Domestic tourism has become an important component of Malaysia’s tourism industry over the past decade, as local incomes have increased, helping cushion the impact of any slowdown in international tourism. This segment is likely to play an increasing role in 2016, as the decline in the value of the ringgit makes overseas travel more expensive for Malaysians and encourages them to take their holidays at home.
The development of theme parks, shopping malls, and well-priced small hotels, are also making the prospect of staying at home an attractive proposition to Malaysians. Legoland Malaysia, the first Legoland in the region, and Hello Kitty Town, in Johor, have proved extremely popular with local residents, Tunku Ahmad Burhanuddin, group managing director of Themed Attractions, Resorts and Hotels, told OBG. From 2012 to 2014, around 5.8m people (foreigners and locals) visited the group’s attractions in the area, according to the final report of the Putrajaya Committee on GLC High Performance’s transformation plan for 20 of the country’s leading government-linked companies.
Travel Bug
The development of cheaper hotels, as well as small independent lodgings, is also a good indication of how the domestic market is growing, according to Hamzah Rahmat, the president of the Malaysian Association of Tour and Travel Agents (MATTA). “It’s a good sign,” he told OBG. “It shows the domestic market is starting to move around. We are seeing a new generation of travellers, many of whom have grown up travelling with family, both domestically and internationally, which makes them more likely to take trips later in life. We are seeing travel become more and more of a must.”
The number of domestic tourists rose from 54.4m in 2013 to 60.7m in 2014, according to the Department of Statistics Malaysia’s domestic tourism survey published in June 2015, with spending totalling RM62.1bn ($15.4bn). A third of all expenditure went on shopping. The size of domestic tourist market was expected to rise 5% to 63.7m in 2015, with a target of 66.9m in 2016. The numbers take into account travel of 50 km of more with at least one overnight stay.
Day Trippers
The number of “excursionists” – Malaysians and Malaysian residents taking day trips – was 108.6m in 2014, 10.3% higher than in 2013.
The typical Malaysian tourist is an urban resident. Domestic tourism numbers among city dwellers rose 15.5% in 2014, compared with a 6.1% increase for Malaysians living in more rural areas.
The most popular time for locals to travel is during the school holidays or at long weekends, when roads can be packed with cars. Nearly 90% of domestic trips are made for leisure purposes, according to hospitality consulting firm HVS, but the average length of stay is only about three days.
Cuti-Cuti
The long-running Cuti-Cuti Malaysia (Malaysia Holidays) campaign is now being supplemented with the marketing theme, “Dekat Je”. According to Mirza Mohammad Taiyab, director general of Tourism Malaysia (TM), the campaign communicates two things to Malaysians: “First is the advantage of proximity; it doesn’t take time to begin your vacation in the same country. And second, economy; when you travel locally, what you would spend on an international airfare can become activity on the ground.”
The plan is to alert Malaysians to the variety of attractions available at home and to encourage them to explore new places. Currently, Malaysians who visit Langkawi tend to stay in the island’s main town of Kuah and shop. Under Dekat Je officials hope they will be persuaded to explore other aspects of Langkawi life, such as the beaches or the paddy fields.
Travel fairs, including the flagship MATTA Fair, are placing greater emphasis on domestic holidaymakers. Some 5.5m domestic tour packages were sold during the fair, 28% more than in 2014, according to TM. The inaugural Cuti-Cuti 1Malaysia Dekat Je Travel Fair was held in February 2016 in Johor Bahru with some 60 industry participants. With 15,000 visitors expected, TM was targeting sales of domestic tour packages to reach RM1m ($247,535). According to HVS, Kuala Lumpur (KL) remains the most popular destination for domestic tourists, followed by Pahang (home to Genting Highlands Resort, the jungle of Taman Negara and the beaches of Cherating and the East Coast) and the Borneo states of Sabah and Sarawak.
Low-Cost Links
The rapid growth of budget airlines, starting with Tony Fernandes’ acquisition of AirAsia in 2002, has benefitted Malaysian travellers enormously. As well as AirAsia and Malaysian Airlines, options for domestic flights include Firefly, the community airline of Malaysia Airlines, which runs turboprop flights out of Subang airport in KL, and Malindo Air, a venture between Malaysia’s National Aerospace and Defence Industries and Indonesia’s Lion Air, which started operations in 2013 and offers low fares with premium service to 13 destinations. The new competition has led to sharp reduction in airfares and given Malaysians more choice in destinations.
The new Kuala Lumpur International Airport 2, an airport for budget travellers, is also connected to the KLIA Ekspres, which runs at least every 20 minutes to Sentral, the main railway terminus in KL. National rail services have also been modernised with a dual-track electric rail link from KL to Ipoh and Penang.
On The Road
Road improvements are also making it easier to get around, although traffic jams at peak times remain a problem. Congested sections of the North-South Expressway have been widened, and the East Coast Expressway was extended to Kuala Terengganu in 2015, significantly reducing travel times between the capital and the beaches of the South China Sea. In Penang, the 24-km second bridge costing RM4.5bn ($1.1bn) opened in 2014.
Nevertheless, while infrastructure has improved, the tourism industry has expressed concern about rising costs associated with the introduction in 2015 of the goods and services tax. All aspects of travel within Malaysia – domestic flights, package tours, accommodation, booking fees, tour guide services and entry fees – are subject to the 6% tax. Only taxi fares and public transport by land and rail are exempt. In the 2016 budget, the tax was removed for economy-class fares on rural air services, which largely operate in interior Sabah and Sarawak.
Incentives
The government is confident tax and financial incentives will provide sufficient support to domestic tourism. The hotel and restaurant industry has been progressively liberalised, reducing the local equity requirement for three-star hotels to 30% in 2015. There is no requirement for higher-class hotels. Hotel investors are also eligible for a five-year tax exemption of 70% in Peninsular Malaysia and 100% in Eastern Malaysia. Tour operators that organise domestic packages for at least 1500 local tourists a year qualify for a tax exemption on income earned.
As part of the 11th Malaysia Plan (11MP), the government is encouraging structured pricing to ensure local visitors pay less to visit major attractions. TM is also nudging operators to provide more incentives for Malaysians, especially during the quieter seasons when there are fewer international visitors. Promotion and campaigns will also be aligned to holiday periods to boost domestic tourism.
Research has shown that the government’s decision in 2005 to move public sector employees to a five-day working week, allowing them a full two-day weekend (they previously worked every first and third Saturday), has done much to nurture growth in domestic tourism. “Voluntourism” and student tourism programmes will also be promoted under the 11MP. “This is to cultivate a touring culture among youth, encourage (the) appreciation of natural, historical and cultural heritage, and develop passionate stewards of the environment,” according to “Transforming Services Sector” strategy paper no. 18.
Read More from OBG
