Tourism sector anticipates headwinds, slow pace in 2023


MALAYSIA’S tourism industry seems to be on track to recovery in the few final months of 2022. 

It had even recorded a welcoming growth in foreign tourist arrivals since the reopening of borders in April 2022. 

The Tourism, Arts and Culture Ministry (Motac) in a statement recently said Malaysia had received some 3.2 million international tourists from January to July. 

Looking at the encouraging numbers, The Malaysian Reserve (TMR) spoke to a few travel experts who shared their opinions on the sector and what to expect in 2023. 

Pearson Anderson founding partner Hannah Pearson said if 2022 was a year of reopening, 2023 will be a year of headwinds. 

As a Malaysian-based research and sales representation tourism consultancy specialising in the South-East Asian and Muslim tourism industry, she said the country’s tourism industry will not see a full tourism recovery in 2023. 

We have seen Malaysians wholeheartedly embrace domestic travels and staycations, which has triggered new innovations, says Pearson (pic: Bloomberg)

“The growth is undeniably positive — when you look at where we were at the start of 2022 for tourism, Omicron scares, and the Langkawi travel bubble with its very limited international travel potential, we have come a long way indeed,” she said to TMR. 

However, Pearson observed that the pace is slow. 

“Malaysia is aiming for just over nine million international tourist arrivals in 2022, but contrast this with the 26 million arrivals of 2019, and it is still far o from that number,” she added. 

Meanwhile, Malaysian Association of Tour and Travel Agents (Matta) president Datuk Tan Kok Liang felt that the forecast does not bode well as these numbers indicated that there were not enough businesses to support the Malaysian tourism economy in 2023. 

“There is a significant decrease from pre-pandemic levels of 26 million tourists with RM86.1 billion in revenue in 2019,” he said. 

Tan told TMR that there is a need to be a great transformation in the government’s tourism strategy. 

“We need a fresh, more strategic and dynamic approach to how we are going to accelerate the recovery and growth of our tourism economy,” he added. 

Matta hoped that the appointment of Datuk Seri Tiong King Sing as the new Tourism, Arts and Culture Minister will provide that drive and initiative. 

Tan says Malaysia’s mere focus on promotions and marketing will not be effective as the nation has no new ‘products’ to offer the world (pic source: Matta)

“I believe that the government’s scope of responsibility should be widened to include infrastructure development and tourism vehicles in order to be effective,” he said, adding that it is currently more than a necessity that special attention be placed on developing tourism infrastructure and products. 

“Malaysia’s mere focus on promotions and marketing will not be effective as the nation has no new ‘products’ to offer the world,” he said, expressing concern that the nation may fall into a state of stagnation. 

Agreeing with Tan, Pearson said the government must continue to encourage consumers to travel domestically to support the local tourism industry while the number of international tourists is still insufficient to be profitable. 

“We have seen Malaysians wholeheartedly embrace domestic travels and staycations, which has triggered new innovations,” she said. 

She strongly believed that the growth in Malaysian outbound travel in 2023 will adversely affect domestic tourism, as Malaysians choose to allocate their savings towards overseas trips rather than local ones. 

“With the whole of the South-East Asia region now open to leisure travel, Malaysia will need to compete against its neighbours, such as Thailand, to grab market share — and competition for international travellers will be intense,” Pearson forecasted. 

In comparison, she said Thailand reported that 1.81 million Malaysians visited their country in 2022, and other favourite destinations, such as Japan and Australia, are open for leisure travel and shrinking the potential domestic tourism spend. 

“I see growth continuing at this steady pace in 2023, with the one major game changer being China reopening its international borders. 

“China accounted for around 12% of tourist arrivals into Malaysia in 2019, and will supercharge the country’s tourism recovery — but could also pose headaches for the tourism industry here, which is still struggling with limited capacity and manpower,” she shared. 

Meanwhile, on air travel, Pearson said the nation saw a rather significant spike in $ight costs at the end of 2022 and she believed this demonstrated that the economy is expanding and that 2023 will have a positive impact on the recovery process. 

“The unexpected price hike also demonstrates that there is a shortage of supply in the business and that most tourism players including hoteliers, airlines and local support are still not prepared for a return to 100% occupancy as previously,” she elaborated. 

Pearson added that towards the end of 2022, airfares remained high, capacities limited, as airlines built back their networks and frequencies, which could also limit growth, at least in the first half of 2023. 

According to a Hong Leong Bank Research report, judging from the current developments, it expected Malaysia’s 2023 air travel demand to charge upwards near to pre-pandemic 2019 levels. 

“The growth will be mainly driven by the international segment, given the recent border reopening by South Korea, Japan, Hong Kong and Taiwan, as well as China potentially by mid-2023 (recently relaxed Covid-19 restrictions),” the report reads. 

Not losing the optimism, however, Pearson said there will be the global economy facing a potential downturn in 2023, which could hit key source markets for Malaysia, particularly long-haul European markets. 

Raising similar concerns, Felda Travel Sdn Bhd senior business development executive Asrol Kadir concurred Pearson’s concerns. 

“Data and expert opinions indicate that 2023 will be a challenging year, with the tourism industry as one of the sectors that is going through a full recovery, not now but in the coming years,” he told TMR. 

Asrol further commented that the big players understand that although the industry was mainly affected by the Covid-19 crisis, it remains one of the top-generating revenues for the nation. 

“To ensure that Malaysia is prepared to welcome visitors from across the world and to make Malaysia a nation that is always prepared for the present demands, I believe that each party’s support — whether provided by the government or non-governmental organisations — is a crucial cooperative effort,” he added. 

Kenanga Research, however, is optimistic about the tourism industry’s progression. 

“We project tourist arrivals in Malaysia to jump fourfold to 9.6 million in 2023 on the back of the reopening of international borders,” the report said. 

  • This article first appeared in The Malaysian Reserve weekly print edition