Malaysia Budget and Business Hotel Association (MyBHA) president Sri Ganesh Michiel said Airbnbs pose a significant threat to the survival of the hotel industry.
He said as the sales and services tax (SST) is increasing from 6% to 8% next year, hotels need to raise their rates to cover rising operational costs.
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However, Airbnb rates will not be affected by the tax hike as they are not registered as businesses, he said.
“Airbnbs pay residential rates for electricity, water and WiFi, so they can sell rooms at cheaper rates.
“Due to this, customers will tend to choose these types of accommodation. But these places are illegal. They don’t have business licences and there are no laws governing them,” he told FMT.
Airbnb’s public policy head for Southeast Asia, India, Hong Kong and Taiwan, Mich Goh, disputed Sri Ganesh’s claim.
She said Airbnb applies value-added tax (VAT) to its service fees on guest reservations, based on relevant laws of the jurisdiction it operates in.
“For all Malaysian consumers, Airbnb service fees are subject to 6% service tax. We’ve long supported tourism taxes and to date, have collected and remitted billions in tourist and hotel taxes globally,” Goh said.
Quoting a recent Oxford Economics report, she said Airbnb contributed over RM5 billion to Malaysia’s gross domestic product in 2022 and supported almost 57,000 local jobs.
On Nov 3, Malaysian Association of Hotels president Christina Toh said hoteliers in Malaysia might raise room prices by 30%, owing to the increase in SST next year.
The increase in SST rate announced by Prime Minister Anwar Ibrahim on Oct 13 will come into force on Jan 1.
Meanwhile, Malaysian Tourist Guides Council president Jimmy Leong said Airbnbs had disadvantaged the Malaysian tourism industry.
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“On the one hand, hotels need to increase their revenue so they can set some funds aside to ensure that they can refurbish and maintain their facilities.
“But, on the other hand, when prices get too high, customers will run to Airbnb, resulting in a drop in hotel occupancy,” he said.
He said the government should examine the legality of Airbnbs as these establishments might lead to a loss of revenue through taxation, ultimately impacting the tourism industry.
“If we look at neighbouring countries like Singapore and even in Penang, Airbnbs are not allowed to operate.
“They’re not supposed to be businesses in the first place, and because they are mushrooming everywhere, they are affecting legally run businesses. The government needs to look into this matter,” he said.