Before Covid-19, Malaysia’s hotel and tourism industry can be said as one of the most thriving sectors amongst ASEAN countries. Its reputation as one of the world’s leading tourism countries was proved by thousands of tourists flocking to its shores each year. To start a hotel business, the entrepreneur is required to apply its licenses.
Process to acquire Hotel License in Malaysia
The regulating authority which is responsible for the implementation of provisions and enforcement in the tourism sector is the Ministry of Tourism and Culture. They ensure that the requirements of the Tourism Industry Act and Tourism Vehicles Licensing Act are adhered to.
To start the business, there are four (4) stages the entrepreneur need to go through:
Company incorporation – The entrepreneur is to appoint a Company Secretary to kick start the Company incorporation.
Employer/ Employee registration – Once Company is incorporated, the business may initiate bank account opening as well as proceed to register its file with Employees Provident Fund (EPF), Social Security Organisation (SOCSO) as well as Inland Revenue Board – Lembaga Hasil Dalam Negeri (LHDN).
Pre-operational approvals – Once the business is set up, the Company will need to acquire accommodation unit license from Tourism Industry Act and Tourism Vehicles Licensing Act. Another license is the signboard/advertisement licensing which are normally acquired from the City Hall of each state.
Additional license approvals – It is common for hotels to have parking lot, hair salon, souvenir shops, restaurants, and many other units within the building. Hence, all these units are required to have separate licensing in order to start operating.
In terms of the legal aspect to start up a hotel business in Malaysia (assuming the building is completed and ready to be occupied), the Company is required to have at least a minimum of 12 approvals to start up the business smoothly. However, depending on the business activities the hotel provides, there may be up to 22 license approvals the Company is required to have.
Any entrepreneur who intends to operate a hotel establishment will be required by the law to have their business registered and licensed. This must be done before operations can commence. The types of licensing that will be required include:
Tourist Accommodation Premises License (issued by the Ministry of Tourism and Culture)
Signboard and Premise License
A Halal License
License to sell alcoholic beverages in your hotel’s bars, restaurants, and coffee shops
License for the use of advertisement and commercials on the hotel’s premise
License to create a swimming pool and parking lot on the hotel’s premise
License for indoor facilities and entertainment
License to open a beauty salon within the hotel (if applicable)
Things to consider before operating hotels in Malaysia
The cost of starting your business and the available source of funding that you have
The competition is high within Malaysia’s tourism sector, and it is important to survey who your competitors are before your set up your business. This can easily be done through market evaluation.
You will need to source for highly qualified individuals to fill the roles within your business. Working with an employment agency in Malaysia can help with sourcing employees who will be the right fit.
Choosing the right location is going to determine the volume of business that you receive throughout the year.
Hotel operators who intend to hire foreign workers in their hotel establishment will need to get the necessary Malaysian work permit visas. The hotel management industry is all about providing great customer service and experience to your guests, so hiring the right staff makes a difference!
Ready to set up your hotel in Malaysia? Reach out to us for a free consultation for your incorporation process, application for visas, and other corporate services today!