More are coming and we need to do more
New Straits Times (Columns)
2 Sep 2007
ABDUL RAZAK AHMAD 

Two decades ago, Malaysia was struggling to catch up with regional tourism industry heavyweights. Today, she is a leading destination in Asean, with arrivals on track to reach a record high this year. Can the growth be maintained? ABDUL RAZAK AHMAD finds out.

IT’S that time of the year again. Hordes of mainly Arab tourists have descended on Malaysia’s shores, packing the shopping malls and hotels in the country’s major cities to the gills.

It’s a most welcome "invasion" for the nation’s tourism industry, and things have never looked this good.

August is the usual peak period for the Middle Eastern traffic. This is also a particularly lively month due to the 50th Merdeka anniversary celebrations.

But there’s also been a near double-digit first quarter growth in tourist arrivals this year due to the Visit Malaysia Year 2007 (VMY07) campaign, and it shows.
Most of Kuala Lumpur’s hotels have been fully booked since last month. The Malaysian Association of Hotel Owners says occupancy for hotels in the city is at a record high.

With the December "winter" traffic — mainly Europeans who come to Malaysia to escape the cold — still to come, industry leaders are increasingly confident the VMY07’s target of upping arrivals by 15 per cent to an unprecedented 20.1 million will be met.

"This year will perhaps be our best yet," says Shaharudin M. Saaid, executive director of the Malaysian Association of Hotel Owners.

Apart from VMY07 and the 50th Merdeka bash, this has been an incident-free year for the region, a rarity in the last decade.

"There’s been no major incident of disease outbreaks like SARS or bird flu, and no terrorist attacks which in past years affected the regional tourism industry," adds Shaharudin.

Malaysia’s success in tourism is by no means a fluke shot. Less than two decades ago, the country was behind more developed regional heavyweights — namely Thailand and Singapore.

In 1989, Malaysia only managed to woo 4.85 million tourists compared with the estimated six million who visited Thailand and five million Singapore.

To catch up, the government in the late 1980s spearheaded the Visit Malaysia Year campaign. It was a national project which brought the government, private sector and public together to "sell" Malaysia to the world.

The first VMY campaign, in 1990, was a runaway hit. Tourist arrivals increased by 53 per cent, making Malaysia the most popular Asean destination that year. A second VMY in 1994 repeated the feat.

By then, a steady momentum of growth in arrivals had set in, and Malaysia has not looked back since.

Last year, the country recorded 17.55 million arrivals, ahead of both Thailand, whose arrivals stood at a reported 13.6 million, as well as Singapore at 9.7 million.

This year marks the third time the VMY campaign is being held. Things so far appear to be going as planned.

But can Malaysia hold her position and maintain the pace of growth in the years ahead?

Tourism Malaysia director-general Datuk Mirza Mohammad Taiyab says growth isn’t just about setting higher and higher targets.

More important is looking at whether the country has the carrying capacity to handle future growth.

"The simple logic is that if you want to double your arrivals, you will have to double the number of your hotel rooms, double the number of flights into the country, and double the transportation facilities to serve the tourists," he says.

"But we can’t just tell people ‘I want the number of hotel rooms and flights into Malaysia to double’ and expect it to happen by the end of the year."

His point — Malaysia needs to take a good, hard look at whether it has the capacity to absorb future growth and start doing what is necessary, now.

Air accessibility is one key area that needs attention.

"Malaysia is not the best place in terms of air accessibility," says Mirza. "Not when you compare with Singapore, Thailand and Hong Kong, where the number of incoming flights is up to three times more than us."

The development of low-cost carriers is helping to meet some of the projected demand. But Mirza believes that it’s also important for the country’s national carrier to look at increasing flight frequencies to key long-haul destinations: "What we want is for tourists to have more facilities to get to Malaysia."

Increasing the number of seats and flights to Malaysia though could involve the liberalisation of air routes — a thorny issue.

Mirza says he understands the concern some have about liberalisation and the possible adverse impact it could have on Malaysia’s national carrier: "But to me, while we can protect an industry to nurture it, we also have to decide for how long. You cannot have a baby growing old in an incubator."

The hotel sector could also face a supply dilemma.

The number of rooms nationwide has increased three-fold in the first decade alone since the first VMY campaign in 1990.

But today, hotels in three locations — Kuala Lumpur, Sabah and Pahang — have average occupancy rates of over 70 per cent. It’s a figure Mirza calls the "trigger point" at which more hotels need to be built.

Mirza said some in the industry are reluctant to build more rooms now, for fear of the negative impact the hotel industry could suffer in the off-peak season, when occupancy rates can drop as low as 30 per cent: "But if hotels start adding new rooms only when demand has started moving away from us, then we will have no choice but to wait for years for the demand to get back."

Future growth will also depend on strategy.

As Ngiam Foon, president of the Malaysian Association of Tour and Travel Agents, notes: "We need to work harder to find ways to get the tourists who come here to spend more and stay longer."

And the reason is increasing competition.

Ngiam says that while the regional tourism industry is not a "zero sum game" where one country benefits at the expense of its neighbours, others are now looking very closely at Malaysia’s success.

He cites Malaysia’s successful strategy to lure Arab tourists as an example: "Malaysia is currently the leading regional destination for Middle Easterners. One reason is because it’s more difficult for them to obtain visas to get into some other countries," says Ngiam.

"Some of our neighbours have in recent years realised this. They’re now very aggressive in relaxing some of the requirements to get more Middle Eastern tourists, so we need to find more ways to remain ahead."

Despite the challenges, the overall outlook for the future of the industry is still positive.

The World Economic Forum’s maiden Travel and Tourism Competitiveness Report 2007, which ranked 124 countries on a number of criteria, placed Malaysia second globally in two categories: price competitiveness in the travel and tourism industry and attendance at the country’s international and local travel and tourism fairs.

Malaysia was also ranked sixth globally in terms of effectiveness of its marketing and branding campaign.

Overall, the country came in 31st in the report — ahead of all in the Asean region except Singapore, and well above some other notable destinations such as Italy (33rd), India (65th), China (71st) and South Africa (62nd).

The figures may show Malaysia to be a generally sterling performer.

What the future holds, though, will depend on how well the country deals with increasing its capacity to support continued growth and maintain its competitiveness.

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