Tourism tax will affect hotel segment — KLCCP

KUALA LUMPUR (April 7): The new tourism tax bill that was just passed is expected to affect KLCCP Stapled Group, which owns Mandarin Oriental Kuala Lumpur Hotel that is already facing a challenging environment.

“We are not overly optimistic about the market, especially with the incoming additional taxes. Let’s not forget that we have the minimum wage imposed. All of these will affect the hotel segment,” he said.

Group’s chief executive officer Datuk Hashim Wahir noted that there will be expectation of the government to provide better facilities given the implementation of tourism tax.

With the hotel industry already facing a big challenge in terms of pricing given the existing competition and overall occupancy, this would be an additional pressure on hotel operators.

“Occupancy rate for Mandarin Oriental was around 47% last year and is expected to remain stable,” he said, despite the expectation of more tourists in Malaysia this year.

According to Hashim, the hotel segment’s contribution to the group’s revenue declined to 11% in the financial year ended Dec 31, 2016 (FY16) from 12% in FY15, mainly due to significant impact by the softer corporate demand, increased competition from luxury and boutique hotels coupled with renovations to the guest rooms.

With the already challenging environment for its hotel segment, the tourism tax will only be an additional hurdle for its business.

This article first appeared in The Edge Financial Daily, on April 7, 2017.