KUALA LUMPUR – The digitalisation of the tourism industry may seem to be a boon for many, but local budget hoteliers say it has become more of a bane as online travel agencies based overseas are impeding them from running their businesses with proper earnings.
For this reason, the Malaysian Budget and Business Hotel Association (MyBHA) is urging the government to regulate online travel agencies (OTAs) and enforce short-term residential accommodation (STRA) guidelines.
Among the grievances related to the OTAs are claims of exorbitant sales commissions that reduce hoteliers’ profits and activation of promotions without hoteliers’ consent.
They also take umbrage at agencies offering monies with strings attached, which the operators say are oppressive.
MyBHA Johor chairman Jarod Chia said that the monies are advanced by OTAs to hoteliers based on past revenue forecasts.
“If, last year, you made RM500,000, they will give you RM500,000 in advance.
“In return, hoteliers must provide a number of rooms to OTAs at a discounted rate or a commission as high as 45%,” he told an online press conference.
Ng Hong Kiat, chairman of MyBHA Selangor, said that the discounts charged by OTAs result in a situation where hoteliers cannot cover the costs of operations.
“Ten years ago, the OTAs probably charged around 5% commission from the sales.
“Now, a hotelier who has invested millions to start his business must share 60% of his profits with OTAs,” Ng said.
He also said that, while official commission rates range between 20% and 25%, the introduction of promotions by the OTAs without giving notice to hoteliers can bump commission rates as high as 45%.
Meanwhile, MyBHA deputy president Sri Ganesh Michiel said these profits made by OTAs do not stay in the country as the operators are based overseas.
Additionally, he alleged that digital tax payments that should be borne by OTAs are instead placed upon hoteliers.
STRA issues
Problems for budget hoteliers do not end there, as Sri also highlighted the fact that OTAs are offering STRAs.
“When we operate, we follow SOPs, we make sure our customers follow guidelines under the National Recovery Plan (NRP),” he said, referring to government restrictions during the current pandemic.
With these STRAs, customers can merely rent out homes or condos easily, which Sri claims has resulted in criminal activities around premises.
“They don’t adhere to SOPs and it is not necessary for them to have operating permits from the International Trade and Industry Ministry.
“That’s why you hear in the news of people renting out these places and holding parties during the pandemic,” Sri added.
He urged the government to enforce guidelines concerning STRAs and regulate OTAs.
“These OTAs operate overseas, so there must be regulations.
“If they don’t follow regulations, block their services,” Sri said. – The Vibes, September 18, 2021
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