Ep 24: Is it Time for a Tourism Rethink in Malaysia?

Malaysia Truly Asia remains one of South East Asia’s most enduring tourism campaigns, but Malaysia emerges from successfully suppressing COVID-19 with several questions marks over its travel sector.

Uncertainty exists for its flag carrier Malaysia Airlines and the region’s largest LCC AirAsia, annual arrivals haven’t shown significant growth for a decade and both inbound and outbound players await news on border reopening.

For now, domestic travel offers a chance for tourism businesses to rebuild confidence among Malaysian travellers, and earn much-needed revenue - but demand currently appears low.

This week, Hannah and Gary take a deep dive into the challenges ahead for Malaysia’s inbound, outbound and domestic travel sectors, and analyse the entrenched issues for rebooting the nation’s vital tourism economy.

Show notes

02:02 Taking stock of Malaysia’s historic arrivals data

• 2010 - 24.6 million visitors
• 2015 - 25.7 million visitors
• 2019 saw 29.1 million visitors
• July was the top month for visitors, followed by June and August
• Visit Malaysia 2020 year’s target - 30 million visitors

“If you look at the arrivals figures historically, not a great deal has changed - which is rather disappointing when you compare it to the growth of other SE Asian countries in the same period.” (Gary)

“The Visit Malaysia 2020 target did always look a little ambitious.” (Gary)

03:15 Top 5 source markets for Malaysia were all Asian countries.

1. Singapore (10.2 million)
2. Indonesia (3.6 million)
3. China (3.1 million)
4. Thailand (1.9 million)
5. Brunei (1.2 million)

Only 36.8% of visitors to Malaysia in 2019 arrived by air, 56.8% arrived by land.

“I can imagine that [the great number of land arrivals] is driven by Singaporeans crossing over the border to Malaysia, Indonesians crossing over into Sabah, Sarawak.” (Hannah)

“It represents just how important the Singaporean market is to visitor numbers.” (Gary)

“It’s one of the busiest land borders in the world - so whatever you do […] has to be spot-on, or it’s going to cause a heck of a traffic jam.” (Hannah)

05:35 Visit Malaysia Year 2020. It follows the previous campaigns in 1990, 1994, 2007, and 2014. 2014 generated the highest arrival numbers of 27.44 million.

“They had big plans, 30 million tourists and RM100 billion MYR in revenue.” (Hannah)

06:30 The Visit Malaysia 2020 logo issue. The initial unveiling of a controversial logo in 2018, which was later replaced after running a competition mid-2019.

“The image itself wasn’t controversial, it was controversial in that it was so basic it looked like a child had developed it, or they had got a staff somewhere to develop it.” (Hannah)

“That probably raised up more interest around the Visit Malaysia 2020 year than the campaign did!” (Hannah)

“The problem with [the cancellation of Visit Malaysia 2020 year] is that so much time, resources and effort and so many actual promotional campaigns, discounts, and coupons were dedicated to run throughout the year, and all of a sudden - they had to reset.” (Gary)

10:15 The overall objective of the Malaysian Health Minister is to drive down COVID-19 cases to zero in July.

“I wonder if they’re going for the coveted 30-day COVID-free that other countries are touting?” (Hannah)

10:48 Malaysia’s success in fighting COVID-19. From 3rd highest case numbers in the whole of Asia when it entered lockdown, to falling far down the list.

“It often goes overlooked how successful Malaysia has been in suppressing the virus curve.” (Gary)

“Because of the Tabligh gathering, it really raised the alert for tracing and tracking contacts, which was done at a high level.” (Gary)

12:57 From MCO to CMCO to RMCO… Malaysia gradually unlocking its restrictions.

“Everyone’s adhering to the rules.” (Gary)

14:30 Malaysia and the domestic tourism market. The focus is on domestic travel for the foreseeable future.

“I don’t think anyone is expecting a surge of arrivals in the remainder of this year.” (Gary)

“In SEA, because there is this intensity between nations to attract more tourists from each other countries and also around Asia, inbound travel has always been the main goal.” (Gary)

“What’s interesting about Malaysia when you think about domestic tourism […] is that Malaysia doesn’t have such a big population as some of the other SE Asian countries […] there is a limit to how much they can generate from domestic tourism.” (Hannah)

18:11 How has the government intervened for the tourism industry? The initial February proposal disappeared, replaced by new initiatives falling around wage subsidies and tax cuts. Unemployment rates have hit 5% in Malaysia in April, a 3-decade high, but it could reach 7% by the end of 2020.

“If you are a travel agency or hotel, the bulk of your costs revolve around headcount […] at this point, the government is just not providing enough for these companies to be able to sustain that, so we are seeing companies put employees on unpaid leave, taking substantial wage cuts.” (Hannah)

“Companies are essentially in hibernation.” (Hannah)

“Tourism overall is the 3rd largest contributor to foregn exchange earnings in Malaysia.” (Gary)

“Conservative estimates from mid-May were that there might be between 10,000 - 15,000 job losses.” (Gary)

“The demand level for domestic tourism hasn’t picked up yet.” (Gary)

“There’s an unclear directive about what will happen with borders.” (Hannah)

24:11 Bubbles and green lanes. Lots of talk from SE Asian nations, but reciprocity is difficult to get with countries protecting their status as COVID-free.

25:20 Big infrastructure projects: the Penang Masterplan, the Melaka Gateway and Desaru Coast. Will they still continue?

“Penang has this idea it can create a Singapore-style tourism economy because it is an island away from the mainland.” (Gary)

“A lot of these are funded by Chinese money, and constructed by Chinese workers.” (Gary)

29:13 How are domestic travellers going to travel? Self-drive will be popular, as a way to avoid flights. Flights are still changed at the last minute, prices remain high.

“We’re seeing from KL, a lot of choices that people are taking for weekend breaks or day trips are trips they can take by car.” (Gary)

31:20 Where will international travellers come back from once the markets open up? India? China? Australia? Singapore? Middle East? Russia? Europe?

“However much SE Asian countries want to be in a travel bubble with Australia, it doesn’t sound like Australia wants to be in a travel bubble with them.” (Hannah)

“I think Singapore will come in the next few weeks, I really think so. They’re so inter-connected, so many reasons to open up.” (Hannah)

“In terms of average spend, the highest spend was from the Middle Eastern countries.” (Gary)

“I think Europe is unlikely.” (Hannah)

“The other uncertainty is the flight routes.” (Gary)

34:30 How should Malaysia market itself as a country? Their marketing strategy hasn’t changed direction since 1992.

“Malaysia Truly Asia is one of these taglines that just… goes on and on, and is more of a trope now.” (Hannah)

“Maybe this gives an opportunity to be bolder with the marketing and rethink.” (Gary)

There is this issue of how you market Peninsular Malaysia and East Malaysia, as they have very, very different appeals.” (Gary)

37:58 How optimistic are we about the future of tourism in Malaysia?

“It’s a long road to recovery.” (Gary)

“My concern is whether we will just see [domestic tourism] as a one-off thing, and people book their holiday and then not book anything for a few months, rather than consistently booking.” (Hannah)

“Consumers need clarity.” (Gary)