Sarawak hoteliers seek Budget 2027 support to combat rising operating costs

In Kuching, as the government prepares to table Budget 2027 on October 9, hotel owners across Sarawak are making a straightforward plea: help us manage the cost of staying open. John Teo, chairman of the Malaysian Association of Hotels Sarawak chapter, has become the voice of an industry caught between two pressures—one pushing costs up, the other preventing them from raising prices to match.

The math is simple but unforgiving. Hotels depend almost entirely on people. Housekeeping staff, kitchen workers, front-desk attendants, servers—every function requires hands and hours. When the government introduced minimum wage requirements, it raised the floor for what hotels must pay. At the same time, electricity bills climbed, food suppliers raised their rates, and maintenance expenses grew. Teo laid out the full weight of it: wages, power, supplies, upkeep, and the hundred other line items that keep a hotel running day to day. These costs have not stabilized. They keep rising.

But here is where the squeeze becomes acute. Hotels cannot simply pass these costs to guests by charging more per room. The market will not bear it. Sarawak's hospitality sector now competes not just with other licensed hotels but with unlicensed Airbnb rentals and informal accommodation providers operating out of residential buildings. These competitors often operate with lower overhead and fewer regulatory obligations. When a traveler can book a room through an app for less, the traditional hotel loses the booking—and the revenue to cover its payroll and utilities. The result is that hotel operators absorb the cost increases themselves, watching their profit margins narrow year after year.

Teo's request to the government is not for a bailout but for targeted intervention. He wants the Budget to address both the cost side and the manpower side together. On costs, he is asking for direct assistance to reduce operating expenses. On manpower, he wants subsidies for training new employees, so hotels do not bear the full expense of bringing workers up to standard. He also wants incentives for businesses to invest in automation and digitalization—technology that could reduce labor intensity in some areas while freeing skilled workers to focus on guest-facing roles where human judgment and service matter most.

Beyond immediate relief, Teo is asking for support in building the workforce itself. Small and medium-sized hotels, which form the backbone of Sarawak's tourism infrastructure, struggle to compete with larger chains for talent. He wants government backing for programs that develop local workers into management-track positions, creating career pathways that might convince skilled people to stay in hospitality rather than drift to other sectors. He also wants incentives for hotels to invest in employee development and wage progression—the idea being that better-trained, better-paid staff deliver better service, which justifies higher room rates and attracts more guests.

The underlying argument is one of mutual benefit. If the government helps hotels improve productivity while supporting higher wages, both workers and operators gain. Employees earn more and have clearer advancement. Hotels maintain service quality and competitiveness. The tourism sector continues to grow, bringing revenue and employment to Sarawak's wider economy. Without this support, Teo suggests, the pressure will only deepen—margins will compress further, service quality may slip, and the industry's contribution to economic growth will shrink. The Budget, he is saying, is an opportunity to prevent that slide. Whether the government sees it the same way will become clear on October 9.