Two proboscis monkeys on a fallen tree in mangrove forest

Tourism & Hospitality

Three-point-eight million visitors a year. More than five thousand five hundred quality rooms. The arithmetic is the opportunity.

Talk to an investment officer

Photo: Sabah Tourism Board

The visitors already come. Sabah needs the places for them to stay.

Sabah drew 3.8 million arrivals and RM 8.74 billion in tourism receipts in 2025, both up more than 20% on the year, and the first half of 2026 added another 8.2%. The assets behind that cannot be replicated: Mount Kinabalu, ancient lowland rainforest, the Kinabatangan wildlife corridor, Coral Triangle reefs and living indigenous cultures. What is missing is supply. Quality rooms sit concentrated in the capital, premium lodges are scarce next to the very assets visitors travel for, and professionally managed operators are thin.

WHAT CAN BE BUILT HERE 5 PROPOSITIONS

Five propositions, each with its own supply gap.

Each one carries its own formats and its own investor profile, and none depends on the others being built first. What is stated below is what exists, what is missing, and the formats the state is inviting.

01 CLEAREST GAP
Accommodation

Arrivals concentrate in Kota Kinabalu because that is where the rooms are. Quality accommodation beyond the capital, the northern coast, the highlands, the wildlife corridors, is the clearest supply gap in the sector.

THE GAP
Branded and boutique rooms outside Kota Kinabalu, particularly around the parks and in the highlands.
International hotels
Branded full-service properties serving business, leisure and MICE demand.
Beachfront resorts
Integrated coastal resorts on the northern west coast and island fringes.
Boutique properties
Design-led, small-format stays in towns and heritage settings.
Serviced residences
Extended-stay product for long-haul visitors and project workforces.
Heritage conversions
Adaptive reuse of heritage buildings into character accommodation.
Mid-market rooms
Consistent three-star supply along the Pan Borneo corridor.
02 COUNTER-SEASONAL
Wellness & long-stay

Sabah has the two things wellness investment actually needs and cannot manufacture: a cool highland climate two hours from an international airport, and coastline warm enough for year-round marine therapy. Stays are longer, spend is higher, and demand does not follow the leisure season.

THE GAP
Purpose-built wellness capacity, highland retreats, marine spa resorts and long-stay recovery residences, is close to absent at investable scale.
Nature-based wellness
Programmed forest bathing and guided nature therapy in gazetted-adjacent rainforest.
Highland retreats
Cool-climate properties around Kinabalu and the Crocker Range for recovery programmes.
Spa & thalassotherapy
Seawater and marine-mineral therapy on the west coast and island fringes.
Long-stay & silver residences
Multi-week and retiree residences pairing care services with climate and cost advantage.
03 CONSERVATION-LINKED
Nature, rainforest & marine

Protected land and reef is the product, and density is the constraint. UNESCO and protected-area status is exactly what sustains the premium these assets command, so investment is welcomed where it is low-density, conservation-linked and involves surrounding communities.

THE GAP
Premium low-density lodges and interpretation infrastructure beside the wildlife corridors, and sustainable island capacity within park carrying limits.
Eco-lodges
Low-footprint lodges in rainforest and riverine settings.
Wildlife observation
Hides, canopy access and guided viewing infrastructure.
Island resorts
Small-footprint resorts operating within marine park limits.
Dive operations
Dive centres, training facilities and liveaboard fleets.
Interpretation centres
Visitor education facilities anchoring longer, higher-value stays.
Reef & forest stewardship
Restoration and monitoring ventures tied to visitor revenue.
04 STATE PRIORITY
Culture & community

Sabah’s indigenous cultures are living, not curated, and the communities that hold them are increasingly the counterparties in tourism ventures. Product built with them lengthens stays, spreads revenue beyond the capital and is what the state actively prefers to approve.

THE GAP
Professionally run community ventures and culinary product, the assets are abundant, the managed operators are not.
Community-based tourism
Village-hosted experiences with direct community participation and revenue share.
Cultural villages
Indigenous cultural experiences developed with host communities.
Culinary tourism
Food trails, markets, artisan producers and dining destinations.
Agritourism
Working tea, coffee and cocoa estate visitor experiences.
Craft & artisan retail
Production-linked retail keeping margin with the makers.
Heritage interpretation
Sandakan and Kota Kinabalu wartime and trading heritage.
05 MIDWEEK DEMAND
MICE & events

Business events are the sector’s counter-seasonal engine: they fill midweek and low-season rooms, and delegates spend multiples of leisure visitors. Sabah has the leisure hook that wins incentive bids and the venue capacity to service only a fraction of them.

THE GAP
MICE-grade venue capacity and professional event services, plus incentive-travel operators able to package coast, highland and wildlife in one itinerary.
Convention facilities
Venue capacity for regional-scale association and corporate events.
Incentive travel
Programmes combining coast, highland and wildlife itineraries.
Professional event services
Production, staging and destination management capability.
Resort conference capacity
Meeting infrastructure attached to leisure properties.
Sports & adventure events
Climbs, regattas and endurance events with international draw.
Festival infrastructure
Permanent capacity for cultural and music programming.
06 NOT WRITTEN DOWN YET
Something that isn’t on this list.

The five above are the propositions the state has written down, not the boundary of what it will approve. Describe the format you want to operate and an officer will tell you which cluster it fits, what sits beside it already, and which incentive band it falls in.

PUT A PROPOSITION TO US →
WHERE IT GOES INTERACTIVE

Five destination clusters, each anchored by gazetted parks.

Gazetted parks & wilderness areas
A calm mangrove creek under an open sky
Cluster 01
Kota Kinabalu & west coast
MARINE PARKS
2
CITY TO JETTY
20 min
INTL. FLIGHTS
160 wk
PARK VISITS
207,950
NAMED ASSETS
Tunku Abdul Rahman ParkPulau Tiga ParkKlias wetlandsKota BeludKK waterfront
WHAT IS BUILDABLE HERE
Branded full-service hotels and MICE capacity
Beachfront resorts north toward Kota Belud
Serviced residences and long-stay wellness
Waterfront, jetty and charter infrastructure

The state’s aviation gateway and its only urban market. Highest room stock, and still the tightest occupancy. Park visits are Jan–May 2026, Tunku Abdul Rahman and Pulau Tiga.

Two proboscis monkeys on a fallen tree in mangrove forest
Cluster 02
Kinabalu & Crocker highlands
SUMMIT
4,095 m
UNESCO
1 WHS
FROM KKIA
2 hrs
PARK VISITS
102,019
NAMED ASSETS
Kinabalu ParkCrocker Range ParkPoring Hot SpringsKundasang plateauTambunan
WHAT IS BUILDABLE HERE
Highland retreats and climate rehabilitation
Nature-based wellness and forest therapy
Interpretation centres and guided climbing
Agritourism on the Kundasang plateau

Development sits outside the gazetted boundary. Adjoining land carries no protected-area restriction. Park visits are Jan–May 2026, Kinabalu and Crocker Range.

The Malaysian flag flying beside a colonial-era building
Cluster 03
Kudat & the northern tip
MARINE PARK
Largest
FROM KK
3 hrs
DISTRICTS
2
PARK VISITS
n/r
NAMED ASSETS
Tun Mustapha ParkTip of BorneoKudatPitas mangrovesRungus longhouses
WHAT IS BUILDABLE HERE
Small-footprint island and coastal resorts
Community-based tourism with fishing villages
Dive, snorkelling and reef stewardship ventures
Cultural and craft product with Rungus communities

Tun Mustapha is Malaysia’s largest marine park and a multiple-use one, community fisheries operate inside it. The state’s earliest-stage marine frontier; its visits are not separately reported.

Two proboscis monkeys on a fallen tree in mangrove forest
Cluster 04
Sandakan, Kinabatangan & the interior
WILDERNESS
3 areas
AIRPORTS
2
TURTLE ISLANDS
3
PARK VISITS
2,723
NAMED ASSETS
Kinabatangan corridorDanum ValleyMaliau BasinImbak CanyonTurtle Islands ParkTabin
WHAT IS BUILDABLE HERE
Premium low-density eco-lodges
Wildlife observation and canopy infrastructure
Research and conservation-linked stays
Community ventures along the river corridor

Riverine buffers and conservation areas are protected. Lodges operate from the corridor edge with river access. Park visits are Turtle Islands Park, Jan–May 2026.

A calm mangrove creek under an open sky
Cluster 05
Semporna, Sipadan & the reefs
SIPADAN WALL
600 m
TUN SAKARAN
8 islands
GATEWAY
Tawau
PARK VISITS
72,410
NAMED ASSETS
Sipadan Island ParkTun Sakaran Marine ParkMabulSempornaTawau Hills Park
WHAT IS BUILDABLE HERE
Off-island resorts serving capped permit demand
Dive centres and liveaboard operations
Marine interpretation and training facilities
Community ventures on inhabited islands

No accommodation is permitted on Sipadan and daily permits are capped, which is why everything serving it is built elsewhere. Park visits are Sipadan, Tun Sakaran and Tawau Hills, Jan–May 2026.

Map: Zh9567 / Wikimedia Commons, CC BY-SA 4.0

Cluster photographs: Sabah Tourism Board

Destination clusters in full
CLUSTER KEY FIGURES NOTE
Kota Kinabalu & west coast MARINE PARKS 2 CITY TO JETTY 20 min INTL. FLIGHTS 160 wk PARK VISITS 207,950 The state’s aviation gateway and its only urban market. Highest room stock, and still the tightest occupancy. Park visits are Jan–May 2026, Tunku Abdul Rahman and Pulau Tiga.
Kinabalu & Crocker highlands SUMMIT 4,095 m UNESCO 1 WHS FROM KKIA 2 hrs PARK VISITS 102,019 Development sits outside the gazetted boundary. Adjoining land carries no protected-area restriction. Park visits are Jan–May 2026, Kinabalu and Crocker Range.
Kudat & the northern tip MARINE PARK Largest FROM KK 3 hrs DISTRICTS 2 PARK VISITS n/r Tun Mustapha is Malaysia’s largest marine park and a multiple-use one, community fisheries operate inside it. The state’s earliest-stage marine frontier; its visits are not separately reported.
Sandakan, Kinabatangan & the interior WILDERNESS 3 areas AIRPORTS 2 TURTLE ISLANDS 3 PARK VISITS 2,723 Riverine buffers and conservation areas are protected. Lodges operate from the corridor edge with river access. Park visits are Turtle Islands Park, Jan–May 2026.
Semporna, Sipadan & the reefs SIPADAN WALL 600 m TUN SAKARAN 8 islands GATEWAY Tawau PARK VISITS 72,410 No accommodation is permitted on Sipadan and daily permits are capped, which is why everything serving it is built elsewhere. Park visits are Sipadan, Tun Sakaran and Tawau Hills, Jan–May 2026.
DEMAND AGAINST SUPPLY

Rooms built against rooms the arrivals imply.

Sabah receives 3.8 million arrivals against more than 5,500 rooms in its 29 four- and five-star hotels, roughly 1.5 quality rooms for every thousand annual visitors. Of 26,822 rooms statewide, only one in five is rated four-star or above. The shortfall is not a forecast; it is a subtraction.

Demand arriving
3.8M arrivals, 2025, up 20.5%
Quality room supply
>5,500 rooms across 29 four- and five-star hotels
4–5 star
Around 21,000 rooms, three-star and below or unrated 685 PROPERTIES · 26,822 ROOMS
17
direct international flights
1
of only three places worldwide to hold UNESCO’s ‘Triple Crown’
66.7%
five-star occupancy, Jan–Mar 2026
40.8%
two-star and below, same quarter

Sources: Sabah Tourism Board (2025 arrivals and receipts; hotel supply and occupancy, Jan–Mar 2026). Quality room stock covers rated four- and five-star properties only. The higher the rating, the fuller the house, premium demand is already outrunning premium supply.

THE 2026 READ

Demand is still climbing.

The first half of 2026 brought 1.9 million visitors and RM 4.38 billion in receipts, around RM 2,300 of spend per visitor, growing faster than arrivals. Domestic volume carries the base; international visitors carry the margin.

Total arrivals
1,902,161 +8.2%
Domestic
1,154,251 +8.6%
International
747,910 +7.6%
Receipts (RM bil)
4.38 +8.1%

Sabah Tourism Board, January–June 2026, year on year.

Where they actually go, park visitors, January–May 2026

Malaysian International
Tunku Abdul Rahman Park
45,398 MY · 160,978 intl
206,376
Kinabalu Park
67,180 MY · 25,252 intl
92,432
Tun Sakaran Marine Park
5,706 MY · 24,183 intl
29,889
Tawau Hills Park
27,777 MY · 1,205 intl
28,982
Sipadan Island Park
4,628 MY · 8,911 intl
13,539
Crocker Range Park
9,150 MY · 437 intl
9,587
Turtle Islands Park
236 MY · 2,487 intl
2,723
Pulau Tiga Park
683 MY · 891 intl
1,574

385,102 park visits in five months. Note the inversion: Tunku Abdul Rahman, Sipadan, Tun Sakaran and the Turtle Islands draw more international visitors than Malaysian ones, the marine assets are already an export product. The highlands and interior remain domestic-weighted, and under-roomed.

THE DEMAND POSITION

ARRIVALS
3.8M
visitors in 2025, up 20.5% on the year
RECEIPTS
RM 8.74B
tourism receipts, 2025
QUALITY ROOMS
>5,500
rooms across 29 four- and five-star hotels
TOTAL SUPPLY
26,822
rooms statewide, across 685 properties
RATED STOCK
21%
of all rooms rated four-star or above
OCCUPANCY
66.7%
five-star occupancy, Jan–Mar 2026
MOMENTUM
1.9M
visitors in the first half of 2026, up 8.2%
SPEND
RM 2,303
per visitor, January–June 2026
PARK VISITS
385,102
gazetted park visits, January–May 2026

Sources: Sabah Tourism Board, Visitor Arrivals by Nationality, 2025 and January–June 2026 (arrivals and year-on-year growth); the State Ministry of Tourism, Culture and Environment, January 2026 (tourism receipts for 2025). Room counts, rated-stock share, occupancy, spend per visitor and park visits come from Invest Sabah and are not covered by these sources.

WHAT YOU GET

What the National Investment Incentive Framework awards a project here.

FEDERAL NIF · ENHANCED TIER
Special Tax Rate, High quality
Frontier or advanced activity, high-skilled roles, strong export orientation.
0% FOR 15 YEARS
Special Tax Rate, Medium quality
A commercially sound operation that does not clear the High bar.
5% FOR 15 YEARS
Investment Tax Allowance
Against qualifying capital expenditure, offset up to 100% of statutory income.
100% QCE FOR 10 YEARS
Baseline quality
Earns nothing under the General category. On the enhanced tier it still qualifies.
10% FOR 5 YEARS
State-level support
Land premium treatment and infrastructure support, on top of the federal award.
CASE BY CASE

Eligibility is assessed case by case against the quality bands. Confirm your project’s band with an Invest Sabah officer before committing capital.

WHAT THE STATE ADDS

Support that sits alongside any federal award, coordinated through one channel.

Land premium treatmentInfrastructure supportOne facilitated approvals channelSite selection and shortlistingInvest Sabah and SEDIA coordination
The full incentive tables LEARN MORE →

Tell us what you’re planning.

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