Can The Tourism Industry Breathe A Sigh Of Relief?

(photo credit: Apple 101)

An euphoric celebration within the travel and tourism industry when the nation’s border reopening was announced

After having experienced the closed borders for almost 2 years, we are wondering what sector would be experiencing in the next few years. Would the recovery for the tourism industry be gradual? Or a drastic V-shaped recovery?

BusinessToday managed to get an e-mail interview with MATTA President, Datuk KL Tan to get his view on this subject matter.

MATTA is forecasting the inbound arrivals is to pick up from  May 2022 onwards.  Datuk KL Tan cited the forecast arrivals of 2 million tourists for year 2022 which is 7.6% of pre-COVID level by Ministry of Tourism and Arts (Motac) while MATTA is forecasting some 20% in terms of percentage of pre-covid level.

The largest travel and tourism association in Malaysia is also forecasting the tourist arrivals may hit 50% of pre-COVID level for year 2023-2024. Bear in mind that so much is dependent on the evolution of COVID variance, its containment, air connectivity and reciprocal entry requirements of key destinations.

So what are some of the main barriers that will slow down the recovery of an inbound tourism?

Testing requirements

Datuk KL Tan said the testing requirements, quarantine rules and Changing SOPs  which are barriers to seamless travel experience.

To many, pre-departure and post-arrival testing is not good for international tourism demand, from an inbound point of view that is still a barrier to entry.

Also, the cost of a test makes up a greater portion of the overall cost of a holiday compared to a long haul trip for the short-haul market.

“Travellers look forward to the “good old days” where travel is affordable and easy. But looks like we have to live with Covid 19 under the new norm,” he added.

The Case of Business as Usual?

When BusinessToday asked Datuk KL Tan’s opinion on business travel, specifically whether business travel is another segment of the industry which may struggle to recover.

He said business travel is another segment of the industry which should pick up soon. It is going to be business as usual.

“Video conferencing platforms and hybrid meetings  have somewhat replaced physical meeting during the pandemic. However, it is a known fact nothing beats the physical meetings which are more productive and effective.”

Surging fuel costs

At the point of writing, the price of oil has risen much, but the war in Ukraine has sent prices skyrocketed.

Certainly significant oil prices rises will impact international tourism because airlines do not have as much scope to discount airfares.

The fact that airline companies have not been hedging their fuel prices as much as they did pre-pandemic because, the outlook for air travel had been so uncertain. Hence,  airlines are now more exposed to oil price movements over the next six months. It is expected that the airline companies are going to be particularly cautious with their pricing because fuel prices are unpredictable.

How much the rising cost of fuel and the added effects of higher inflation on international airfares? And how this would dent the international arrivals? Perhaps we will have a better answer by end of this year.

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