MIRI: The Malaysia Association of Hotels (MAH) Sarawak Chapter lauded the federal government’s Budget 2026 as a strong and timely boost for Malaysia’s tourism industry.
However, it cautioned that hotels continue to face economic headwinds and shifting travel patterns.
MAH Sarawak Chapter president John Teo Peng Yew said the RM700 million allocation for the tourism sector, including RM500 million for Visit Malaysia Year (VMY) 2026, reflects a clear recognition of tourism’s role as a key pillar of national growth.
“This marks a significant increase from last year and sends a strong message that tourism remains a national priority,” Teo said in a statement today.
“The renewed focus is both timely and encouraging as the country prepares to welcome more international visitors under Visit Malaysia Year 2026.”
However, Teo noted that the hotel industry continues to face a challenging environment, with occupancy rates for the first eight months of 2025 down by 3.3 per cent and average room rates slipping 2.9 per cent compared with 2024, based on data from MAH’s analytics partner ADATA.
“These figures reflect a market still finding its footing amid global uncertainties and changing travel behaviour,” he said. “While optimism is returning, the sector must remain agile to stay competitive.”
Teo said Budget 2026 provides much-needed relief through a range of tax incentives designed to stimulate recovery across the tourism ecosystem.
Among the key measures announced:
- Tour operators will enjoy 100 per cent tax exemption on inbound tourism activities.
- Tourism premises are eligible for renovation and refurbishment tax deductions up to RM500,000, aimed at upgrading domestic offerings.
- International incentive trips, conferences and exhibitions verified by the Ministry of Tourism, Arts and Culture (MoTAC) will receive full tax exemptions, benefitting the MICE segment.
- A personal tax relief of RM1,000 for domestic tourism spending, expected to boost local travel demand.
“These measures will help strengthen the tourism value chain, especially for hotels that rely heavily on the MICE and domestic travel markets,” Teo said.
“We see this as not just a budget allocation, but a vote of confidence in the industry’s resilience.”
MAH will continue its partnership with Tourism Malaysia to drive domestic travel through the Cuti-Cuti Malaysia campaign, first launched in 2024.
“For 2026, MAH plans to organise a series of Domestic Tourism Fairs in Kuala Lumpur, Johor Bahru, Penang, Pahang and other states,” Teo said.
“Hotels will offer attractive packages and discounts to encourage Malaysians to explore the country.”
He added that strong domestic participation is essential to sustain the momentum leading up to VMY2026.
Teo also called for greater focus on workforce development to prepare for an expected surge in visitor arrivals.
While the Human Resource Development Corporation (HRDC) has been allocated RM3 billion for digital and technology training, MAH hopes to see a portion directed towards AI-driven hospitality systems and digital service training.
“The hospitality workforce must evolve with technology. Upskilling in digital and AI applications is crucial for service efficiency and global competitiveness,” Teo said.
Teo emphasised that effective management of allocated funds will determine whether the tourism industry achieves its full potential.
“All allocations must be channelled efficiently and implemented promptly. Timely disbursement and transparent governance are vital for impact at the operational level,” he said.
Despite the current challenges, MAH Sarawak remains confident that the industry is on the path to full recovery.
“As one of the core pillars of Malaysia’s tourism economy, hotels are fully committed to supporting the nation’s growth agenda,” Teo said.
“With the government’s renewed investment and focus, we believe the sector is well positioned to achieve the target of 47 million visitors and RM329 billion in tourism receipts under Visit Malaysia Year 2026,” he said.
