Its president, Sri Ganesh Michiel, described the move as unreasonable and unsustainable, saying it would force many budget hotels to shut down and hurt Sabah’s tourism sector.

“For decades, hotels in Kota Kinabalu have paid a fair licensing fee of RM10 per room per year, as set by the Cabinet in 1989.

“However, the recent decision to revert to the 1966 rates, ranging from RM40 to RM140 per room per month based on hotel classification and occupancy, has placed an unbearable financial burden on hotel operators,” he said in a statement.

He said a 100-room hotel classified as a second-class hotel, with a 60% occupancy rate, would now have to pay up to RM57,600 annually in licensing fee, a drastic increase from the previous RM1,000.

Unfair advantage for short-term rental operators

Sri Ganesh criticised the lack of enforcement against unlicensed short-term rental accommodations (STRA), such as those operating through Airbnb and similar platforms.

Hotels are subjected to strict regulations, licensing requirements, and taxes, while STRA operators remain largely unregulated and untaxed, he said.

He also warned that if the issue was not addressed, it would have serious consequences for the state’s tourism industry.

“Investors will avoid the city due to unfavourable business conditions, and hotels, which are essential for attracting domestic and international travelers, will continue to suffer,” he said.