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Travellers to Malaysia mulling fewer hotel stays amid projected 30% hike in room rates

SINGAPORE: Amid a forecasted hike in the prices of hotel rooms in Malaysia next year, some travellers say that they may opt for alternative accommodations or arrangements though experts believe that the spike in prices is unlikely to have a major impact on international tourism. 

In a report last Friday (Nov 3), Malaysian Association of Hotels (MAH) president Christina Toh said that hoteliers in the country may raise the prices of rooms by 30 per cent, owing to an increase in the Sales and Services Tax (SST) next year. 

Singaporeans whom CNA spoke to said that the move to raise the prices of hotel rooms may push them to consider other options when visiting the country, such as using the online marketplace Airbnb. Others said that they may choose a different country in the region for their vacation.   

Ms Hanisah Halid, 26, who stays in hotels at least twice a year during her visits to Johor Bahru in Malaysia, noted the appeal of cheaper hotel prices there as compared to Singapore. 

“(I stay at the hotels) in Johor Bahru because of the low price. If the rates increase, I can just go on a day trip instead of staying over,” said the receptionist, adding that she typically stays in hotel rooms priced at less than S$150 (US$111) per day. 

A search by CNA found that higher-end hotels in Johor Bahru can cost anywhere between S$90 to S$157 for a standard room for two, while similar hotels in Singapore can cost between S$300 to S$800 a night. 

While she may halt her extended vacations to other parts of Malaysia, Ms Hanisah said that she will continue travelling to Johor Bahru for her monthly grocery shopping due to the favourable exchange rate.

“Personally, I think there is quite a fair share of difference (in the price of groceries),” said Ms Hanisah.

Similarly, Ms Adriana, a 25-year-old preschool teacher, said that she will continue her trips to Malaysia as most of her travel there has consisted of day trips to Johor Bahru. 

But for longer vacations, Ms Adriana said that she may opt to stay at an Airbnb in Malaysia or travel to a different country instead. 

“I feel like it depends on the itinerary and financial capability at that point in time … (I may choose to travel to) Thailand as it seems fun and has a similar affordability to Malaysia,” she told CNA. 

Meanwhile, a Malaysian domestic traveller whom CNA spoke to said that he may choose to split the cost of a hotel room by going on vacation in a group instead of travelling solo. 

“If the increase in price is too drastic, I guess I won’t be travelling solo. With more people, you will be able to lower your travel budget,” said Mr Farizul Ikhmal, who works as a content safety labeller for a social media company.

The 30-year-old, who travels to three Malaysian states a year for leisure purposes, said that he usually stays in hotels which cost less than RM200 (US$83) but is willing to splurge, depending on the uniqueness of the hotel room.

He added that if hotel room prices in Malaysia do indeed see an increase, he may choose to travel abroad – especially to neighbouring countries like Indonesia, Thailand or Vietnam – where he will be able to stay within his budget.  

Meanwhile, housewife Ms Faridah Beram, 64, remains undeterred by the potential increase in hotel room prices. 

“Our (Singapore) currency is very stable and I think I can still afford to stay in Malaysia and enjoy my vacation there,” she said. 

“Malaysia is the place to be. They have a lot of places we haven’t discovered yet … and their food, culture and people (align more with) my preferences.” 

Ms Faridah said that she usually visits Johor Bahru twice a month. “Due to the jam and all the hassle at CIQ (Customs, Immigration and Quarantine Complex), I prefer to stay overnight at a hotel (before heading back to Singapore),” she said. 

She added that she will continue staying at the hotels in Malaysia as opposed to an Airbnb due to their convenience and good quality beds as her husband, whom she often travels with, has had lumbar surgery. 

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DEMAND FOR TRAVEL TO MALAYSIA NOT EXPECTED TO TAKE A HIT

Tour company Chan Brothers Travel told CNA that it does not expect the demand for its tour packages to Malaysia to wane greatly. 

“Firstly, Singaporeans have significant spending power in Malaysia, particularly if the current strong Singapore to Malaysia currency exchange rate remains stable or continues to rise,” said senior marketing communications manager Mr Jeremiah Wong. 

“Secondly, our partner network is robust and well-established, allowing us to leverage extensive connections and collaborate with our preferred travel partners, including hoteliers.”

Last month, the Singapore dollar breached the 3.5 mark against the Malaysian ringgit for the first time on Oct 23. 

Ms Toh, the MAH president, was quoted as saying by The Malaysian Insight last Friday: “Despite the budget announcement stating the SST wouldn’t apply to certain categories, operating costs are expected to increase due to the integrated supply chains.”

“Regardless of how hotels respond, the effect will be felt throughout the industry and is expected to influence room rates.”

Malaysia’s SST is expected to increase from six per cent to eight per cent next year, though it will not include food and beverages or telecommunications. 

This was announced by Malaysian Prime Minister Anwar Ibrahim during a tabling of Budget 2024 on Oct 13 this year. 

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VARIOUS FACTORS AT PLAY INFLUENCING HOTEL PRICE HIKE, SAY EXPERTS

Experts whom CNA spoke to cast doubts that the SST increase is the sole reason for the predicted 30 per cent ballooning in hotel room prices.

Dr Wong King Yin, a senior lecturer from the Nanyang Technological University’s (NTU) Nanyang Business School, told CNA that a combination of factors, such as increased manpower and utility costs, are likely to play a role in the forecasted prices of hotel rooms next year. 

Dr Wong explained that due to a shortage of manpower in Malaysia’s tourism industry during the COVID-19 pandemic, increased wages were needed to attract workers to the hotel industry. Utility and other supply costs have also rapidly increased after the pandemic, she said. 

“All these added up together with the increase in SST could put a great financial burden on the hotel industry. So I think the potential increase in room price could be reflecting all these various factors rather than the SST increase,” said Dr Wong. 

Associate professor Dr Godfrey Yeung from the National University of Singapore’s (NUS) geography department commented that while the SST could have an impact on inflated prices due to a multiplier effect, a 30 per cent increase “sounds excessive”. 

“One has to differentiate the sources of inflation. In this case, the rising price could also be due to the depreciated ringgit, in the form of imported inflation,” Dr Yeung told CNA. 

Meanwhile, Dr Kevin Cheong, adjunct faculty at Singapore Management University and University of Newcastle, Australia asked if the drastic price hike “would … be deemed as ‘profiteering’ from the SST increase”. 

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INTERNATIONAL TOURISM LIKELY UNAFFECTED

Due to the weakening Malaysian ringgit as compared to other currencies in the region, the increased hotel room prices would likely have a bigger impact on domestic rather than international tourism, Dr Wong told CNA. 

“International tourists might still find the prices (of hotel rooms) in Malaysia to be relatively affordable when compared with their home countries in the region,” she told CNA. 

Dr Cheong also agreed that Malaysia will still be an attractive destination for international tourists. 

“In addition to a myriad of experiences and destinations (in Malaysia), the Malaysian ringgit favours the foreign tourist. I would also expect Singaporeans to take advantage of the weakened ringgit for short escapes to Malaysia,” he told CNA. 

However, he also said that domestic tourism is still likely to flourish due to the appeal of discovering and exploring the cultural and geographic diversity of their own country. 

“We should expect tourism products and experiences to do well from domestic or resident staycations and inbound tourism, particularly from Singapore. 

“This could lead to increased investor confidence in developing resorts and visitor attractions in Malaysia,” said Dr Cheong.

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