Sabah hoteliers appeal for service charge

The Sabah Hotel Association wants dialogue on moves to abolish the service charge.

KOTA KINABALU: Sabah hoteliers fear that without the service charge component in billing, the industry would be forced to cut back on staff and redefine service standards in a sector which operates seven days a week, 24 hours a day.

Abolishing the service charge means dilution of the star rating system. “This will hit the industry which nationwide collected RM100 billion last year.”

“If the service charge is abolished, what is the total loss of tourism receipt to the country? And the loss of direct income to workers in the hospitality industry?” asked Sabah Hotel Association (SHA) President Christopher Chan. “How do you justify the removal of the service charge?”

“The service charge is the motivator, a substitution, for the inconvenience faced by staff in the hotel industry which faces many challenges.”

The service charge, he added, was also a sort of financial subsidy for the industry which has to work even on public holidays. “The service charge will encourage staff to work long hours, put in overtime and turn up on public holidays.”

The SHA was appealing to the Ministry of Human Resources and the Ministry of Tourism and Culture, both State and Federal, to engage with stakeholders on the matter. It was also following up on a statement by the Malaysian Association of Hotels (MAH) which responded to calls by senior government officials that the service charge component in billing be abolished.

“If the service charge issue requires review, all stakeholders should discuss the matter in detail,” said Chan. “We need to discuss the complications and implications that will arise.”

“The government should not declare the matter – abolishing the service charge – as final in the media.”

He pleaded that there was nothing personal in the matter as the implications of abolishing the service charge affects millions of workers in the industry. “They are caught off guard and cannot express their feelings and stand up for their rights if there’s no dialogue.”

The MAH, in calling statements by senior government officials to abolish the service charge as uncalled for, said it discriminates against those workers in the industry who are not covered by employer-employee collective agreements. “This is unfair and smacks of double standards.”

“Workers without collective agreements would be deprived of the service charge. Their economic welfare would be affected.”

The MAH also wants the public to be aware of what the service charge entails and feels that there’s a lot of misconception on the issue. “The public perception on the service charge component is not good for the industry and the community as well.”

“MAH’s stand is to ensure that employees are not short-changed either by abolishing the service charge or deprive them of it when imposed.”

The service charge has been imposed by the hotel industry since 1975 through the Sales and Service Tax (SST) which has been abolished with the coming into force of the 6 per cent Goods and Services Tax (GST) on April 1. Under SST, hotels charged 10 per cent service charge and 5 per cent government tax. The government component has since been increased to 6 per cent vide GST. That leaves a question mark over the 10 per cent service charge levied under the SST. Hotel workers covered by collective agreements are entitled, through service points, to the service charge collected.