Malaysian tourism industry on the verge of crippling again

Published on : Wednesday, January 20, 2021

The Malaysian tourism industry is being crippled once again with the implementation of another Movement Control Order (MCO) effective since January 13, 2021 alongside countrywide restrictions on interstate travels. Despite being allowed to operate, hotels are expected to lose all revenue streams due to the restrictions. While the industry experienced domestic market pick up in June last year, it was again impacted with the increase in COVID-19 cases early October, and saw occupancy dropping almost immediately to approximately 20% and lower in most areas.

In December, a short relief arrived when domestic travel was allowed again triggering an increase in tourism activities across the country for the year-end holiday period. Hotel occupancy rates peaked at approximately 43% on the last week of December with the Christmas and New Year holidays. Unfortunately, after unprecedented losses for the year 2020, the industry is off to a rough start of 2021 and will likely need to take drastic actions to sustain, not knowing how long more the current situation will last.

The announcement by the Prime Minister, which we now know as the “Permai Initiative”, came with much anticipation of the industry but again fell short of industry’s expectations. Other than the 10% discount on electricity and that is only from January to March 2021, there was no other assistance extended to the hotel industry. Moratorium on loans was again left at the hands of commercial banks and financial institutions.

While the wage subsidy program is being extended to other industries, the government did not improve the program for the tourism industry that had been most heavily impacted by the pandemic and more so by the recent MCO 2.0. A higher wage subsidy program is much needed to keep hotels and tourism business afloat, without which more will be forced to retrench.

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