Domestic tourism offers recovery hope in travel and hospitality
Contributed by Tan Ming Luk, Country Head, Malaysia & Singapore, OYO Hotels & Homes
The increasing accessibility of international travel to a wider percentage of the population and the subsequent importance of inbound tourism to more and more countries has amplified vulnerabilities to global events beyond our control. The COVID-19 pandemic upending the world today is turning out to be the biggest economic disruptor in decades, threatening 75 million jobs in the global travel and tourism industry, and slashing approximately USD2.1 trillion in earnings in the same sector this year. In the wider economy, a total of 195 million jobs are expected to be lost just in the second quarter of the year.
Malaysia too is not spared, with a best case scenario estimating a loss of 951,000 jobs and RM41 billion in household income due to the pandemic. These include an estimated revenue loss of RM3.37 billion in the travel and tourism sector between January and February 2020 alone. While staying hopeful, we nevertheless must recognise that the impact of COVID-19 will not dissipate within a short period. It will take time for things to settle, with some estimating that it could take up to 10 months for the tourism sector to return to its normal levels once the pandemic is over.
Government aid provides much-needed relief to tide us over at this critical juncture, but we can still make good use of this slow period to look for the silver lining in the dark clouds, as we make our way on the path to recovery. It is true that many past crises were smaller in geographical scale. From natural disasters to terrorist attacks to disease outbreaks, international travel was often redirected from the affected region to a non-impacted one. For a large pandemic, while the timeline for recovery may need to stretch over a wider period of time, well-proven methods still have their place.
Learning from the world
Tourism is a business of seeing and experiencing, so when its tourism industry was hit by a MERS outbreak in 2015, South Korea invited foreign media and industry decision makers to visit key tourism destinations to rebuild confidence, as part of its recovery process. Likewise, Malaysia can replicate this tried and true method during our own recovery from COVID-19. With popular attractions largely closed, we can also optimise the lack of crowds to continue improvement works on tourism assets, so they will be ready to welcome tourists at their full glory once the market improves.
Keeping in mind the Director-General of Health’s advice that mass gatherings should be avoided for six months to a year after the Movement Control Order is lifted, we can learn from other markets on how to spread out the crowds. We know that families travel more during school holidays and festive seasons, while budget-hunting independent travellers can be enticed to travel during low or shoulder seasons, reducing surge and keeping income stable for businesses. Those new to a destination tend to make a beeline for the Top 10 highlights while repeat visitors may opt for quieter attractions. Residents of smaller towns head to big cities for shopping or to enjoy cultural performances, while urbanites head towards nature for R&R during long weekends. All these behaviours and more can be used to guide travel promotions aimed at aggregating the travel crowds.
In many countries, there are also different prices for international and domestic tourists, or lower prices during the off-season. These efforts to offer varied pricing targeted at domestic tourists makes tourism more accessible to locals with different income levels, besides creating all-year-round tourism and helping to alleviate pressure from overcrowding. Incentives for locals are also used, in line with the personal income tax relief of up to RM1,000 for domestic tourism expenditure and the RM100 digital voucher for domestic flights, rails and hotel accommodations announced by former Prime Minister Tun Dr Mahathir Mohamad as a stimulus measure.
Recovery starts at home
For those of us complying with the MCO at home, it would not be unusual to fantasise about our future holidays. With the trajectory of the disease surge differing from country to country, domestic travel is the place for recovery to start. We can already see this domestic focus in China, as it cautiously restarts non-essential sectors like tourism. Research shows as many as 90% of those ready to travel wanting to start domestically, as experts point to safety fears and the desire to be near the security of home as driving forces in consumer decisions. At the same time, independent travel is preferred, with travellers avoiding large tour groups and cruises and opting for hotels offering flexibility to amend bookings.
Besides, domestic tourism will remain accessible to many in Malaysia, if we consider that it is most popular among those with monthly household incomes of RM1,001 to RM3,000 per month (43.3%). With young adults forming the majority of domestic travellers (39.6% were aged 25 to 39 years), this may be yet another bright point, looking at global trends. Research has found that young travellers may consider travelling a meaningful way to spend their time when the economy is poor, even using their severance pay to fund their travels.
For Malaysia, like our Southeast Asian neighbours, while domestic tourism may not contribute as much in total tourism revenue compared to inbound tourism (a 41.8% contribution compared to the global average of 71.2% in 2018), the value has been growing every year (11.4% growth in 2018 compared to 11.1% in 2017). Indeed, domestic travellers in Malaysia made up 86% of hotel guests in 2019, spending more than RM70 billion for shopping, entertainment, accommodation and sporting activities in repeat trips (302.4 million trips in 2018).
To continue generating more domestic trips, more effort is required to draw out and refine the unique propositions of each destination. For example, Malaysians already love the concept of Jalan-Jalan Cari Makan, heading to Penang and Melaka for the local fare, visiting Pahang during durian season or Sekinchan for the seafood. We can step up efforts to enhance the uniqueness of each locale, learning from countries like Japan and its One Village One Product movement that encourages local communities to identify products that are locally specific, concentrate resources on its production, establish it as a local brand, and market it to the entire country or beyond. Certainly, the importance of domestic tourism in Japan at 82% of overall tourism earnings makes the country a source of inspiration.
With the cancellation of Visit Malaysia Year 2020, the RM1.1 billion previously allocated to the Ministry of Tourism, Arts and Culture for the campaign, including the RM960 million earmarked for driving awareness, promotions and programmes can be channelled towards promoting domestic tourism. Once the Movement Control Order is lifted, Malaysians will still want to travel, and spending their money at home is the right choice for many reasons. For a start, it is a way to show solidarity with our fellow Malaysians by keeping money within the local economy. Besides, postponed events are likely to be rescheduled, so parents will want to attend their children’s convocations, and business travellers are likely to start attending trade events and professional conferences again.
Malaysians may be choosing domestic travel for down to earth reasons like visiting relatives and friends (40.6%), shopping (34.7%) or relaxation (10.4%)3, but their spending will nevertheless help businesses in the travel and tourism sector achieve their income goals. We certainly hope all Malaysians will have the opportunity to enjoy the remaining long weekends in Malaysia.
About Tan Ming Luk
Tan Ming Luk (Ming) joined OYO Hotel & Homes as its Country Head, Malaysia & Singapore in November 2018. In the short time that he’s been with the company, he has led the home and hotel business in Malaysia to become one of the best and consistent performers within the OYO-network, globally.
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