Open a Hotel in Malaysia

Updated on Wednesday 16th October 2019

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Foreign businessmen who want to establish their presence in Malaysia have numerous investment and trade opportunities on the market. Most individuals choose to open companies in the tourism sector, food industry or construction. It is important to know that the accommodation industry is rapidly expanding here, as Malaysia is one of the top touristic destinations at a global level. 

Here, the foreign entrepreneurs are welcomed to do business and can open a hotel in Malaysia, with 100% ownership and USD 2 million minimum share capital investment. Our team of consultants in company registration in Malaysia can provide information on the steps that are necessary for the incorporation of a business.  
 

Requirements to open a hotel in Malaysia


Besides reserving a name for your hotel, drafting the articles of association, registering with the tax authorities and submitting the documents with the Companies Commission of Malaysia, there are about 22 important approvals (grouped in four categories) you need to obtain before opening the hotel

Among them, we mention the pre-operational approvals category and the employee registration. It is good to know that setting up a hotel in Malaysia may be a simple process if the building is ready to be used and occupied, being necessary only 12 approvals before starting the activities. Or if you want to buy a hotel, the licenses are already approved and available. Our representatives in company formation in Malaysia can offer assistance and guidance for all foreign investors when deciding to open a hotel in Malaysia.
 

Necessary licenses for a five-star hotel in Malaysia


A five-star hotel in Malaysia can be a great option for any overseas entrepreneur who wants to make good profits and to enjoy the benefits of such business. There are certain licenses to obtain before starting the activities as a hotel in a big city in Malaysia and here we remind the following, also known as Composite licenses:
 
  • license to sell alcohol beverages at the bar, coffee shop or restaurant;
  • license to create a swimming pool and a parking lot for a Malaysian hotel;
  • license to use commercials and advertisements in the hotel;
  • license for all indoor facilities and also for other entertainment facilities;
  • license to open a beauty salon operating in the premises of the hotel.
 

What are the formalities of opening a hotel in Malaysia? 
 

Opening a hotel in Malaysia can be a challenging task, especially as a foreign investors. This is given by the fact that the registration is comprised of numerous steps and the entity must acquire a large number of authorizations, as we presented above. 
 
Foreign investors who want to open a company in Malaysia as a hotel must also know that there are additional requirements in the case of foreigners setting up this type of business and due to the variety of procedures that have to be followed, we strongly recommend to address to our team of consultants. Foreigners entering the accommodation industry should perform the following steps: 
 
  • prepare the necessary incorporation documents and register the legal entity with the Companies Commission Malaysia;
  • select a suitable company name and make the necessary steps for registering it;
  • register for taxation purposes with the local tax authorities; 
  • register with the Employees Provident Fund, as the company will hire local or foreign staff;
  • register with the Social Security Organization (the company’s employees have to be registered here). 
 

Where can one obtain an approval for a hotel in Malaysia? 


The main institution which is in charge with the approval of an accommodation unit on the local market is the Ministry of Tourism and Culture. The institution handles various licensing requirements and ensures the fact that accommodation units, including hotels, comply with the applicable legislation in the field. 

The main rules of law that have to be respected by accommodation units in Malaysia are given by the Tourism Industry Act and Tourism Vehicles Licensing Act. Local hotels are also regulated under the Hotels (Federal Territory of Kuala Lumpur) Act 2003. Part II of the latter Act stipulates that a hotel unit is not allowed to perform any business activities without the issuance of a license. 

This provides the legal framework for all the aspects that are related to operating a hotel in Malaysia. It states the conditions under which a license can be issued, the fact that the renewal of the license can be refused, provided that the accommodation unit does not respect the required criteria for having a specific type of license, but it also mentions that an applicant can apply for more licenses at the same time. 

It is also necessary to know that a hotel in Malaysia can be granted with a temporary license, which is generally valid for a period of six months. However, investors must know that this type of license can also be extended for other six months, if needed. The legislation also stipulates the conditions in which a hotel license can be revoked; please note that, in Malaysia, the hotel licenses can’t be transferred to other entities operating here.  
 

How many hotels are in Malaysia? 
 

The accommodation sector in Malaysia is constantly expanding and thus, the number of investments in accommodation units is also increasing. Those who want to open a company in Malaysia should also know that the revenues declared by accommodation units operating here also expanded. The latest data on this industry show the following: 
 
  • in 2009, Malaysia had a total of 2,373 accommodation units registered as hotels;
  • in 2013, the number of hotels in Malaysia increased, reaching 3,094;
  • in 2015, there were 4,799 hotels, while in 2016, there were a total of 4,961 hotels;
  • in 2017, the market slightly declined to 4,512 hotels, but in 2018, it recovered, and in that year, there were 4,750 hotels;
  • at the level of 2019, the accommodation industry (the hotels segment, which also includes guest-houses businesses) is expected to reach a total revenue of $733 million. 
 
With regards to the revenues obtained by the hotel industry in Malaysia, it is important to know that, on a year-to-year basis, this sector registered an increase of 12.9% (compared to 2018). In 2019, the accommodation industry expects a total of 3,4 million visitors, which will represent an increase of 3.4% compared to the previous year. 
 
By 2023, the hotel industry in Malaysia is expected to grow at a market volume of $1,095 million and the revenues obtained by this sector, measured based on the estimate annual growth rate, are expected to increase by 10.6%. The current average revenue per user is accounting for $213.  

You may ask for additional information about how to open a hotel in Malaysia from our team of company formation agents in Malaysia, if you contact usOur team of consultants can offer tax consultancy services on the main types of taxes that are applicable to the accommodation industry in Malaysia