The new tourism tax bill recently approved by the Parliament would negatively impact hoteliers, reported The Star, citing a report from CIMB Research.
While it is still unsure when the new law will come into force, it enables the federal authorities to levy a tax on visitors staying at any lodging run by a licensed hotel operator. Moreover, the rate will be determined by the Tourism Minister.
According to Tourism and Culture Minister Datuk Seri Nazri Aziz, the revenue from this is expected to reach approximately RM654 million if Malaysia’s existing 11 million room-nights achieves an occupancy level of 60 percent. But if it hits 80 percent, collections would significantly increase to RM872.8 million.
The funds generated by the new tax will be utilised for the improvement of the tourism sector, he explained.
However, CIMB Research believes that it would be detrimental to the industry, as it would result in an unequal playing field between licensed hotel operators and illegal accommodations providers.
“Hoteliers may not be able to pass on all the additional tax to the tourist as the hotel occupancy rate in the country was only 61.9 percent in 2015,” it noted.
Hotel owners that would be affected by this new tax include Genting Malaysia, KLCC Property Holdings and Sunway Real Estate Investment Trust (REIT), assuming that the added cost would be shouldered by these firms.
Nevertheless, CIMB Research reckons that the impact on these companies’ net profit would be small, at one percent to two percent of 2018’s earnings.
At present, Genting Malaysia owns seven hotels with a total of over 10,000 rooms. As of end-2016, the firm’s average occupancy rate reached 93 percent.
Meanwhile, Sunway REIT operates five hotels with 2,090 rooms at an occupancy level of 66.7 percent, whereas KLCCP runs the 632-room Mandarin Oriental Kuala Lumpur.
Radin Ghazali, Content Writer at PropertyGuru, edited this story. To contact her about this or other stories email radin@propertyguru.com.my
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