THE Malaysian Budget & Business Hotel Association (MyBHA) has requested the Government to temporarily shelve the enforcement of the new minimum wage rate for the hotel and tourism industry until business recovery is within sight for the hotel industry.
Describing the RM1,500 minimum wage rate which came into effect on May 1 as being done unexpectedly without any engagement with the industry, MyBHSA revealed that Malaysia’s hotel and tourism industry are still facing six “industry recovery threats” that have yet to be resolved.
“Failure to resolve the threats and even increasing the burden of operating costs of the hotel industry will prompt hotel and tourism operators to raise the selling price for hotel or tourism services,” MyBHA national deputy president Dr Sri Ganesh Michiel pointed out in a media statement.
“This is to ensure that they can provide good and adequate services to their customers although this will indirectly affect the entry of international tourists into the country as well as domestic tourism.”
Against the backdrop of the “industry recovery threats”, MyBHA said the hotel and tourism industry is facing the following challenges:
- Income reduction resulting in inability to cover operating costs;
- Hotel operators have to reduce the number of employees which will directly affect service quality;
- Hotel operators have to reduce salaries for executive employees or terminate their services in order to obtain sufficient cash flow for the continuity of their business;
- Hotel operators have to reduce overtime hours for their employees;
- Hotel operators are unable to improve hotel services such as buying new linens and towels as well as ensuring a better level of cleanliness;
- Hotel operators are unable to raise room sales prices due to the issue of unhealthy competition with online travel agencies (OTA); and
- Many Tourists choose to stay in short-term residential accommodation (STRA) even if it is an illegal or unlicensed accommodation provider.
Given that many of the industry recovery threats have remain unresolved, Sri Ganesh said the sudden enforcement of the new minimum wage rate would mean additional burden to hoteliers in the form of increased business operating costs whereby service fee rates from suppliers will go up, hence they “could end up closing their business operations”.
“This is likely to happen when the hotel and tourism operators face unresolved cash/financial flow problems stemming from the effects of the COVID-19 pandemic,” he noted.
“Therefore, we would like to request the Government to temporarily suspend the enforcement of the new minimum wage rate for the hotel and tourism industry until the aforementioned threats are fully resolved.
“We are not against the decision to look after the welfare of our employees but it must be implemented with a win-win mechanism for all parties, which this was not the case at all.” – May 13, 2022
