Licensed hotels in Miri face stiff competition
MIRI: The hotel industry here is facing a rough time, especially with the Visit Miri Year campaign this year; that is the competition between licensed and unlicensed hotels, budget hotels as well as homestays offered through Airbnb.
While there are over 3,000 rooms offered to tourists and travellers by over 30 licensed hotels, motels and inns, the steep competition they are facing against 3,000 rooms offered by over 75 unlicensed hotels, motels and inns is unimaginable.
Malaysia Hotel Association, Sarawak Chapter honorary secretary- general John Teo shared with The Borneo Post how the unfair competition between both sides had affected the industry, creating imbalance amongst hotel operators despite Miri welcoming what seemed to be the most important year for the its tourism industry.
“Four years ago, the licensed hotels could easily generate a total of RM230 million in revenue, with average room occupancy from 75 per cent to more than 80 per cent. For your information, at the time, average room rate was about RM255.
“In recent years, with the sudden surge of unlicensed hotels, motels, and Airbnb offering various options for homestay service, the overall room occupancy at licensed hotels has dropped to less than 50 per cent, forcing the room rate to be reduced to about RM175 per room to attract more customers.
“Back in 2014, a 5- star rated hotel enjoyed an average rate of RM520 per room a night, and now the price has been reduced to only RM260 per room a night whilst a 4- star rated hotel offered price at an average of RM320, but now the same standard hotel offers about RM160 per room a night or less.
“While the facility and services
In recent years, with the sudden surge of unlicensed hotels, motels, and Airbnb offering various options for homestay service, the overall room occupancy at licensed hotels has dropped to less than 50 per cent, forcing the room rate to be reduced to about RM175 per room to attract more customers.
provided at these licensed hotels are still the same, however, the profit made by these legitimate accommodation providers has drastically reduced. That unfortunately may force retrenchment due to decreasing room demands, which is very unhealthy for the whole economy,” said Teo.
With lesser demand, he said the domino- effect is happening to various services that are offered to guests at the hotels, such as spa, business centre, food and beverage outlets like restaurants and bars /lounges.
“It is often true that travellers may have less demand on the quality of the accommodation service, because their main objective is to travel around on a budget, and spend when only necessary.
“Even so, the hotels that offer higher standard of quality services are aiming to be on par with the market demand, by lowering their rate and at the same time offering a comfortable stay,” Teo said.
Teo stressed that while travellers and tourists may opt for cheaper, affordable option, safety measures must not be taken for granted.
“Licensed hotels have to comply with the Fire and Rescue Department ( Bomba) requirements including equipping the premises with fire detection and fire- fighting system, as well as having security measures in place.
“In comparison, unlicensed hotels may have higher security risk for fire, theft, burglary, accidents etc. Without Bomba’s fire certificate, they are unable to obtain the occupational permit (OP). Hence, they are unlicensed premises.
“If, unfortunately, accidents occur at the premises, the operators and guests will not be protected by insurance. In short, the consequences could be very serious and devastating,” added Teo.
Other basic requirements that operators of 3- star and above hotels must adhere to are: they must obtain at least 44 licences including Bomba fire certificate; registration with the Ministry of Tourism Malaysia; Innkeepers Act 1952; Registration of Guests Act 1965; total insurance coverage; trading licences; local authorities building approval and by-laws; electricity tariff rating; security and safety guidelines with the police department as well as compliance with the Personal Data Protection Act 2010.
The process for all the licences usually takes up to about 166 days, and the guidelines to these are listed under the Malaysia Administrative Modernisation and Management Planning Unit ( Mampu).
Therefore, Teo stressed that tourists travelling here must always check on safety of the premises and possible risk when they are looking for accommodation.
Teo hoped that the Miri City Council ( MCC) and other relevant authorities could enforce stricter law against the unlicensed premises in order to protect the interest of both the hotel operators and guests.
“Based on the statistics that we have collected from Jan 1 to Dec 31, 2017, it is possible that we are looking at approximately one million hotel room nights taken up by unlicensed hotels/motels, etc at an average room rate of RM70 per night.
“If the situation is not controlled, we are anticipating more losses by licensed hotels,” he said.
John Teo, Malaysia Hotel Association, Sarawak Chapter honorary secretary-general