Malaysia : Tourism Industry

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Lay Hwa Teh December 2007

Summary
• Malaysians love to travel and there exists a growing market of affluent Malaysians who travel overseas at least once a year for vacation. Lifestyle living is important to the younger generation these days and traveling is considered essential to them. The United States was one of the top outbound tourism destinations for Malaysians before 9/11. Tighter U.S. visa regulations after 9/11 caused a substantial decline in Malaysian visitors to U.S. and resulted in Malaysians diverting their travels to Australia, Britain and Europe. Since 2004, Malaysians travel to U.S. has started recovering and the potential for growth in this market is good. The improved U.S. visa application process, the strengthening Australian dollar, sterling and Euro against the Malaysian ringgit and the weakening dollar is expected to improve the U.S. travel market in the near future. Marketing and promotion of U.S. destinations and briefings on the visa application process in Malaysia is important to create more awareness and encourage Malaysians to travel to the U.S. The most popular U.S. destinations for Malaysians are Los Angeles, New York, Orlando, San Francisco, Las Vegas and Washington D.C. They travel to the U.S. mainly to visit theme parks, sightsee, shop at factory outlets and visit casinos. Cruises in Alaska and New England are getting popular among Malaysians. The market for group package tours is still very much California and New York. New U.S. destinations can be promoted to Free Independent Travelers (FIT), which are increasing as Malaysian become more adventurous and independent in their travel. FAM tours will have to be organized for travel agents and journalists to promote new destinations.

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Market Demand
Regulatory Bodies The Ministry of Tourism regulates the travel and tourism industry in Malaysia. Its licensing division issues travel licenses to tour and travel agents (or “travel operators”) in the country. Tourism Malaysia (or Malaysian Tourism Promotion Board) is the marketing arm of the Ministry and has the objective of promoting Malaysia as a tourist destination. The Malaysian Association of Tour and Travel Agents (MATTA) was established in 1975 with the objective of promoting the interests of the travel and tourism industry in Malaysia. It is mandatory for all tour and travel agents to join MATTA. Presently, MATTA has a membership of 2,000 members, with around 50% offering outbound travel. Outbound Travel Market Travel and tourism to foreign destinations, or “outbound travel”, is getting more popular among Malaysians. Air Asia, the Malaysian budget carrier that entered the market in 2002, has been very successful in encouraging more Malaysians to travel overseas due to affordable pricing of their air tickets to regional

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Europe.S. The leisure market comprise of Free independent travelers (FIT). These are especially popular among Malaysians that are less independent. The leisure market used to dominate the U. leisure travel is slowly recovering and the weakening U. They are paid by large corporations to provide incentives for their employees.S. Taiwan Western Countries: Australia.S. where everything is arranged.S. travel and tourism market in Malaysia. most of the time accompanied by family members or friends. Commercial Service — Your global business partner. Everything is arranged specifically for the group according to its needs. and are organized normally once a year.S.S.S. New Zealand.S. known as MATTA Fair is held in March and September/October annually. especially in May and December when long school breaks take place. like the popular ones listed below.. There are no formal statistics on the percentage breakdown by market segments of Malaysian visitors to the U.S. Malaysians normally travel to other ASEAN countries first before progressing to longer haul destinations. This is the reason the largest bi-annual consumer travel fair in the country. and popular U. cities in order of preference are: (1) Los Angeles (2) San Francisco (3) New York (4) Orlando (5) Las Vegas (6) Washington D. The most popular U.S. hotels. or first time visitors to the U. which is organized by the MATTA. They are normally professionals who are more adventurous.S. Japan. Malaysian Travelers to U. Korea. The following table is a rough estimate from interviews with major local travel operators that are promoting U. including a tourist guide in the U. These travelers will eventually be the market for longer haul destinations. travel and tourism and airline companies. Asian Countries: China. are ranked as follows: Let us help you export. its contribution to the total market substantially decreased from 70% to 30%.Insert Report Title Here Page 2 of 8 countries. The west coast is more popular than the east coast due to the lower cost of traveling there and shorter flight time required. U. Group corporate incentive tours (GIT) are comprised of groups of at least ten and can include up to 300 people. MATTA Fair is the largest travel consumer fair in ASEAN. After 9/11. Free independent travelers (FIT) are travelers that are more independent and book air tickets.C. and travel on their own. Nevertheless.S. Britain.S. Malaysia’s outbound travel can be segmented into two broad categories – the Business/ Student/Visitors of Friends and Relatives (VFR) market (ticketing market) and the leisure market.gov 800-USA-TRADE . export. dollar against the ringgit will helped to revive this market segment. or business people who prefer to do their own sightseeing and tour at their own pace. Malaysians’ preferences in touring the U. Malaysians normally stay at 3 to 5 star hotels in the U. Group package tours are comprised of groups of at least ten people and can be as large as forty. group package tours and group corporate incentive tours. Ticketing Market (Business travelers/students/VFR) Leisure Market Before 9/11 30% 70% After 9/11 70% 30% Outbound Travel to U. The U. Canada The peak periods for traveling among Malaysians are April to June and October to December. with limited English speaking capabilities. states to visit among Malaysians are California and New York.S. distributors and agents.

In the past.974 in 1998. to look for different lifestyle experiences in their travel e.597 Source: Office of Travel and Tourism Industries (OTTI). sports.S.750 2003 34. increased the cost of traveling to the U. and the strengthening Australian and European currency. Department of Commerce The U. 1996 80. but due to lack of accessible flights there from Malaysia in recent years the destination is no longer as popular. United.S. The U.S. the number of Malaysians traveling to U.5) in September 1998. This was due to aggressive promotions by local travel operators on tour packages to the west coast (Los Angeles. the declining perception of risk in traveling to the U.000.597 in 2006 and this will continue to grow. the majority of travel operators stopped promoting U.S.836 in 1997 to 48. In total.S. American. soft adventure. there is a growing trend among Malaysians. New York. peaked at just above 80. which are considerably less expensive.S. travel and tourism and diverted their promotions to Australia. sightsee.S. Nevertheless. Malaysian vacationers travel to the U.S.396 2002 40. and visit casinos. Honolulu was a popular destination. Delta) and eight Asian carriers. travel started to revive due to the improved visa application process. Universal Studios) Sightseeing. export. shop at factory outlets. Market Data Number of Malaysian Visitors to U.S.C.S.S. mainly to visit theme parks. 9/11 in 2001 and the Iraq war in 2003 resulted in a further decline in Malaysian visitors to U. destinations. In 2004. San Francisco. nature parks Shopping at factory outlets Casinos (like Las Vegas) Special interest (like sports.507 2001 52.S.S. cities already in existing Let us help you export. significantly. Thus.066 1997 79.S.g. But at present only the national carrier.S.C. Orlando and Washington D.S. there still exist some interest among group incentive tours for this destination. and Honolulu) and east coast (New York. U. carriers (Northwest.974 1999 59. was one of the top destinations for outbound tourism in Malaysia from 1990 to 1996. and other countries. Best Prospects In terms of U. Los Angeles (stopover in Taipei) and New York (stopover in Stockholm). As a result.442 2006 59.396 2005 51. national parks. which led to the exchange rate peg of US$1 to RM3. This led to the 40% decline in the number of Malaysian visitors to the U. food. Las Vegas. The market for package tours is still California and New York. the most popular is California followed by New York. especially among professionals. rebounded to close to 59.836 1998 48. flies directly from Kuala Lumpur to two destinations in the U. Commercial Service — Your global business partner. Las Vegas.S. mainly due to the new visa regulations and increased perceived terrorism risks in the U. music. food) Flights to the U. However.S.. there are twelve airlines that Malaysians can use to fly to the U. comprised of four U. Europe.S. There is no problem getting flights to the U.S.274 2004 45.gov 800-USA-TRADE . from Malaysia. Package tours can also be expanded to include new destinations that are near to popular U. when the number of Malaysian visitors to the U.). interest in U. Malaysian Airlines (MAS). popular cities include Los Angeles. San Francisco. New Zealand. from 79.8 (compared to the pre-crisis exchange rate of US$1 to RM2. Niagara Falls. tour package itineraries to California and New York can be expanded to make them more interesting. Malaysians started to divert their travels to China and Australia. Furthermore.Insert Report Title Here Page 3 of 8 (1) (2) (3) (4) (5) Theme parks (like Disneyland resorts in Los Angeles & Orlando.785 2000 74.S. an “American experience” in entertainment. Therefore. The Asian economic crisis in mid-1997. etc. and Washington D. entertainment.

600 . are well known among Malaysians as attractive tourist destinations. Furthermore. which are on the rise as Malaysians become better informed and independent about foreign travel. Foreign Based Ownership Travel Operators JTB Japan Miki Japan Kouni Switzerland GTA (Gullivers) U. they will usually make additional stops in several other European countries. can also be promoted especially to free independent travelers (FIT). For example. Let us help you export.S. since Malaysia was once a British colony and the Dutch. the majority of Malaysians are keen to visit the country.600 Britain and Europe Since the cost of traveling to the U. families of students.Insert Report Title Here Page 4 of 8 package tour itineraries. export.S. the following foreign-based travel operators which promote Europe also have a presence in Malaysia and are active in promoting European destinations to local travel agents. In recent years.600 $1. Britain and Europe. Europe (include Britain) Australia Flight (Hours) 18-24 12-15 5-8 Average Days Spent 7-14 7-14 6-10 Average Cost of Package $1. the U. In addition. Malaysians traveling to Britain include those visiting friends and relatives. Malaysians find it more worthwhile to go to Europe.’s main competitors are other popular western countries including Australia.$2.gov 800-USA-TRADE .000 . the U. The cultural. New destinations in the U. Spanish and Portuguese also colonized parts of the country in the past. Due to its historical ties with Britain. which included participating in MATTA Fairs. New Jersey and Pennsylvania are near to New York and Washington DC. Visit Britain setup an office in Malaysia in 2005 to promote FIT travel to Britain. In the past. Air Asia has been successful in encouraging FIT travelers.S. These were effective in attracting Malaysians to visit their countries. Britain had done some travel and tourism promotions in Malaysia. Country of Destination U. Some of the popular European countries have NTOs present in Singapore which service the Southeast Asia market including Malaysia. business travelers and those that are interested to see the country due to the historical ties. There also exists a historical linkage. is closer to that of Europe. Italy and Spain promoted their various tourist attractions by working with selected local Malaysian travel operators and offering them grants. Commercial Service — Your global business partner.S. The U. To make their trip to Britain more worthwhile. including France. Arizona or Utah can be promoted as destinations near to Las Vegas.S.S. In terms of comparative cost and length of flight.500 $1. Their presence had been rather successful in encouraging local travel agents to promote Europe. Britain and other popular European countries. This is because they get to see various countries with different cultures and cuisines in Europe.S.$2. Key Suppliers As a tourist destination. FAM Tours will have to be organized to encourage travel agents to promote new destinations and journalists to write about the new destinations.$1. the flight time to Europe is much shorter than to the U.600 . Britain is the second most popular destination for Malaysian students.S. Italy and Switzerland. trade and education linkages with Britain still remain strong after Malaysia gained its independence in 1957.’s more direct competitors are Britain and Europe as shown in the table below.

S. WATC and Queensland tourism office provide grants to selected local travel agents for Australian tourism promotion that include paying more than 50% of advertising costs and organizing FAM trips. Commercial Service — Your global business partner. many are visitors of friends and relatives residing there and families of students studying there..S.300 59. The table below shows the number of visitors to Australia in comparison with the U.S. Australia has participated in the MATTA Fair aggressively.S. had been actively promoting Australia as a tourist destination. Australia Since 1992. Since 1997. Canada. The number of travel agents that promote the U. it started to be active in promoting U. England. Tour America. Prospective Buyers Travel Agents There are 1. Presently. TA and Queensland Tourism offices have representative offices in Malaysia.gov 800-USA-TRADE .900 51. but marketing and promotions have been so effective that the number of Malaysian visitors to Australia hit almost 167. Number of Visitors to Australia 2003 M No. of Visitors to Australia (Source: Tourism Australia) 2004 166. WATC used to have a representative office in Malaysia but its Singapore office now services Malaysia as well. At present. Furthermore.442 2006 150. which is an indication of the potential market in Malaysia that can be tapped for U. TA. claims to have more than 50% market share of Malaysian tour packages to European destinations. Let us help you export. company.S. Before 1992.S.274 No. New Zealand and Spain.S. ground operator. briefings and training.S. In July 2007.S. it has started to promote U. New Zealand took up five booths at MATTA Fair in March 2003 to promote its country.Insert Report Title Here Page 5 of 8 Gullivers Travel Associates (GTA). Western countries that have participated in MATTA Fairs include Australia.616 34.831 45. Tourism Australia (TA) and the Western Australia Tourism Commission (WATC). Others Other competitors such as Canada and New Zealand also provide grants to travel agents to promote their destinations. has declined significantly since 9/11. This is because most Malaysian frequent travelers have been to Australia at least once and are therefore confident to travel independently on their next trip there. Australia is the top destination for Malaysian students studying abroad due to its relative proximity to Malaysia compared to Britain and U.S. sometimes together with local travel agents. they also organize trade events to promote Australian tourism in shopping malls and hotels. 70% of Malaysian tourists to Australia are FIT travelers. of Visitors to U. destinations.S. Since it was acquired by a U. destinations by partnering with another U.000 local travel agents in Malaysia that promote outbound travel. destinations. Malaysians hardly traveled to Australia. Furthermore.000 in 2004. This will hopefully help to revive more interest among the local travel agents to promote the U.597 155. Luxemburg. export. Blackstone in recent years. Below is a list of the top travel agents that are currently active in promoting U.S. Marketing and promotion is extremely important to encourage outbound travel to a particular destination.396 2005 165. a previously British-owned ground operator that has had a presence in Malaysia for more than 10 years. The U.

On average. magazines.S. normally use FIT instead of group package tours since they can only eat “halal” food (i. food specially prepared for Muslims.my www.S. FIT Group Package. Recommendations by friends and relatives.parlotours. FIT Group Package.my www. FIT.e. FIT.9 million. Advertisements and promotions of tourist destinations and travel packages.com. FIT Business.com.com. with 60% between 35-45 years. 3. are usually in the age range of 28-50 years. incentive Business. After 9/11.2 % of Travelers to U.2% of the population.S. Malaysian males between the ages of 16-45 face a more complicated process to obtain a U. newspaper advertisements. These include Let us help you export. since those that are interested in traveling normally prefer to go to Britain and Europe. due to the fear of facing tighter scrutiny at U. write-ups in travel sections of newspapers and magazines. Chinese make up 24. Malays that travel to the U. Recommendations by travel agents.2%. tourist visa.g.my Nil www. immigration checks because of their Muslim background. The Malays comprise 50. 4. 2.S. Commercial Service — Your global business partner.2 24.gov 800-USA-TRADE . Since 9/11. of employees) 300 85 60 260 500 55 Travel Focus Website Group Package. The U. Internet.Insert Report Title Here Page 6 of 8 Travel Agent Reliance Parlo Tours Golden Tourworld Travel (GTT) Holiday Tours Mayflower Harpers Travel Size (no.5% and Indians 7. MATTA Fairs. airline companies and national tourism organizations (NTO).harperstravel. the Chinese represent 70% of Malaysian travelers to the U.holidaytours.S.S. The majority of Indians cannot afford to travel abroad and represent only 5%. and this visa regulation had discouraged some from going to the U. decisions are made within two months from the travel date.com Consumers Malaysia is a multicultural country with a population of 26.S. etc. The destination and type of tour Malaysians choose is based on the following ranked factors: 1. with substitute being “kosher” food). Decision Making Malaysians tend to make short-term decisions for their holidays.S.rpb. they are more reluctant to travel to the U.com. The Malays represent only about 25% of Malaysian travelers to the U.S. Others consist of indigenous and non-Malaysian citizens. Malaysians traveling to the U.5 7. The most effective way of convincing Malaysians to travel to particular destinations is through advertisements and promotions by travel agents.S. export. 60 25 5 Due to higher spending power and general interest in travel. e. Race Chinese Malays Indians % of Population 50.my www.. incentive FIT www.mayflower.

GTA’s recent partnership with Tour America will hopefully help to create more interest among travel agents to promote U. An applicant will have to pay $100 to apply for a U. Furthermore.S. Kuala Lumpur Organizer: Malaysian Association of Tour & Travel Agents (MATTA) Tel: 60-3-9287-6881 Fax: 60-3-9287-6880 Email: admin@matta. Commercial Service — Your global business partner. The government encourages NTOs and foreign travel operators to establish their presence in Malaysia.org. In comparison.Insert Report Title Here Page 7 of 8 advertising and write-ups in major local newspapers and magazines.S. destinations. the mandatory requirement for personal interviews with applicants is a discouragement to Malaysians that stay far away from Kuala Lumpur. Since 1992. especially the MATTA Fairs. Italy and Spain successfully built awareness of various sightseeing spots in the country by having their NTOs work with local travel agents and airline companies to promote package tours to various destinations there. Many families and companies are not willing to take the risk of having their family members and company employees’ visa application been rejected after incurring the cost. In recent years. At present.my Let us help you export. The visa issue is the main obstacle in promoting group package and corporate incentive tours. visa is difficult to attain. compared to Australia and Europe which are aggressive in their promotion here. Promotional efforts to expose and educate Malaysians about a country and its various tourist attractions are extremely important. Market Issues & Obstacles The main issue in promoting U. Once they have decided on where to travel. 2008 Venue: Putra World Trade Centre (PWTC). young urban professionals may use the Internet to decide on which places to go within the country. less than 5% of Malaysians will surf the Internet to decide on which countries to travel to. Malaysians do not need visas to travel to Europe and the visa application process for Australia is online with no interview or fee required. Australia is now one of the top destinations among Malaysians.matta. tourism in Malaysia is the visa application. the government encourages foreign destinations to participate in MATTA Fair. In fact.S. export. their U.S. based NTOs and travel operators in Malaysia and the Southeast Asia region.org. holiday will have to be cancelled. and promotions at tourism fairs. visa which will not be refunded should the visa be rejected. especially the ones living in East Malaysia.my Website: www. According to the local travel agents. Trade Events MATTA International Travel Fair Dates: March 14-16.S. there is a lack of presence of U.S.gov 800-USA-TRADE . There still exist a mindset among Malaysians that a U.S. Australia’s NTO and its state tourism organizations promoted Australia aggressively by working with local travel operators and airline companies. advertising and promotions can also appear in local women’s magazines. The U. The cost can be significant for a family of travelers and should any of the family member’s visa application is rejected. Market Entry There are no barriers to entry in terms of promoting foreign destinations in Malaysia. They have to incur cost to fly to Kuala Lumpur for the interview and stay for 1-2 nights in the city to collect their passports the next day. Since women often make the travel decisions for their families in Malaysia.

gov. 45 Jalan Tun Ismail 50694 Kuala Lumpur Website: www. International copyright.gov 800-USA-TRADE .gov. The information provided in this report does not constitute legal advice.my Phone (603) 2696-3928 (DL).S. nearest you by visiting http://www. Menara Dato’ Onn PWTC.S.S. U. All rights reserved outside of the United States. 11. 2693-7111 (GL) Fax: (603) 2693-7491 Contact: Mr.my Phone: (603) 2615-8300 (DL). Department of Commerce utilizes its global presence and international marketing expertise to help U. Commercial Service trade specialist in the U. Fax: 603-2168-8350. Jalan 1/76 Desa Pandan.org.S.Insert Report Title Here Page 8 of 8 Resources & Contacts • Malaysian Association of Tour and Travel Agents (MATTA) Wisma MATTA.gov/malaysia. The U.gov/. Disclaimer: The information provided in this report is intended to be of assistance to U. No. exporters.tourism.export. While we make every effort to ensure its accuracy. Sulaiman Harmain Shah (Head of Tourism Services Division) For More Information The U. Department of Commerce. Ngiam Foon (President) Mr. 2615-8188 (GL) Fax: (603) 2692-4148 Contact: Datin Normasila Musa (Director. 2006. Phone: 603-2168-5048. The U. Commercial Service of the U. 55100 Kuala Lumpur Phone: (603) 9287-6881 Fax: (603) 9287-6880 Website: www.S. 45 Jalan Tun Ismail 50480 Kuala Lumpur Website: www. Tai-Neng Phua (COO) • Tourism Malaysia 16 Floor. Malaysia can be contacted via e-mail at: layhwa.matta. Europe & Americas Division) • Ministry of Tourism 21 Floor. companies sell their products and services worldwide.S.buyusa.S.doc. Menara Dato’ Onn PWTC.my Contact: Mr. Commercial Service — Your Global Business Partner With its network of offices across the United States and in more than 80 countries. Commercial Service in Kuala Lumpur.S. neither the United States government nor any of its employees make any representation as to the accuracy or completeness of information in this or any other United States government document. Let us help you export.S. or visit our website: www.gov.teh@mail.S. Readers are advised to independently verify any information prior to reliance thereon. Commercial Service — Your global business partner.motour. the U. Locate the U. export.

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