ONE OF PENANG’S crucial industries is tourism. The state has continuously drawn visitors from near and far, and efforts have been needed to generate income for the upkeep of the state’s many assets.

Introduced in 2014 under the former Penang Chief Minister Lim Guan Eng, the hotel fee collection imposed on all hotels has undoubtedly contributed to the growth of the tourism sector in Penang, specifically setting high standards in the hotel industry. This fee, priced at RM3 per room per night for hotels and resorts rated four to five stars and RM2 per night for lodgings rated three stars and below (dormitories, budget hotels, hostels and boarding houses), is collected and channelled toward the appropriate agencies to promote Penang as the preferred destination.

This tax is now applied in other Malaysian states that rely on tourism as a major industry, namely Melaka at RM2, and Kedah’s Pulau Langkawi with a fee ranging from RM1 to RM9.

The Penang Island City Council (MBPP) is the authorised body in charge of collecting the fees from the hotels on the island. Meanwhile, the Seberang Perai City Council (MBSP) spearheads the exercise on hotels on the mainland.

While these two local councils are tasked to only collect the fees (hotels are supposed to use the Penang Hotel Fee Online System to make payments), the state Finance Department and the Penang State Exco for Tourism and Creative Economy (PETACE) office play an even greater role by managing and deciding on relevant tourism promotional activities using the funds collected.

I spoke to MBPP mayor, Rajendran P. Anthony, recently, and I was told that a total of 119 licenses have been issued to 119 active hotels on the island to promote tourism-related packages.

“Since it was first introduced, there have been no complaints by the guests, and everything is progressing positively,” he said.

“Before implementing this programme, the state government has held various dialogue sessions with the public, non-governmental organisations as well as hoteliers to ensure they were all aligned with this hotel fee collection,” he added. A sum of RM72mil was collected since the fee was imposed in 2014. Also, 88% of hotel fees were collected from hotels on the island, with the remainder coming from Seberang Perai. To diversify and increase state revenue, the government decided that starting at the end of 2023, hotel fees collected will be included in the State Consolidated Revenue account as state revenue.

The breakdown of the hotel fees is as follows: 2014 (RM3,686,310), 2015 (RM8,590,989), 2016 (RM9,395,560), 2017 (RM9,796,332), 2018 (RM9,595,311), 2019 (RM9,406,481), 2020 (RM3,514,257), 2021 (RM92),[1] 2022 (RM3,832,692), 2023 (RM10,628,531.34) and 2024 – until April (RM3,719,144); total: RM72,165,699.34.

I did probe him further about how exactly these funds were used, and he directed me to PETACE, as they would be the perfect candidate for this question.

The state government has to vowed channel part of this revenue to Penang Global Tourism, Penang Convention and Exhibition Bureau (PCEB) and for tourism programmes. For the year 2024, an allocation of RM1mil was given to PETACE to be used for tourism-related programmes.

Now, this piqued my interest. Therefore, I approached Wong Hon Wai, the EXCO in charge to ask how this sum was used. He was tight-lipped, but told me that the state government is currently reviewing the hotel fee.

Therefore, I moved on to ask an influential figure in the Penang hotel industry, the Malaysian Association of Hotels (MAH) Penang chapter chairman, Tony Goh, about what the hoteliers thought about the hotel fee. After all, it has been 10 years since it was first implemented—and from what I read in the news about disgruntled hoteliers in Melaka who were not in favour of their need to impose hotel tax on their customers, I thought it best to ask if they were okay with it.

He said the decision to introduce the hotel feel collection was one of the best decisions made by the Penang government, which directly impacted the positive growth of the tourism sector in Penang. However, Goh has urged the state government and the related parties to conduct regular meetings to discuss the progress of the funds collected, and to introduce the latest promotions about Penang to tourists and visitors.

“This fee has been a launchpad for many hoteliers in Penang,” Goh said.

Another industry expert, Gulab Mahatam Rai, who is the current general manager of Lone Pine Penang (Attribute Portfolio Resort), commended the Penang government for introducing this initiative that has been instrumental in uplifting the tourism sector in Penang.

The collection of hotel fees was temporarily ceased following the Covid-19 outbreak a few years back, and the exemption was lifted and the exercise resumed as usual on July 1, 2022. Now, the question remains, how best can the hotel tax be used to make Penang more recognisable as a travel destination? Could it be this marketing that landed MBPP the ASEAN Clean Tourist City Award 2024-2026? Or being listed by CNN as the No.2 Must-Visit City in the world in 2017? Maybe.

Footnote:

[1] The collection reduced sharply due to hotel fee exemption following the Covid-19 outbreak.