Malaysian Tourism Infrastructure & Promotion Set to Receive a Major Boost – New hotel levy tabled in parliament this week

Exclusive Interview – YB Dato’ Seri Mohamed Nazri bin Abdul Aziz – Minister of Tourism and Culture of Malaysia

The Malaysian tourism authority is set to receive a much-needed boost after a couple of years of declining funding. We asked YB Dato’ Seri Mohamed Nazri bin Abdul Aziz – Minister of Tourism and Culture of Malaysia to tell us a little bit more about the new hotel levy.

The legislation is being tabled this week in parliament, in the coming session. The plan is to place a levy on room nights, which will vary depending on the star-rating of the establishment. For four and five star hotels, it will be only 20 Malaysian Ringgit per night; that’s about four euro, then it will be three euros for three stars and two euros for two stars. Each year, we have altogether 11 million room nights, so we calculate that at 70% occupancy, we can collect about 650 million Malaysian Ringgit every year (eds: approx. 137m). This money will be used for tourism promotion and for development of tourism infrastructure. Obviously, when tourists come in big numbers, it’s the hotels that will benefit in the long run, and they will understand that the money is being used for good purposes. Furthermore, infrastructure is very important.  For example, we have to build new jetties to ensure safe embarkation for tourists when touring the coast and islands.

EACH YEAR, WE HAVE ALTOGETHER 11 MILLION ROOM NIGHTS, SO WE CALCULATE THAT AT 70% OCCUPANCY, WE CAN COLLECT ABOUT 650 MILLION MALAYSIAN RINGGIT EVERY YEAR

It’s important for us to have this extra budget, so the tourism ministry no longer has to depend on oil and gas for revenue. To me this is logical, especially given the growing importance of eco-tourism and the fact we are in the year of sustainable tourism for development. It will not affect the local people, because it is the tourists who will pay, as they are the ones who stay in the hotels, and I strongly believe that tourists will clearly understand that the levy is there for a good reason. In Europe, there are similar taxes, and all those travelling understand that someone needs to pay for the infrastructure and promotion of a destination, so this is not something that is done solely by Malaysia. Singapore has also applied this kind of levy successfully, so this is why am con dent it will work well.

What about AirBnB? Will people renting via platforms like this have to pay?

Indeed. To be fair to the hoteliers, when we spoke to them, they asked whether such platforms will be taxed, and I said yes, under the law, if you rent a room and advertise it online, the rental will be taxed… that is fair. Homestay is exempt however, as this is a grass roots programme and is part of our poverty reduction plan in rural areas.

WE WILL CREATE AN ACADEMY RUN BY TOURISM MALAYSIA TO TRAIN TOURIST GUIDES

What has the hoteliers’ reaction been overall to the idea of the new levy?

Of course, their initial reaction was to object, because they said that it was going to increase the tariff for the rooms. However, I pointed out that the Malaysian Ringgit has gone down against major currencies in the world and as they are not charging their tariff in US dollars or euros, it’s still cheap for travellers to come and have a holiday in Malaysia. The hoteliers of course always keep asking us to do promotion; for example, at this pavilion at ITB Berlin. When you look at some of the other countries at ITB, they have in their pavilion stands from the hoteliers and the local, regional or provincial tourism boards supporting the promotion. I said to them, “You are not doing this; but you depend on us, and that’s why we need the money, so that when we organise an event like this you can come on board… but we need the money.” I have found that once this is explained, they do in fact comprehend our issues.

What is the time frame for this?

If it passes, as I imagine will be the case, we will be able to start collecting quarterly with the first period starting on 1 May.

What other promotional ideas do you have that will be implemented from this levy?

One of the problems that we face is that of language difficulties for tourist guides – especially in German or French and so on. I’m not talking about those who work with the big groups, but about two or three people coming to Malaysia and who want to engage a tourist guide who speaks German, French or even Russian. At the moment that’s very expensive, so we are going to create a training scheme for tourist guides to ensure that the supply will be there, and then we will fix how much they can charge. For the moment, because there are not many tourist guides speaking German or French, they can ask what they want, and it can be quite expensive. We will create an academy run by tourism Malaysia to train tourist guides… They will also learn Russian and other major languages. Of course, Chinese is not a problem because everybody in Malaysia speaks not only Chinese but also the dialects. 30% of the population are of Chinese descent, so not only do they speak Mandarin but also Cantonese and other dialects

Finally, please tell us about the development of air links that will now include Malaysia with other stop overs in between – such as Vietnam Airlines with a stopover in Hanoi, then carrying people on to Malaysia…

Already this has been implemented through Singapore, wherein with Singapore Airlines, people can fly to Singapore and then on to different locations in Malaysia. We launched this last year and there has been an increase in the number of tourists from Spain, France, Germany and the Netherlands. On average, we have seen a 40% increase in the number of tourists flying to Malaysia via Singapore from these regions on Singapore airlines. We believe that by doing the same thing with Vietnamese airlines, Garuda and Thai International, it will be an even bigger success.

PHOTO- Top of Page:  YB Dato’ Seri Mohamed Nazri bin Abdul Aziz – Minister of Tourism and Culture of Malaysia (centre) with Gérard Lefebvre – ITB Berlin News publisher (right) and Richard Barnes – ITB Berlin News Editor-in-Chief (left)