Travel and tourism remains a highly important part of the Malaysian economy, with an ever increasing number of companies competing for a share of rising tourist expenditure. The tourism accommodation and air transportation sectors have seen the lion’s share of growth. For example, Air Asia, the country’s premium low cost carrier, has expanded its operations and now offers many more routes within and outside the country and is regarded as a significant regional player. The hotel segment has been growing particularly rapidly, with the popularity of top-end boutique hotels continuing to increase. In addition, the budget accommodation segment is also performing well, with new entrant Tune Hotels expected to become the country’s largest chain of budget hotels.
Visit Malaysia Year 2007 Campaign Helped to Boost Tourist Arrivals
The visit Malaysia Year 2007 campaign helped to increase awareness of Malaysia as a tourist destination throughout the world and to sharply increase the number of tourists visiting the country. Tourist arrivals have increased across all sectors, whether business or leisure. The 9th Malaysia Plan, a 5 year economic plan developed by the Malaysian government, projected a 9% annual increase in tourism inbound figures from 2006 to 2010 – a target which is likely to be met as a result of the success of the marketing campaign.
Internet Sales Limited but Growing Rapidly
In 2009, the majority of travel and accommodation reservations were either performed via the telephone or face-to-face, with internet retailing remaining very much a niche channel. However, the number of internet bookings continues to increase rapidly as retailers increase their technological capabilities. The leader of the internet sales model is Air Asia, which follows an almost exclusive online booking strategy in order to minimize operating costs. Not surprisingly, internet bookings are most popular in the airline sector and are increasing in the hotel segment, with internet sales in other categories such as travel retail, car rentals, and tourist attractions lagging behind.
Slower Growth Forecasted due to Economic Slowdown
According to Euromonitor International, the global economic downturn is expected to have a severe impact on Malaysia’s travel and tourism industry, with many tourists worldwide likely to reduce expenditure as a result of declining confidence. As a result, tourism arrival figures are expected to decline over the early part of the next five years period. However, incoming tourism numbers are expected to recover towards the end of the next five years period, partly as a result of the government’s fiscal stimulus package.
(Extract from Euromonitor International’s report “Travel and Tourism in Malaysia”)