WHILE domestic travel has returned to pre-pandemic numbers, the budget hotel industry has yet to recover, the Malaysian Budget and Business Hotel Association (MyBHA) said. 

Its President Dr Sri Ganesh Michiel said that they had yet to see any form of recovery at present.

He said to speed up recovery, authorities need to give it a boost by regulating online travel agencies (OTA) as well as short-term rental accommodation (STRA). 

“There is occupancy, but no profit. Because online platforms are charging low rates for rooms. 

“When there is no profit it is difficult for the hotels to buy new linen, upgrade facilities and others,” he told The Malaysian Insight.

He said they need a regulation on the percentage online travel agencies can charge. 

“We need to come up with a regulation and discuss the issue with all stakeholders and get a fixed percentage. Maybe five or 10%. Now it can go up to 45%. We also need to regulate pricing to mirror the current market and economy.

“For example, If we charge RM100 per night, the OTA platform can bring it down to RM50. Not all of us are online and this has affected bookings”

He also said it was a very good move when Penang decided to regulate STRA, but other states have yet to do it. 

A STRA is a business that does not have laws or regulations to regulate the business and unlicensed business is illegal business.

Among operations that fall within the definition of STRA are Airbnb, an online platform for private home owners to rent out their property for short-term stays and homestays.

He noted that the Penang government has become the first state government that has taken a firm action in ensuring STRA business is regulated.

“We need this regulation for the whole country.

“If it is not resolved, the industry will not recover. Because the budget & business hotels are not able to sustain their businesses.”

The association has about 2,700 members with about 5,000 budget hotels nationwide.

He also said that there is insufficient manpower for their industry. 

“We give priority to locals, but if we can’t get them, then we will need foreign workers.”

He added that overseas bookings are slowly starting to roll in.  

Ganesh hopes that the government can provide some type of grant to assist budget hotels. 

“We also hope that banks can provide financial assistance for budget hotels. Banks currently don’t make it easy in providing loans because it is a risky business for them. 

“This business is still stagnant until the government resolves industry threats.” –  June 12, 2023.