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Speaking in parliament in November 2011, deputy tourism minister James Dawos Mamit said tourist arrivals for H111 reached 11.36mn, with tourism revenue generated totalling MYR25.9bn. The Malaysian tourism industry has not been immune to a drop in demand from Japan, following the earthquake and tsunami of March 2011, and Europe, where the sovereign debt crisis is ongoing. Later in 2011 Thailand, another key source market for inbound tourism, was devastated by the worst flooding in 50 years. Minister of Tourism Ng Yen Yen said the ministry is expected a decrease in international arrivals for fullyear 2011 as a result of the natural disasters and economic difficulties elsewhere in the world. She said the government may not hit its target of 25mn foreign tourist arrivals in 2011 and total arrivals around the 24mn mark is the most likely outcome.

Against this backdrop, BMI believes it is prudent to revise down its estimates for tourism arrivals and tourism revenue for 2011. We now believe that a 2.5% fall in tourism arrivals is likely, plus a 5% fall in tourism revenues.

Still Upbeat About Long-Term Outlook

Although we have scaled down our estimates for 2011, BMI remains bullish about the long-term prospects for Malaysian tourism, which continues to benefit from strong government support and a relatively secure and stable political situation. The country offers a range of tourism options, from travel for meetings, incentives, conferences and exhibitions (MICE) to beach holidays, and the government is committed to supporting an industry that is an important generator of foreign exchange.

In October 2011, Ng launched a new national tourism strategy, the Malaysia Tourism Transformation Plan 2020 Towards 36:168 at the World Tourism Conference in Kuala Lumpur. The numbers 36:168 refer to the countrys aims of attracting 36mn tourists and generating US$168mn in annual tourism revenue by 2020.

The Ministry of Tourism has prioritised five areas of tourism: affordable luxury, family fun, events and entertainment, business tourism and nature adventure. The government is also keen to attract more middle-to-high-income tourists.

BMI welcomes the priority given to tourism by the Malaysian authorities. We believe 36mn tourist arrivals by 2020 is achievable, based on current trends, with our own forecasts projecting an increase of 22% in arrivals by 2015. We remain confident that Malaysia can continue to expand its tourism industry in the years ahead, though demand from key European markets may remain depressed in 2012 as fears of a double-dip recession grow.

Increasing MICE Travel In November 2011, the Malaysia Convention and Exhibition Bureau (MyCEB) unveiled a new branding campaign aimed at increasing the amount of MICE travel to the country. The new campaign, with the tagline Malaysia – Asias Business Events Hub, was launched at the global EIBTM meeting and events exhibition in Barcelona, Spain. MyCEB has also launched a new website.

James said that the governments aim is to position Malaysia as a gateway to Asia, taking advantage of its strategic location between China and India. On a longer-term basis, MyCEB hopes to make Malaysia one of Asia Pacifics top five meeting destinations by 2020.

Malaysia Airlines To Cut Loss-Making Services

In December 2011, struggling national airline Malaysia Airlines (MAS) said it will temporarily stop flying eight loss-making routes in Q112 to cut costs. CEO Ahmad Jauhari Yahya said the airlines cumulative losses up until the end of Q311 came to MYR1.25bn. The airline was not seeing any improvement in the fourth quarter, Associated Press reported. The affected routes include direct flights to Surabaya, Dubai, Johannesburg and Rome, and services with stopovers such as Langkawi-Penang- Singapore and Kuala Lumpur-Cape Town-Buenos Aires.

Ahmad Jauhari said the suspension of these services should have a positive profit impact of MYR220- 302mn in 2012, with the rationalisation accounting for almost 12% of passenger capacity. The airline is hopeful that passengers can use existing code-share partner airlines to make these journeys over the shortterm, with MAS set to resume the services after we have stabilised our business.

It remains to be seen if the government will support these plans, with Ng telling Bernama that if MAS stopped its direct flight service from many cities, like Dubai and Tokyo, we will have problems. There is a case to be made for tourists preferring direct flights instead of having to change planes mid-route. The announcement highlighted the difficult situation MAS finds itself in. On the one hand, it is under pressure to cut costs in order to remain a viable airline, but it also remains important to keep key direct services in place for the long-term.