KUCHING: Hotels are adjusting room rates and menus in response to higher operating costs triggered by the expanded Sales and Service Tax (SST), which now covers everything from rental leases to imported ingredients.
According to Infinite Hospitality Group CEO Patrick Lau, many hotels have already made modest price adjustments to cope with the wider tax net.
“The key cost pressures are coming from increased commercial rents especially for hotels that lease space and rising procurement costs for food and beverage (F&B) operations,” he told the Sarawak Tribune.
Lau noted that outsourced services such as laundry, cleaning and maintenance have also become more expensive as these are now subject to SST.
“Instead of blanket price hikes, most hotels are adopting a targeted strategy,” he said. “That includes revising menu pricing and applying selective rate increases during peak periods, in a bid to balance cost recovery with guest expectations.”
He said that the inclusion of commercial property rentals under SST has had a significant impact, particularly for hotels in high-rent areas like shopping malls and city centres.
“For leased hotels, SST becomes an added overhead on top of base rent. Some operators are renegotiating with landlords, while others are exploring lease-to-own models to ease the tax burden,” Lau said.
F&B operations are also under pressure, especially those offering premium buffet spreads, fine dining, or large-scale banquet services.
“Imported items like smoked salmon, shellfish and berries have all gone up. Hotels are responding by reengineering menus—absorbing some costs, substituting with local produce, and aligning with the farm-to-table trend,” he explained.
While overall bookings have not dipped significantly, Lau said price-sensitive guests particularly domestic leisure travellers and corporate clients are voicing concerns.
“To stay competitive, hotels are shifting from a ‘price per night’ mindset to a ‘value per stay’ proposition,” he said, pointing to bundled offers, loyalty perks, and digital booking incentives as key strategies.
Lau also raised a broader regulatory concern. Licensed hotels, he said, now face more stringent tax compliance, while short-term rental platforms and foreign online travel agents (OTAs) may not be subject to the same obligations.
“This creates an uneven playing field. But licensed hotels continue to hold the edge in trust, professionalism and consistency. Differentiation through quality and compliance is more important than ever,” he added.
