Speaking to FMT, Malaysia Budget Hotel Association (MyBHA) president PK Leong said the GST had eaten into the spending power of locals.

“They had to cut down on non-essentials like travelling. Hopefully now they will have extra money to spend.

“But it’s the tourism tax that hurts us more because it means extra costs for foreigners.”

Under the tourism tax, which came into effect on Aug 1 last year, foreign hotel guests have to pay a flat fee of RM10 per room per night, regardless of the hotel’s star rating.

Leong said this had resulted in foreign tourists opting for other countries in the region, especially those who were travelling on a budget.

“Imagine, if the rate for a budget hotel is RM100 a night, then the RM10 tourism tax is an extra 10% per night.”

Leong said according to MyBHA’s research, the average market share of foreign guests in budget hotels had dropped from 60% before the tourism tax to 30%.

Malaysian Association of Hotels (MAH) president Cheah Swee Hee said for now, it was hard to determine how the switch from GST to the sales and services tax would affect hotel operators.

“But as far as the tax goes, I don’t think it will be much of an issue.

“It’s more the changing of the software that is an issue. Before, when we changed the software to comply with the GST, that was costly.”

Like Leong, Cheah said the tourism tax was a more pressing matter.

“To us, it’s unnecessary and there’s also an element of unfairness as tourists who stay in airbnb or illegal hotels aren’t being charged the tax.”