New tourism tax could cause major ripple in Penang tourism

Khoo says travel agents and hotels are in a quandary because the additional cost for MICE groups could lead to cancellations.
The Star/Asia News Network

The tourism tax could cause a major ripple in Penang's tourism industry because it would affect MICE (Meetings, Incentives, Conventions and Exhibitions) groups.

Penang Tourist Guides Association president Chin Poh Chin said the tax could reduce Penang's competitiveness as a MICE travel destination.

"People have this simple notion that if tourists can afford a five-star hotel stay, they can pay an extra RM20 (S$7), which is not the case."

She said the extra cost would hit groups such as a recent one in which about 20,000 tourists from China spend three nights in Penang.

"If it is two to a room, then 10,000 five-star hotel rooms for three nights for a group this large will cost an extra RM600,000 with the tourism tax.

"This might make such groups think of other destinations like Thailand," she said.

Malaysian Hoteliers Association (MAH) Penang Chapter chairman Khoo Boo Lim said travel agents and hotels were in a quandary because explaining the additional cost for MICE groups could lead to cancellations.

"MICE events are booked one to two years ahead and the prices are locked in. To tweak the costing now does not make sense," he said.

But while the 'big guns' are fretting, the 'little people' seem to not mind and even perceive the tax as an equalizer of sorts.

A budget hotel owner, who declined to be named, said the new tax which starts on July 1 was 'no big deal' for budget hotels.

"Our guests only have to pay another RM2.50. Add Penang's local government fee of RM2 and it is just RM4.50 in taxes per room night. We charge RM60 to RM80 per room night depending on which day."

He believed that the lower taxes for budget hotels would make them more appealing for travellers compared to starred hotels.

"People come to Penang to see things and eat. They just need a clean and cosy place to sleep at night so as long as budget hotels do that, we will stay attractive," he added.

Starting July 1, travellers to Penang will pay the tourism tax on top of the local government fee (LGF).

Chief Minister Lim Guan Eng said in a press conference yesterday that the state would continue to charge the LGF of RM3 per room per night for four-star and five-star hotels, and RM2 per room per night for three stars and below.

The tourism tax is also charged on a per-room, per-night basis.

The rates are RM20 for five-star accommodations, RM10 for four-star, RM5 for one-to-three star and RM2.50 for non-rated accommodations, including budget hotels.

Tourism and Culture Minister Datuk Seri Nazri Aziz had said the tax would supply a sustainable fund to develop the tourism industry.

He said it would yield at least RM654mil annually, assuming a national average hotel occupancy rate of 60 per cent for the 11 million hotel rooms in the country.