Why Hotel Rates in Johor is Set to Increase from 1 March 2024

As we approach public holidays such as, Good Friday and Hari Raya Puasa, you might have been contemplating a holiday in Johor Bahru (JB).

After all, the conversion rate is $1 to RM3.55, right?

Just a quick a heads up: hotel stays in JB are about to become slightly more expensive. So, you might refrain from spending your money like you’re the child of a tycoon while you’re there.

Reason Behind the Increase in Hotel Rates in JB

Effective from 1 March 2024, there will be a slight increase in hotel rates in JB, primarily due to an increase in the sale and service tax (SST) from 6% to 8%.

Malaysian news outlet, The Star, reported that Mr Ivan Teo, chairman of the Malaysian Association of Hotels (MAH) Johor Chapter, said its members had previously increased hotel room rates by 20% to 30% in the middle of 2023 due to increased electricity tariffs.

For those not familiar, electricity tariffs are essentially pricing structures charged by utility companies for the consumption of electricity. Thus, this is another reason why prices have been increasing since last year.

Mr Teo pointed out that there are 90 three, four, and five-star hotels in Johor. All of which generally had good occupancy rates on weekends, long public holidays as well as school breaks.

Nevertheless, Mr Teo highlighted that they aim to boost occupancy rates for hotels in JB during weekdays and non-peak periods.

Singaporeans Form the Bulk of Hotel Guests in JB

Mr Teo mentioned that he did not foresee any issues with the increase in room rates, especially, for guests from Singapore, China, Thailand, and Vietnam. In fact, Singapore remains to be the bulk of the hotel guests due to favourable exchange rates.

However, Mr Teo acknowledged that hotel operators might face difficulties when explaining the new rates to Indonesian guests due to the rupiah-ringgit exchange rate.

The hotels also saw an increase in the number of South Korean guests in JB and Iskandar Malaysia due to an uptick of golfers and visitors wishing to escape experiencing winter in their countries.

He also explained that they have South Korean and mainland China guests who enrol in short term English language courses and those seeking medical treatment at private hospitals in JB.

Inclusion of SST Unlikely to Cause Issues

On the other hand, Lotus Desaru Resort chief executive officer Ms R.Indra Ghandi said that the room rates would not increase apart from the inclusion of SST.

“We have been charging nett rates for our hotel rooms. Consumers are price sensitive so they will react if we were to increase our rates,” she added.

Ms Indra anticipates no significant backlash from the SST inclusion, especially from Singaporean guests who possess strong purchasing power.

Ms Indra proposed for the government to offer visa-free entry to tourists from countries other than China and India. She also expressed her hopes for road shows to be organised to attract more guests from South Korea, Japan, Taiwan, and India.

She added that, 300 million people in India are from the middle-income group. Hence, it would be a huge market if they visit JB.

Ms Mariam Mohd, operations manager of Katerina Hotel Batu Pahat, said there would be minimal increase in room rates in March as the increase in price largely depends on packages. She also highlighted that, hotels in regions outside JB, such as Batu Pahat, are reliant on guests visiting hometowns and relatives.

Increased Hotel Rates Unlikely to Affect Singaporeans Significantly

Despite the impending rate increases, the impact on Singaporean travellers is expected to be minimal.

Just recently, CNA reported that the Malaysian ringgit fell to its lowest level in 26 years since the Asian financial meltdown in 1998.

S$1 was equivalent to RM3.568 on 20 February 2024 at 7pm. Malaysia’s central bank governor Datuk Abdul Rasheed Ghaffour explained that the reasons behind the drop in the currency could be due to external factors such as US rate hikes, geopolitical concerns, and uncertainty about China’s economic prospects.

On 20 February itself, traffic jams were already in place. Many people have been flocking to JB due to the currency rate.

@gforshorrt

20/2/2024 , steadyy 🔥 #runsgd🇸🇬🇸🇬🇸🇬🇲🇾🇲🇾🇲🇾 #jbstyle #fypシ #runsgd

♬ original sound – Didi & Friends 🐥 – Didi & Friends

Not even a bird can squeeze in between the motorbikes.

Right now, S$1 is equivalent to approximately RM3.54. Although we Singaporeans love to complain, maybe we should overlook the rising hotel costs for now.