Malaysia is the home to several popular tourist destinations, including Kuala Lumpur, Penang, Perhentian Island, Tioman Island, Langkawi, and Redang Island.
With almost 30 million visitors yearly, Malaysia continues to attract everything from foreign retirees who opt-in for the MM2H visa, medical tourists, and travelers.
Malaysia further tries to boost tourism, for example, through its Visit Malaysia 2020 program. Unfortunately, the government couldn’t pursue this plan due to the COVID-19 crisis.
But we will most likely see a rebound once the market opens again.
Topics covered in this article:
- Can foreigners buy hotels in Malaysia?
- Regulations and Licensing of Hotels
- The Malaysian Hotel Industry
- Best Cities for Hotel Investments in Malaysia
Can foreigners buy hotels in Malaysia?
Malaysia has some of the most relaxed foreign property ownership regulations in Southeast Asia.
Ownership regulations can differ by states, but you generally don’t have any issues purchasing land, villas, and commercial real estate, including hotels and resorts.
This is not the case in many of its neighboring countries, like Thailand, where you’re not capable of acquiring commercial property as a foreign individual.
That said, most large transactions are managed through foreign-owned or local companies.
Worth mentioning is also that the Malaysian residential real estate market is different from the commercial ditto where the government has introduced minimum investment requirements.
You can read more about the requirements in my separate post that explains how you can buy residential real estate in Malaysia.
In short, the residential real estate market is more competitive and the government wants to assure that affordable housing is available to locals.
You should also know that some states allow foreigners to buy landed residential real estate while some don’t, such as Selangor.
You must work with a credible real estate agent and a lawyer that understands what regulations apply in each state.
Regulations and Licensing of Hotels
First and foremost, you have to register a company and obtain a Malaysia Business License to perform business in the country.
You also have to get the necessary licensing agreements in place before you can operate a hotel. Bear in mind that these differ between locals and foreigners.
Examples of licensing required when running hotels:
- Tourist Accommodation Premises License (obtained by the Ministry of Tourism and Culture)
- 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
- Signboard and Premise License
- A Halal License
- License to create a swimming pool and parking lot on the hotel’s premise
- License for indoor facilities and entertainment
The licensing and regulations also differ depending on how many stars the hotel has. If you start a 5 stars hotel, for example, the composite license has to cover:
- Health club/ gymnasium/ sauna/ outdoor and indoor facilities
- Beauty/ Hair salon
- Souvenir shop and drug store
- All signboard advertisements
- Banquet/conference hall
- Entertainment/performance activities
- Restaurants/coffee houses
- Swimming pool for adult and children
- Parking lot
I won’t go into more detail in this article but suggest you check the Attorney General of Malaysia’s website. You should also consult with a local lawyer and specialist that has experience in helping foreigners in the past.
The Malaysian Investment Development Authority’s website also provides more information about how you can operate a hotel, which is worth checking.
For an overview of the Rated Tourist Accommodation Premises, simply visit the the Ministry of Tourism, Arts, and Culture Malaysia (MOTAC) that provides a complete list.
If you’re interested in investing in hotels in Malaysia, you can also contact us by sending a message via the form at the end of this article.
The Malaysian Hotel Industry
Malaysia is not only ranked as one of the top 10 tourist destinations in the world, but it’s also been called one of the top shopping destinations.
It’s well-known for attracting numerous medical travelers every year.
Most of the medical tourists come from Indonesia, but we also see a fair amount from Europe, Japan, and Singapore.
It also becomes an increasingly popular tourism destination for leisure among foreigners and the Ministry of Tourism, Arts, and Culture Malaysia projected that 30 million visitors would visit the country in 2020.
Unfortunately, this goal wasn’t reached due to the COVID-19 pandemic. Malaysia was unlucky as it had vast plans for its Visit Malaysia 2020 campaign, to further boost tourism.
The CEO of the Malaysian Association of Hotels (MAH) told the media that the country will instead see up to 30% of hotels closing temporarily or even permanently, with many of them being up for sale.
The MAH also informed that some hotel operators have indicated they would remain closed till the end of 2020. Some said they would only resume operations after a COVID-19 vaccine is made available.
For the time being, Malaysia will primarily focus on domestic tourists and related services.
Best Cities for Hotel Investments in Malaysia
Below you can find some of the most interesting cities and islands for hotel investments in Malaysia.
Kuala Lumpur is the capital that attracts the biggest number of travelers in Malaysia. Not surprisingly, most large brands like Hilton, Marriott, and Sheraton have opened hotels here.
Some of the most popular locations among travelers are Bukit Bintang, KLCC, Sentral, and Bangsar, as tourists prefer to stay here.
In the coming years, we will see an increased supply and primarily of high-end hotels.
26 new hotels are planned for the coming years, adding almost 5,000 new rooms only in 2020 – 2021. 16 of the hotels will have 4-star services and the other 16 will be 5-stars.
With that said, the market was hit hard by the COVID-19 crisis and occupancy rates were as low as 10% in March 2020.
Penang is a cultural melting pot with some of the best cuisines in Asia. Travelers flood to the city to indulge in the local culture and experience the UNESCO World Heritage Site, Georgetown.
Unfortunately, the hotel industry was hit hard by the COVID-19 crisis and the Conditional Movement Control Order (CMCO) believes that occupancy rates will stay below 30% at the end of 2020.
The main reason is that domestic traveling will need a longer time to revive. To cope with this, the Penang government decided to waive tourism taxes and hotel stay fees.
Penang is a popular destination among retirees, medical tourists, and travelers. We will most likely see a rebound when the pandemic is under control.
Malaysia is the home of many well-known islands that attract travelers and retirees from all over the world. Some of the most popular ones are Redang Island, Langkawi, Tioman Island, and Perhentian island.
Langkawi is undoubtedly one of the most developed places and caters to many Middle Eastern and Western tourists. It’s the home to many high-end hotel chains, like Marriott.
If you look for large hotel investments in the hundreds of millions of US dollars, then Kuala Lumpur, Penang, and Langkawi are most likely your best options.
Below I have included some commonly asked questions and our replies.
How can I find hotels for sale in Malaysia?
You have two options to find hotels for sale: 1). Check listing websites and get in touch with the agent that listed a specific project online. 2). Find a partner that can help you identify multiple options based on your needs.
How much do I need to pay my agent?
Commissions for hotels generally range between 0.5% – 2% and are lower compared to residential property. It mainly comes down to the value of the transaction and the seller.
Are there minimum investment requirements for hotels?
For large-sized transactions, there are no minimum investment requirements. These requirements are mainly enforced in the residential property market to protect local buyers from being priced out.