Malaysian Hotel Prices Expected To Rise Due To Expanded SST & New Electricity Tariff

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The local hotel industry is bracing for an increase in room rates, with one expert projecting a hike of 10% to 15% due to rising operational costs

The Malaysian Association of Hotels (MAH) attributed the expected price increase to the newly introduced commercial electricity tariffs and the expanded Sales and Services Tax (SST), both of which take effect today, 1 July, reported The Vibes.

MAH vice president Datuk Khoo Boo Lim said while the association does not wish to contribute to the rising cost of living, hoteliers have no choice but to pass these added costs on to consumers.

He noted that while it is still too early to determine the exact rate of increase, his colleague, Negeri Sembilan MAH chapter chairman Haziz Hassan, said it could range between 10% and 15%.

"We have no choice. We are facing demands in the rise in wages, food prices and now power tariffs, and some elements of SST need to be absorbed," Khoo said.

On 1 February, the minimum wage was raised to RM1,700 for companies with five or more employees, while those with fewer than five have until August to comply. Many businesses have only recently begun adjusting to this change.

Now, with the added burden of the expanded SST and increased electricity tariffs taking effect today, hotels are grappling with multiple cost pressures. 

Additionally, the mandatory 2% Employees Provident Fund (EPF) contribution for foreign workers, set to be implemented in October 2025, will add yet another cost for companies to bear.

While Khoo supported the minimum wage increase in principle, he noted that it is not practical for the hotel sector, which requires a minimum salary of at least RM2,000 per month to maintain service standards.

He also pointed out that Malaysia's heavy reliance on imported food contributes to the rising costs

"Food and beverage components are an essential service in the hospitality industry, and our guests, who are predominantly Malaysians, like to sample food," he said.

Khoo agreed with Haziz's projection that hotel room rates are bound to increase.

On 29 June, Haziz voiced concern over the price hike, noting that the increased minimum wage, expanded SST, and new electricity tariffs were all implemented in a short span of time, putting additional pressure on the industry.

Travel industry insiders have cautioned against raising hotel rates, especially with the Visit Malaysia Year 2026 campaign set to launch in just six months, reported The Vibes.

The campaign is intended to mark Malaysia's strong comeback in tourism following the devastating impact of the COVID-19 pandemic four years ago.