Malaysia’s tourism faces a bumpy road to recovery

Uncertainty of the epidemic hits Malaysia's tourism recovery without opening up foreign tourists, it is difficult to support

Lim Ann Gee
January 11, 2022
Malaysia’s tourism faces a bumpy road to recovery
The pandemic has dealt a major blow to hotels and other tourism businesses in Malaysia. Photo: supplied

Tourism has always been one of the main sources of income for the Malaysia economy. Prior to the pandemic outbreak, tourism pumped some RM86 billion into Malaysia in 2019. The industry has also created numerous job opportunities, adding 3.6 million jobs across the country.

However, the Coronavirus outbreak of 2020 has impacted industries across the world. The highly people-centric tourism industry was suddenly brought to a halt.

It has been two years and the Covid-19 pandemic has continued to rage on. Countries around the world have rolled out their vaccination drives to inoculate their population against the virus which has brought the number of confirmed cases down significantly. As the tourism industry almost saw signs of recovery on the horizon, a highly contagious Omicron variant of the virus was detected, setting the tourism industry even further back on their road to recovery.

Oriental Daily conducted a number of interviews with several Malaysian tourism company operators to get a better understanding of the current state of the industry.

Leong Wai Hong, acting chairperson of the Malaysian Inbound Tourism Association, said that the unstable and uncertain epidemic has made the tourism industry unable to see a way forward.

According to her the new Omicron variant of the coronavirus has had little impact on the tourism industry in general, however it has had a more noticeable effect on the recovering inbound tourism industry.

“In this period of uncertainty, those of us in the industry cannot see a way forward. We are unable to make plans for anything because the pandemic is changing so often.”

Leong Wai Hong, Acting Chairman of the Malaysian Inbound Tourism Association. Photo: supplied

For example, local inbound tourism operators had at first, planned to roll out several promotional activities in 2022 for tourism. However due to the uncertainty brought about by the Omicron variant, many of these projects had to be readjusted or put on hold.

Speaking frankly, she said that although Malaysia’s current tourism industry is experiencing a good recovery, the climate is still far from conducive for a full recovery of the tourism sector.

“Every stage of recovery has been short-lived. Progress flattens out and then recovery begins again before being flattened. This unpredictable state is far from conducive to the overall recovery of the tourism sector.”

She pointed out that in order to assist travel agencies with this recovery, the best solution for now would be to open up to allow many more inbound tourists in.

Every stage of recovery has been short-lived. Progress flattens out and then recovery begins again before being flattened”

Leong Wai Hong, acting chairperson of the Malaysian Inbound Tourism Association

She believes that if the government does not aggressively push for the reopening of our borders, the inbound tourism industry will experience a late recovery and will be the industry that suffers the worst impact from the pandemic.

Hotel occupancy fell to below 30% in 2021

Malaysian Association of Hotels CEO Yap Lee Sheng also agreed that the hotel industry in Malaysia is in urgent need of foreign tourists.

They said that 45% of tourists in Malaysia’s hotel industry are foreign tourists while the remaining 55% are domestic tourists. In the absence of foreign tourists, the market demand from domestic tourists is not enough to sustain the local hotel industry.

They also mentioned that the emergence of the Omicron variant has cause many countries to tighten restrictions and shutter their borders once again in order to stem the spread of the virus. This, in turn, will delay the reopening of international borders and has become a major concern for the hotel industry.

According to them, before the coronavirus pandemic, the average occupancy rate of hotels in Malaysia in 2019 was 64%. In 2020 as the pandemic struck and the national Movement Control Order (MCO) was implemented, the average occupancy rate for hotels nationwide plunged by half to just 32%.

Yap Lisheng, CEO of the Malaysian Hotel Industry Association. Photo: supplied

“We were expecting a better recovery in 2021, not knowing that it would end up worse since another MCO was imposed from January to October and interstate travel was only recently reopened.”

“In 2021 we expected the average occupancy of hotels (for the entire year) to be under 30%.”

He explained that at the moment, hotels in the country only have high occupancy rates on weekends or in areas with popular tourist attractions like Langkawi and Penang – but not elsewhere.

“As a whole, the hospitality industry is still struggling with small recoveries in operations but hardly any financial improvement.”

The aviation industry’s slow recovery

They admitted that the recovery process of Malaysia’s local aviation market is very slow and that of the international market is even worse. They are hoping the coronavirus situation will begin to stabilise more in the next few months.

Looking back on his experience in the last two years, Malindo Air CEO Mushafiz Mustafa Bakri said that all airline companies have been hit hard by this unprecedented pandemic. Malindo Air’s revenue in March 2020 had tumbled by 95% compared to that of the previous year.

He told us that he originally believed that the coronavirus pandemic would pass quickly with an impact of just 4-6 months like the SARS pandemic. It ended up lasting for over two years.

In an interview with Oriental Daily, he said that due to the sharp drop in revenue, the airline was forced to downsize and major adjustments were made including the reduction of aircraft and employees to reduce costs.

“We returned 20 Boeing 777s and three ATR-72s. Without these aircraft in service, we had to lay off some employees either through termination or a Voluntary Separation Scheme (VSS). This has had a significant impact on our operations since 2020.”

He admitted that while the recovery of the Malaysian aviation market was very slow, the international market was doing much worse. He hopes that the pandemic will simmer down and that things will stabilise in the coming months.

“We wanted a bottomed-out V-shaped recovery, but what we really got is more of an L-shaped recovery.”

He said that the aviation industry is very concerned about the government’s actions and response to this new Covid variant as the operation of the aviation industry depends on the actions of the government.

He hopes the government will not take a zero-tolerance approach in dealing with this Covid-19 variant as Malindo Air has opted to take a risk-based approach with the experience they have accrued over the last two years in dealing with Covid-19 and its variants.

This article was originally published in Oriental Daily and is produced as part of the Seafore Masterclass project, with support from the Institute for War and Peace Reporting

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