DestinationsWith borders locked till December 31, travel players are rejigging plans to steel themselves for tougher times ahead.

Malaysia's extended closure means extended hardship for tourism sector

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Travel and hotel association heads Richard Koh, Yap Lip Seng, Jimmy Leong and Tan Kok Liang foresee another round of cost management, restructuring and layoffs.
Travel and hotel association heads Richard Koh, Yap Lip Seng, Jimmy Leong and Tan Kok Liang foresee another round of cost management, restructuring and layoffs. Photo Credit: Photos of Koh and Yan by SS Yoga

The recent announcement by Malaysian prime minister that the Recovery Movement Control Order (RMCO) was extended to December 31 was not unexpected but certainly does not bode well for the beleaguered travel industry.

The duration of the extension though, noted Malaysian Association of Hotels (MAH) CEO Yap Lip Seng, was of concern though as it meant that international borders will remain closed for the same period.

"The extended restrictions would force the industry to re-strategise and push its plans further into late 2021 with no indication whatsoever if it would improve by then,” he observed. Hotels are already reducing available inventory of rooms, and with that, manpower as well as other related costs.

Yap added that the hotel industry would need to focus on domestic market and explore cross-industry collaborations to drive volume, acknowledging that the domestic market would be a low-yield one.

“The industry at the moment is surviving solely on domestic tourism, which is also seen as a temporary recovery. Hotels, in particular, are willing to compromise on room rates, currently lower against last year by 50%-70%, while awaiting reopening of borders via ‘green travel bubbles’, he added.

Malaysian Association of Tour and Travel Agents (MATTA) president Tan Kok Liang said the impacts of an extended RMCO would be "most severe" on tourism players, of which a majority are predominantly dependent on international tourism. Travel agencies, he elaborated, have already seen a 90% decline in revenue from January to August.

"The domestic market is not big enough for all industry players to share. With an anticipated loss of some RM60 billion in foreign tourism receipts and a decline of more than 25 million tourist arrivals, the whole industry is crippled,” added Tan.

There is practically no work for tourist guides as long as the borders remain closed, said Malaysian Tourist Guides Council president Jimmy Leong.

The most affected are guides aged between 30 to 50 years and who have been in the business for more than five years, according to Leong. He said they account for 60% of their members and with no livelihood they have forced to look for scare jobs to put food on the table.

“Even if the tourism industry recovers at a much later stage when vaccines are available, we might have lost many good guides especially those with foreign language proficiency,” Leong added.

All association heads foresee another round of cost management, restructuring and layoffs, if nothing is done.

The Malaysian Association of Amusement Theme Park & Family Attractions (MAATFA) Richard Koh said they needed a new effective stimulus package and increase the domestic tax relief to RM5,000 (US$1,210) for locals and an exemption of the heavy 25% entertainment tax that is imposed on MAATFA members.

MATTA's Tan said that even now the RM1,000 tax relief for domestic travel was ineffective, adding that the Finance Ministry had not released a detailed mechanism on how taxpayers could claim it. He added that it should be increased and cover the taxpayer, the spouse and children, if any, and he also called for the loan moratorium to be extended by another six months.

He urged the government to extend both the bank loan repayment moratorium and wage subsidy programme by the Social Security Organisation, a point which Yap concurred with. Meanwhile, Leong appealed for the one-off assistance to the guides be changed to a monthly stipend and added on with grocery vouchers.

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