The outbreak of Severe Acute Respiratory Syndrome (SARS) and the Iraq war were the twin issues that wreaked havoc in world travel and tourism. The Malaysian tourism industry was particulary hard hit in the 2nd quarter. StarBIz spoke to a panel of five, comprising representatives from the government and private sector, to review the damage and lessons to be learnt. The panellists were the director-general of the Malaysia Toursim Promotion Board Datuk Abdullah Jonid, Malaysian Association of Tour and Travel Agents (MATTA) president Tunku Datuk Seri Iskandar, Malaysian Association of Hotel Owners (MAHO) president Tan Boon Lee, Malaysia Retailers Association deputy president Rashid Adam and Malaysian Food and Beverage Executives Association president Samsarujee Omar. StarBiz was represented by general manager (advertising and business development) Datuk Linda Ngiam, senior editor (corporate) David Chow and deputy news editor (business) Hafidz Mahpar. The second and final part of discussions appears below.
STAR: What are the private sector’s plans or initiatives to try and bring more tourists from the region? Are there any under way or being planned?
Iskandar: The way the private sector does it is to work together with the government and follow and support the programme that Datuk Abdullah has mentioned just now (see part 1). Malaysia has sent the biggest delegation of all the non-Middle East countries that were participating in the Arabian travel market in the first week of May. So we were there very much in force – the travel agents, tour operators, hoteliers, resort operators and attraction operators. So the private sector does very much support all the programmes done by the MPTB.
Thirty members of the private sector went along with various travel bodies to the Middle East on June 12 and we have been sending them messages that Malaysia never had SARS. But they asked that when the WHO advisory against Singapore was lifted, why Malaysia’s was not lifted? So they were not aware that Malaysia was not in the same category as Singapore. That was a serious misconception that we had to overcome.
The other thing that MATTA is hoping to do is to work together with the hotel association and prominent media to have a new programme to reinvigorate domestic tourism. This is a very important component, so we have to do this. As I have mentioned, domestic tourism did drop by some 30% for very illogical reasons, but that was at the height of the SARS scare at the end of April when everyone was scared to do anything.
I mentioned just now of how travel agents have been affected deeply. Singapore is Malaysia’s largest tourist market, but by and large travel agents do not get involved because it is so easy for Singaporeans to come in, book their own hotels, do their own thing and drive out, or take buses and come to Malaysia, go shopping, but tour agents and operators do not actually get involved. So that’s why we are even more badly affected in terms of percentage (drop in business) compared to the hotels.
Star: Apart from that, do you dispel the notion that we are not a SARS affected country? Do you initiate any actions with your counterparts in the Middle East, or work with the airlines to bring in inbound travellers?
Iskandar: Yes, well, definitely the members of MATTA are going full speed ahead trying to attract travel agents and a lot of that is in communicating with them. When I was in Dubai during the travel mart, what I discovered was that the travel agents and tour operators were actually very keen to send people to Malaysia.
They see Malaysia as value for money, Malaysia is a tremendous comfort zone in the fact that we are a Muslim country, halal food is easy to get, shopping is great - everything is great in Malaysia, except for SARS. It is not the travel industry that needs to be convinced, it’s the consumers that need to be convinced. If the travel agent in Dubai tries to sell Malaysia to the customer, the customer may say they have SARS in Malaysia.
During the travel mart, I met a gentleman who was planning to get married. He wanted to come here for his honeymoon just before summer starts. And he said Malaysia was near Hong Kong. He thought that we are just next door to Hong Kong. So I told him that Kuala Lumpur to Hong Kong is further than Dubai to Baghdad.
He understood it better. But, you know you can tell one person, but how do you tell the rest of them that we have never been affected by SARS?
But other stories also crop up. I was just told by some friends that some media in the US or Europe picked up that Malaysia now does not allow the holding of hands. Maybe the competitors may be using this or maybe they are just hyping this up for the fun of it. It has been blown totally out of proportions. So what image are we giving to the foreigner travellers? If you come with your wife or girlfriend, you can’t hold hands or something will happen to you. At this point of time, it is working against us.
Tan: I share the same sentiments as Tunku and Datuk. The key issue here is the confidence barrier that we have to overcome. As far as the hotels are concerned, it is not a matter of price or anything like that. If you look at the SARS period, the room rates did not change too much, only the occupancy. Even if the hotel rooms were to come down in price, that is not the issue. It was more of a confidence issue.
On our side, I am very happy to hear of all of the initiatives taken by the Ministry and Datuk. I think that with the limited resources they have, they have done very well and we will support their initiatives during this period. The other thing is, I suppose, not to just look at certain markets and that they are going to keep coming every year. Demand may be disrupted. We have to look at domestic tourism, which is an initiative which the Ministry and the associations fully support.
As far as domestic tourism is concerned, the issue of price does kick in. And even during the SARS outbreak, a number of hotels actually offered discounts of up to 50% on F&B, and I was told there were queues of people lining up to take up the offers.
As far as domestic expenditure is concerned, there is a demand there. We should put some of our resources behind that and try to encourage more domestic spending here. These are some of the areas that I think hotels should work on.
Rashid: To diffuse the attention on SARS, we realise that shopping centres are the places where people meet up and talk. To give them the confidence, we invited officers from the Health Ministry to give talks to the workers. When there was AIDS, nobody wore a mask but with SARS, there is fear of sudden death. With the talks and knowledge given by the ministry, we told the workers not to wear masks because we have to create confidence. With the masks on, I don’t think people want to come. In fact, Domestic Trade and Consumer Affairs Minister Tan Sri Muhyiddin Yassin invited reporters to have dinner with him and asked them not to report like this. The Cabinet ministers were also requested to go out and shop without masks and then the reporters would take photographs so that the public would get their confidence back.
With the help of the media in toning down the reports, now the reports on SARS are in small columns and we are very happy.
Star: We would like to return to the subject of in-bound travel. We have talked a lot about the Middle East. What happened to top markets such as China and Hong Kong? For a short time, we made a tough decision to ban tourists from there from coming. Do we have to go on a marketing drive to regain the goodwill that we may have lost there?
Abdullah: As far as Tourism Malaysia is concerned, we are watching the situation in China, Hong Kong, Taiwan and to a certain degree, Singapore, very closely. The moment a given country is declared SARS-free, we will start our promotion, as we have done in the case of Singapore. We have established linkages with the tour operators in Singapore to get more visitors to come across the causeway.
In the case of China, the first sign we see which indicates that the situation has improved, we will go in very heavily into the market. What we are currently doing is responding to the initiatives undertaken by some of the tourism administrations in China. For example, the Beijing Tourism Administration has written to us to have a joint meeting in Beijing, among all the countries in this region including Singapore, Thailand, and Hong Kong, to discuss ways and means of promoting two-way tourism flow.
This meeting will be organised very soon and some of the initiatives indicated in their proposals are on measures to be put in place when we receive visitors from China.
This is because they are just as concerned for the safety of their own people as they don’t want their own people to spread SARS to countries they are visiting. All the various precautionary measures will be in place before they start moving again. I think this is a very wise move on the part of the Beijing Tourism Administration, of which we are very supportive.
On June10, I had a meeting with the Malaysian Chinese Travel Agents Association whereby they put up a few proposals to do a quick recovery plan by sending delegations from Malaysia to meet selected tour operators in China. I also suggested to this association to use this lull to educate the front-liners of tour agencies in China on how to package tours to Malaysia. So that if their clients want to visit Kuala Lumpur, they would know exactly how to package KL.
It’s a very interesting experience for the Chinese. They should not be subjected to the normal ways that had been done in the past, being taken to shops in Batu Caves, and at the end of the day, they get fleeced. We have to do this educational exercise. In so doing, for any traveller who goes to a travel agency in China for advice on a holiday, the travel agent would be able to suggest Malaysia because we have educated them. We are not forgetting China. You have to understand China has a population of more than 1 billion. We have been getting 557,000 tourists so far, which is not even 0.5% – a drop in the ocean.
Prior to SARS, my minister visited China and we developed a plan to target 1 million visitors from China, Taiwan and Hong Kong. That is what we hope to achieve, our eventual target. The time to achieve this varies. Maybe we can get 1 million visitors from China quickly, may be not. For Hong Kong and Taiwan, we may take a couple of years to achieve that. But we have to set a working target, bearing in mind what our Prime Minister said, which is to try to achieve a 1 to 1 ratio, i.e. for every 1 Malaysian, we should have 1 tourist.
Now we have 13 million tourists, it has been generating some RM25.8bil in foreign exchange earnings for the country. It is not a small number we are talking about.
Samsarujee: As for F&B, we have this Culinaire Malaysia event every 2 years in September and we won’t postpone this year’s event. We had a meeting with MAHO and we are asking the industry to help to make sure it goes on. If we postpone it, the public will think something is wrong. The visitors are from Asean countries and the competitors are from Singapore, Indonesia and Thailand. So we have to go on.
Together with the Tourism Ministry, from July 6 to 27 we will also have a food fiesta, with competitions for local food, mocktails and so on ? So we have these events to make sure that we forget about SARS. We have asked the members not to wear masks, be normal and we hope there will be more tourists for the five-star hotels. For the four-star and three-star hotels, we are not that worried. Only for the five-star hotels. We expect, hopefully, that for the F&B sector, it would be back to normal by October.
Star: The government has been very good to the tourism sector in the recent economic stimulus package. Various forms of financial incentives have been extended, such as the RM1bil Special Relief Guarantee Facility (SRGF) for companies in tourist related areas, a 5% discount in electricity bills for hotels, suspension of income tax instalments for travel agencies and exemption of service tax for all hotels and restaurants.
Although it is still early days, do you feel the beneficial effects of all these beginning to come through? Has there been a discernible pick-up in business or business sentiment?
Tan: Traditionally, April, May and June are the best months for the hotels. So with this outbreak, it hit us at a very bad time. The meetings and functions that were supposed to be held over April and May, some are rescheduling to June and July.
Some of them are coming back. The occupancy is also up. From about over 30% occupancy, some of the hotels are seeing about 40% occupancy now and a small number are even looking at 50%. So, it has improved.
As far as the economic package is concerned, it is not so much the package itself. We are highly appreciative that the government has taken cognisance of the difficulties of the industry and I think that is worth more than the package.
The savings in energy is probably one of the things that benefit us. But I think we would like to appreciate the gesture that the government recognises the difficulties and because of that, all the other ministries, especially the Tourism Ministry, are taking initiatives to help us in our weakest moments. That to me is the most important thing.
Star: For the travel sector, has there been a pick-up in business?
Iskandar: Not really, from the stimulus package. But as Boon Lee said, the first positive effect is giving the whole nation a sense of confidence. It is a very good booster when the government understands the problems and issues and says ‘look, we are here to help and we are going to give money where it is needed down there’ and that is giving confidence all over to the consumers.
Travel is starting to pick up, but one of the issues that the travel agents are facing is cashflow problems and that’s why the RM1bil fund or even the tax waiver or suspension of the profit tax are useful, although small, because no travel agent is going to make a profit this year.
So there is no point paying tax when you have no profit.
We need a fresh injection of capital to travel agents and tour operators.
The SRGF, unfortunately, has not been implemented yet. It has been some three to four weeks now since the announcement, and the commercial banks are not yet sure of the guidelines. But we hope that in the next few days, we would know for sure how to go about it (applying for the SRGF).
Star: What about the exemption of service tax for the F & B business?
Samsarujee: It’s not that great, but it’s an incentive for people to come back to dine.
Tan: I think there has been a marginal increase in the F&B business.
The hoteliers themselves have come to realise they can’t sit on their high stools.
They have to spur domestic spending with packages and discounts, in conjunction with the 5% exemption.
We also have to do our part.
Rashid: I think it is not only the retailers. Many other businesses have also picked up.
As for the retailers, our objective is to get as many people as possible to come to our outlets.
With the 2% cut in EPF, and the half-month bonus, it is good news for people like us and for the business.
Compared with April, sales have improved, especially towards the end of May, but not as good as May last year.
In June, with payment of the half month bonus, we can expect to see a lot of people coming in, with sales of high-value items, apparel, electric goods and with memories of SARS fading away, I think people will start enjoying their normal life.
Transcribed by LIEW LAI JING
Note: In the table on hotel occupancies published yesterday, the first column refers to the state, the second column refers to room occupancies in May 2003, the third column, to occupancies in May 2002 and the last column is the variance between the two.
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