Accounting for Hotels in Malaysia: Revenue and Cost Guide

Hotel accounting in Malaysia involves recording revenue from different hotel departments, matching that revenue against operating costs, accounting for taxes and reconciling bookings with actual payments received.

That sounds straightforward until one guest books through an online travel agency, pays a deposit months before checking in, orders room service, uses paid parking and checks out with several different taxes and charges on the bill.

Multiply that by hundreds of rooms and thousands of transactions, and hotel accounting quickly can become overwhelming.

Fortunately, our accounting service firm is here to help.

Why Is Hotel Accounting Different From Normal Business Accounting?

Hotels combine several types of businesses under one roof.

A manufacturing company mainly earns from selling its products while a professional firm may primarily earn service fees, simple stuff right?

Well a full-service hotel can earn from:

• Room accommodation
• Restaurants and cafés
• Room service
• Weddings and banquets
• Conferences
• Parking
• Late check-outs
• Cancellation or no-show charges
• Other guest services

And the list goes on. Each department may have its own revenue, direct expenses and profit margins.

The accounting system therefore needs to answer more than “How much did the hotel make this month?”

Management may also need to know:

• “Were the rooms profitable?”
• “Is the restaurant actually making money?”
• “Did the wedding package generate enough margin?”
• “Why did occupancy increase while profit fell?”

What Laws Affect Hotels and Accommodation Businesses in Malaysia?

There is no single Malaysian law that covers everything a hotel needs to do from an accounting perspective.

But there are several acts and regulatory frameworks that can apply.

Tourism Industry Act 1992

The Tourism Industry Act 1992 [Act 482] regulates parts of Malaysia’s tourism industry.

Section 31A provides that a person carrying on or operating accommodation premises must apply for registration of those premises as tourist accommodation premises. MOTAC is responsible for areas including registration, inspection and classification of tourist accommodation premises.

Companies Act 2016

Where a hotel business operates through a company, the Companies Act 2016 governs areas such as company financial statements, reporting and audit requirements.

Whether the company’s financial statements require an audit depends on the Companies Act and, for eligible private companies, whether the company satisfies SSM’s applicable audit-exemption criteria.

Under SSM’s Practice Directive 10/2024, the thresholds are being introduced in phases. For financial periods beginning in 2026, the Phase 2 thresholds are RM2 million in annual revenue, RM2 million in total assets and 20 employees, subject to the detailed qualifying conditions and exclusions

Income Tax Act 1967

Hotel businesses are also subject to Malaysian income tax rules under the Income Tax Act 1967.

From an accounting perspective, this means income, deductible business expenses, capital expenditure and supporting records need to be properly identified.

Service Tax Act 2018

Hotels and other accommodation providers can fall within the Service Tax framework under the Service Tax Act 2018 and related regulations.

Royal Malaysian Customs currently categorises accommodation providers under Group A, covering hotels, inns, lodging houses, service apartments, homestays and similar establishments. 

The listed registration threshold for accommodation is RM500,000 in taxable services.

Tourism Tax Act 2017

The Tourism Tax Act 2017 is separate from Service Tax.

Tourism Tax applies to tourists staying at qualifying accommodation premises and can also involve digital platforms facilitating accommodation bookings.

Do not treat Service Tax and Tourism Tax as one generic “hotel tax”.

What Revenue Should a Hotel Record?

For useful management accounts, hotel revenue should be separated by revenue stream.

Revenue Category	Common Examples
Room Revenue	Overnight stays, room upgrades, early check-in, late check-out
Food & Beverage	Restaurant, breakfast, room service, minibar
Banquet & Events	Weddings, conferences, corporate functions
Spa & Recreation	Massage, treatments, recreation facilities
Parking	Separately charged parking
Other Revenue	Laundry, transport, equipment rental, other guest services

A small hotel might only need a handful of revenue accounts but a large resort could have dozens.

When Should Room Revenue Be Recognised?

One of the most important distinctions is between money received and revenue earned.

Imagine a guest books a room in August:

• Room price: RM800
• Deposit paid in August: RM300
• Hotel stay: October
• Remaining balance paid: October

Receiving RM300 in August does not necessarily mean the hotel has earned RM300 of accommodation revenue in August.

Until the hotel provides the accommodation, that amount may instead represent an advance payment or customer deposit.

Once the stay takes place and the relevant service has been provided, the amount can then be recognised appropriately as revenue.

This matters because recognising deposits as sales too early can overstate both monthly revenue and profit.

How Should Hotel Deposits Be Accounted For?

Deposits are common for:

• Advance room bookings
• Weddings
• Conferences
• Group bookings
• Corporate events

Let’s say hotel ABC offers a wedding package worth RM40,000.

The customer pays:

• RM10,000 deposit in January
• RM15,000 in March
• RM15,000 when the wedding takes place in June

The hotel has received RM25,000 before June, but that does not automatically mean it should report RM25,000 of wedding revenue before hosting the wedding.

Instead, accounting needs to distinguish between cash received in advance and revenue earned from providing the contracted service.

Why? Because sometimes cancellations and refundable deposits are involved.

How Should OTA Bookings Be Recorded?

Online travel agencies such as Agoda, Booking.com and other platforms add another reconciliation layer.

Assume:

Room booking: RM500
OTA commission: RM75
Net settlement to hotel: RM425

If RM425 enters the hotel’s bank account, simply recording Room sales = RM425 could give management an incomplete picture.

Depending on the contractual arrangement and accounting treatment, the records may instead need to reflect the gross booking revenue and the OTA commission separately.

For example:

Item	Amount
Room Revenue	RM500
Less: OTA Commission	RM75
Net Settlement	RM425

This makes it much easier for management to calculate the actual cost of acquiring customers through each booking channel.

A hotel paying RM250,000 a year in OTA commissions should be able to see that expense clearly rather than having it disappear into net bank receipts..

What Are the Main Costs of Running a Hotel?

Hotel expenses become easier to understand when they are separated between departmental costs and general operating costs.

Rooms Department Costs

Typical room-related costs include:

• Housekeeping wages
• Linen
• Laundry
• Toiletries
• Guest amenities
• Cleaning supplies
• Room supplies

Food and Beverage Costs

Restaurants and banquet operations may incur:

• Food ingredients
• Beverages
• Kitchen labour
• Restaurant staff costs
• Breakages
• Cleaning
• Consumables

Hotels need good inventory control here.

If the restaurant records RM200,000 in revenue but management does not know how much food was purchased, wasted, transferred or consumed, measuring the restaurant’s real profitability becomes difficult.

Administrative and General Costs

These may include:

• Finance staff
• Management salaries
• HR
• Office expenses
• Professional fees
• Accounting software
• Insurance

Sales and Marketing

Costs include:

• Online advertising
• OTA commissions
• Travel agent commissions
• Promotions
• Sales staff
• Marketing agencies

Utilities and Maintenance

Hotels tend to be utility-heavy businesses.

Major expenses can include:

• Electricity
• Water
• Air-conditioning
• Repairs
• Preventive maintenance
• Lift servicing
• Plumbing
• Building systems

A hotel with excellent revenue but uncontrolled utility and maintenance expenses can still have a disappointing bottom line.

Which Hotel KPIs Should Accounting Teams Monitor?

Hotel accounting becomes much easier when financial results are connected to operating performance. Observe the following.

Occupancy Rate

Occupancy measures how much available room inventory was sold.

Occupancy Rate = Rooms Sold ÷ Rooms Available × 100

If a hotel has 100 available rooms and sells 70:

Occupancy = 70% simple maths!

Average Daily Rate

ADR measures average room revenue per room sold.

ADR = Room Revenue ÷ Rooms Sold

If 70 rooms produce RM21,000 in room revenue:

ADR = RM300

Revenue Per Available Room

RevPAR combines room rate and occupancy.

RevPAR = Room Revenue ÷ Available Rooms

Using the same example:

RM21,000 ÷ 100 = RM210 RevPAR

You can also calculate it as:

ADR × Occupancy Rate

RM300 × 70% = RM210.

Gross Operating Profit

Management may also monitor Gross Operating Profit or GOP.

At a simplified level, this compares operating revenue with the expenses required to operate the property before certain ownership-related or financing costs.

A hotel can increase revenue without necessarily improving GOP if labour, utilities, commissions and other operating expenses rise even faster.

How Does SST Apply to Hotels in Malaysia?

This is where hotel bookkeeping needs to be very careful at revenue classification.

Royal Malaysian Customs currently lists accommodation providers under Group A of taxable services.

This category includes:

• Hotels
• Inns
• Lodging houses
• Service apartments
• Homestays
• Similar establishments

The current threshold listed by Customs is RM500,000.

Malaysia’s general Service Tax rate is currently 8%, while F&B, parking, logistics and telecommunications remain at 6%.

That means a hotel can potentially have different service tax rates within the same property.

For example:

Hotel Transaction	Illustrative Current Rate
Accommodation	8%
Hotel Restaurant F&B	6%
Separately Charged Parking	6%

Customs specifically states that food and beverage services provided by a hotel operator are subject to Service Tax at 6%.

That is one reason why separating revenue streams properly is more than a management-accounting exercise because It can also affect tax reporting.

Should SST Collected Be Treated as Hotel Revenue?

Generally, tax collected from customers on behalf of the government should not be treated as additional operating income belonging to the hotel.

Imagine:

Room charge: RM500
Service Tax at 8%: RM40
Amount payable: RM540

The RM540 collected is not necessarily RM540 of hotel revenue.

The hotel needs to distinguish between:

Revenue: RM500
Service Tax payable: RM40

Mixing tax liabilities into revenue can distort sales figures and create reconciliation problems when tax payments become due.

What Happens When Guests Book Through Airbnb or Other Platforms?

Malaysia’s Tourism Tax framework also deals specifically with online accommodation booking platforms.

A Digital Platform Service Provider, or DPSP, is broadly a provider offering online services relating to accommodation bookings.

Customs’ Public Ruling No. 01/2025, effective from 1 December 2025, clarifies the liability of accommodation operators and registered DPSPs to account for Tourism Tax received through online bookings.

This can affect bookings made through platforms that facilitate Malaysian accommodation.

Customs guidance also requires Tourism Tax charged by registered digital platform providers to be shown separately from other charges on relevant documents.

From an accounting perspective, hotels and accommodation operators therefore need to know:

• Who collected the tax
• How much was collected
• Whether the platform or operator must account for it
• What amount was ultimately settled to the property

Otherwise, the hotel risks counting amounts handled by the platform twice.

Do Airbnb Hosts and Homestays Use the Same Accounting As Hotels?

Not necessarily. A person operating a single short-term rental will usually have much simpler accounts than a full-service hotel.

Customs’ Service Tax framework nevertheless includes homestays, service apartments and similar accommodation establishments within the accommodation category.

Tourism Tax guidance also distinguishes an accommodation operator from someone who merely rents property under an ordinary tenancy without providing accommodation-style operational services.

What Internal Controls Should Hotels Have?

Good internal controls matter because hotels handle large numbers of relatively small transactions every day.

Useful controls may include:

• Daily reconciliation of occupied rooms against room revenue
• Reconciliation between PMS and accounting software
• Separate tracking of deposits
• OTA settlement reconciliation
• Bank and credit card reconciliation
• Approval limits for refunds
• Food and beverage inventory counts
• Purchase authorisation procedures
• Fixed asset registers
• Cash collection controls
• Segregation of accounting duties

Consider a 150-room hotel.

If only RM10 per occupied room goes unrecorded through errors, leakage or incorrect reconciliation, the annual difference can become significant.

Small discrepancies are much less small when they happen every day.

What Hotel Accounting Mistakes Should Businesses Avoid?

One common mistake is treating the bank account as the accounting system. The amount received from an OTA is not automatically the property’s correct room revenue.

Similarly, a booking deposit is not automatically revenue, and money collected as Tourism Tax or Service Tax does not automatically belong to the hotel.

Hotels should also avoid:

• Combining every revenue stream into one sales account
• Failing to reconcile OTA commissions
• Recognising deposits as revenue prematurely
• Ignoring cancelled bookings and refunds
• Combining operating repairs with major capital expenditure
• Failing to reconcile inventory
• Recording taxes as revenue
• Tracking occupancy without considering room profitability
• Waiting until year end to investigate reconciliation differences

Hotel accounting works best when reconciliation happens throughout the year rather than when auditors or tax deadlines arrive.

Conclusion

Hotel accounting in Malaysia involves much more than recording room sales and paying operating bills. A properly structured system needs to distinguish between revenue streams, deposits, OTA settlements, departmental costs, assets, Service Tax, Tourism Tax and other liabilities while giving management a clear picture of how the property is performing.

For larger and more complex properties, getting the accounting structure right from the beginning can also make tax reporting, year-end accounts and statutory audit considerably easier. 

Accounting.my support Malaysian hotels, resorts and accommodation operators with services including:

• Hotel Bookkeeping & Reconciliation: Record room sales, F&B income, operating expenses, bank transactions, receivables and payables, while reconciling OTA settlements, card payments and other collections.
• Tax & SST Compliance: Assist with corporate tax calculations and filings, SST registration and returns, tax planning, compliance reviews and preparation for tax audits or investigations.
• Financial Reporting & Audit Support: Prepare year-end profit and loss accounts, balance sheets and financial statements, while helping businesses organise their records for statutory audit and management reporting.

Rather than forcing hotel transactions into a generic accounting structure, we help build a reporting setup that better reflects how the property actually earns, spends and performs. Isn’t that great?

Disclaimer: The information in this article is general in nature and reflects the legislation and guidance available at the time of writing. Accounting and tax treatment can depend on the circumstances of each business, and applicable rules may change. Professional advice should be obtained where appropriate. 

Sources

• Ministry of Tourism, Arts and Culture Malaysia, Tourism Industry Act 1992 [Act 482]
• Ministry of Tourism, Arts and Culture Malaysia, Tourist Accommodation Premises and Tourism Licensing Information
• Royal Malaysian Customs Department, MySST Registering Business: Accommodation Services
• Royal Malaysian Customs Department, MySST Service Tax FAQ
• Royal Malaysian Customs Department, Accommodation and Hotel Service Tax FAQ
• Royal Malaysian Customs Department, General Guide on Tourism Tax
• Royal Malaysian Customs Department, Public Ruling No. 01/2025: Liability of Operator and Digital Platform Service Provider to Account for Tourism Tax Received
• Companies Commission of Malaysia, Practice Directive 10/2024 and Audit Exemption Criteria