing the peace.

Last week, state tourism and creative economy committee chairman Yeoh Soon Hin said the state government is still open to the option of regulating the activity.

He said many parties such as the Tourism, Arts and Culture Ministry (Motac), Housing and Local Government Ministry and local councils will need to be involved.

He said short-term rental homes have created unfair competition for licensed hotels that abide by Motac’s regulations, including paying taxes.

Wong had previously told The Malaysian Insight that the government only listened to one side of the story, which was from the residents, and claimed that it should have consulted homestay owners as well.

He also suggested allowing individual building managements and residents to decide and draw up their own rules, instead of interferences by the authorities.

Last year, the state government introduced new local by-laws, which require short-term rental service platforms such as Airbnb to get approval from 75% of residents in a building before they can operate.

Owners are subjected to a RM200 fine for each day if they fail to comply with the regulations.

Considers financial strength of tourists

Wong said the authorities should consider all aspects before making a decision, including the spending power of travellers.

He said if short-term stays in residential properties are banned in the state, then it would result in a spike in hotel rates, which he claimed could deter tourists from visiting and spending.

“Every traveller has a budget. Assuming that the entire Penang has no short stays and only left with hotels, then this will eliminate the supply and demand, thus forcing the hotel rates to shoot up,” he said.

“If travellers spend most of their money on hotel stays, then they will spend less in other tourist spots, reducing other expenditure as well.

“Tourism should benefit the entire industry, not just hotels. If prices in Penang are too high, then travellers will choose to visit other places instead.”

According to MHOA, there are about 1,500 homestay units in Penang, including in Butterworth and Bukit Mertajam.

Wong said the government should protect the value of properties and reduce the redundancy of units.

He said if the state imposes a ban on homestays, property prices are expected drop in the near future.

“Homestays exist because of high demand,” he said.

“The number of units in high-rise buildings in Penang is more than the number of local residents. If there is no one operating short-term homestays, it will directly affect the occupancy rate and property prices will fall in the long run.”

Several other industry players have said the ban will impact the real estate sector and high-rise buildings under construction.

They said the properties attracted buyers because they give them a chance to invest in the homestay sector.

Last year, it was reported that Penang had the second-highest number of unsold properties in the country, worth some RM3.6 billion.

Penang was sitting in-between Johor, which ranked first with unsold properties worth RM4.89 billion, and Kuala Lumpur, with RM3.1 billion worth of unsold units. – May 10, 2022.