PETALING JAYA: Industry leaders are raising the alarm over the threat of a surge in illegal operators from unlicensed hotels to rogue travel agents.
They said these entities threaten consumer safety, regulatory integrity and government revenue, and call for heightened enforcement and collaboration among stakeholders.
Malaysian Association of Tour and Travel Agents (MATTA) president Nigel Wong said technology has facilitated the rise of unlicensed operators.
“Illegal operators, whether they are hotels, travel agents or other attractions, have proliferated due to several factors.
“The pervasiveness of technology enables product owners to market and sell directly to consumers, bypassing traditional regulatory frameworks,” he said in a recent interview.
The lack of prosecution and insufficient punishment emboldens illegal operators to act outside the law, said Wong.
He added that if authorities do not become more efficient in enforcement efforts, especially against unlicensed operators, the impact on the industry could be severe.
Wong noted that the implications of using unlicensed operators extend far beyond just regulatory concerns.
“When customers use services provided by an unlicensed operator, they often lack insurance coverage and have no recourse if something goes wrong.
“There is an accountability issue, leaving consumers vulnerable,” Wong said.
“Moreover, the proliferation of illegal operators leads to potential tax revenue losses because these individuals or organisations may not report their earnings accurately.”
Malaysia Budget and Business Hotel Association president Dr Sri Ganesh Michiel said the issue has worsened nationwide.
“With the rise of unregulated online booking platforms and a growing demand for trendy, affordable stays, more illegal accommodation providers have emerged, especially in tourism- heavy states.
“Not only does this jeopardise public safety, but it also undermines the efforts of legitimate, licensed hotel operators who have invested significantly to meet regulatory requirements.”
When asked, Sri Ganesh said most illegal operations are profit- driven; many operators also face bureaucratic hurdles, especially when dealing with old or heritage buildings that may not meet modern fire safety or structural standards.
“Still, this does not justify non- compliance,” he said.
The lack of effective enforcement is a significant part of the problem, he said.
“Local authorities often direct their monitoring efforts towards licensed businesses, leaving illegal operators to continue unchecked.
“It’s crucial that we implement stronger enforcement measures, including court action and heavier fines, to deter these illegal operations.”
Sri Ganesh also called for establishing a State Tourism Development Council to “manage the transparent use of local tourism fees and facilitate the registration process, especially for operators of heritage buildings facing unique challenges.”
He highlighted the broader scope of unlicensed operations, including short-term rental accommodations and unregistered homestays, and said that without stringent enforcement, these rules will be ineffective.
“There should be closer collaboration between local councils and federally-recognised hotel associations. All accommodation providers should be registered and rated by the Tourism, Arts and Culture Ministry.
“A transparent, well-regulated system is crucial for the sustainable growth of Malaysia’s tourism industry,” he said.
Malaysian Tourism Federation president Datuk Tan Kok Liang urged operators to adhere strictly to regulatory guidelines.
“Operators must fully comply with regulations and laws, acknowledging the bureaucratic guidelines.
“Avoid cutting corners and comply with the requirements, even though it may take time.”
Regarding enforcement efforts, Tan was unequivocal in his stance.
“If there is a will, there is a way; rather than citing inadequate resources.”
Tan also advised holidaymakers to act responsibly by supporting compliant businesses.
“Be a responsible traveller and support operators that follow the rules to ensure fair play and a sustainable tourist destination.
“Enquire whether they have a license or otherwise before making reservations,” he said.
Tourists can verify registered hotels in Malaysia at https://www.motac.gov.my/en/check/registered-hotel.
