GEORGE TOWN: Penang’s intention to raise the “local government fee” (LGF), effectively collecting more money from tourists staying in hotels, is seen as adding insult to injury by industry players.
Hospitality players in Penang have been miffed since 2023, when they lost their input on how the millions of ringgit collected from tourists through the LGF were spent.
When it was introduced in 2014, the LGF was envisaged to improve Penang’s tourism infrastructure and promotion as jointly decided by a committee consisting of state officials and hotel industry players.
Malaysian Hotel Association Penang chapter chairman Datuk Tony Goh said ever since tourists had to pay the LGF on a room for each night’s stay, a joint committee decided how the LGF revenue was used.
Goh said as of 2023, the collection was channelled directly into state coffers, while hotels were relegated as LGF collection agents.
The latest plan to hike the fee by as much as 50% has raised more eyebrows, given that hoteliers no longer have oversight of the expenditure of the millions of ringgit collected annually.
Goh stressed the importance of ensuring the funds are used productively, with full transparency.
“The funds collected must only be used for tourism and nothing else, which was the original purpose and why hotels were made the collecting agents,” he said.
It was reported on Wednesday that the state government was considering a proposal to raise the LGF, though the exact quantum was not disclosed.
At present, anyone booking hotel rooms in Penang pays an LGF of RM3 per room/night for four-star hotels or above, and RM2 per room/night for hotels of three stars and below.
Previous reports indicated the amount collected ranged from over RM8mil to almost RM11mil per year, except for the pandemic-stricken 2020 and 2021.
Goh said he wrote to the Chief Minister’s Office last November, requesting a meeting to discuss the use of LGF, but has yet to receive a response.
“Unless the LGF is used purely for tourism marketing and promotion, I see no reason why the hotels are made to do the collection. It adds to our hotel room rates and becomes a burden,” he said, adding that operators of legal short-term rentals (such as apartments) should also be required to collect the LGF.
Berjaya George Town Hotel general manager Amran Taib said any decision to increase the LGF must be discussed with hotels as the prime stakeholders as their input is critical, and added that any proposed increase now comes at the wrong time.
Prestige Hotel general manager Melvin Ooi said increasing fees at this time runs counter to the more important task of increasing tourist arrivals to Penang. He questioned why only hotels were made to collect this fee when the government had other alternatives.
In response, Penang Island City Council Mayor Datuk A. Rajendran stressed that the matter is “only a proposal”.
“No quantum of increase has been decided, it’s still under consideration,” he said.
Rajendran said the increase is aimed at serving multiple purposes, including encouraging people from abroad to visit Penang, engaging with airlines, hosting exhibitions and participating in tourism forums.
Meanwhile, state tourism committee chairman Wong Hon Wai confirmed that in September 2023, the “hotel fee trust account” was closed, with the balance of RM9.69mil credited into the state government’s consolidated funds.
