MALAYSIAN Budget and Business Hotel Association (MyBHA) president Dr Sri Ganesh Michiel said while visa-free travel granted to tourists from India and China was encouraging, budget hotels faced tough competition in getting clients.

“The issue is whether these tourists will stay in budget hotels,” he told The Malaysian Insight. “We believe that they will be going for short-term rental accommodation (STRA) like condominiums, residences and others.

“We estimate that our members will experience average losses of up to 70% during peak periods.”

He said the STRAs are illegal and undermine the budget hotels’ market, adding that online booking platforms also offered STRA on their websites.

“The illegal accommodations are businesses with no license – like condominiums, residencies and others which are under Airbnb .

“So, they (tourists) prefer these homelike accommodations as opposed to hotels.

‘Government failed to regulate STRAs’

“The STRA have stolen our businesses. We are losing out because the government has failed to regulate it,” he added.

Ganesh said the government had promised to work out a guideline to control STRAs but it has yet to happen.

However, he praised the Penang government for being the only one that has managed to “shake the industry”.

In May, Penang banned all forms of STRA – including those found on Airbnb and Booking.com – at private residential properties on the island.

It was reported that certain types of commercial properties were exempted but must obtain approval to offer STRA from their respective management corporations or joint management bodies.

Ganesh said there are about 70,000 illegal accommodations nationwide.

“So, what are the local councils doing about it? STRAs are mushrooming in Kuala Lumpur, Selangor, Johor, Perak and Sabah.”

He said the unfair competition affected potential hoteliers and investors.

“We need to look into the sustainability of our industry otherwise it will be detrimental in the long run.”

He said the association had a dialogue with Tourism, Arts and Culture Minister Tiong King Sing last week and voiced their issues.

“We asked Tiong to regulate STRA and online travel agencies.

‘No profit’

“Tiong said he will ask the Housing and Local Government Ministry to look into it as local councils come under their jurisdiction.”

Previously, Ganesh was reported as saying unregulated STRAs were offering unlicensed rooms at low prices, making budget hotels a last choice for tourists.

“How are we supposed to do business with such low prices?” he had said, adding that some rooms were priced as low as RM50 a night.

He said due to these competitive prices, budget hotels gained no profit, especially with higher wages and bank interest rates.

“On top of the unfair terms of business operation – where only registered and licensed hotels are being asked to follow rules and regulations – no action has been taken against the unlicensed or unregistered accommodation providers,” he said.

The association has 2,700 members.

On November 26, Prime Minister Anwar Ibrahim said travellers from China and India would enjoy visa-free travel to Malaysia starting December 1.

“To celebrate our strategic partnership with China and India, we are giving visa-free travel for 30 days.

“These exemptions are subject to a layer of security checks as initial screening for all tourists or visitors to Malaysia,” said the prime minister. – December 11, 2023.