Friday, June 27, 2008

Malaysia losing edge

Inbound agents brace for fallout as cut in fuel subsidies jacks up tour cost

Malay­sian inbound operators are anxiously awaiting feedback from their China and Hong Kong counterparts if tour package price increases due to the cut in government fuel subsidies, will be accepted.

The super peak season for both markets is July and August, and tour operators fear losing market share to neighbouring destinations if prices are jacked up.

The cut in government fuel subsidies, effective June 5, forced diesel pump prices to increase 63 per cent, from RM1.58 (US$0.48) to RM2.58 per litre; and petrol by 41 per cent, from RM1.92 to RM2.70.

Inbound tour operators said the increases would affect Malaysia’s competitiveness.

Travel agents in China had proposed a RMB200 (US$29) increase for tour packages to be implemented in two stages: RMB100 in mid-June and another RMB100 in mid-July. Those in Hong Kong had proposed tour package prices increase by HK$100 (US$12.80) per person per trip of four to five days’ duration.

Low: Singapore agents may twin with other destinations.
Picture by S Puvaneswary

Malaysian Inbound Tour­ism Association (MITA) division executive committee member for the China market, Mr Bernard Low, said Malaysia was now more expensive compared to Thailand and Indonesia.

He said a four-night/five-day package in a three- to four-star hotel in Langkawi would cost about RMB4,500 compared to less than RMB4,000 in Bali and Phuket.

He added a five-day honey­moon package in a five-star resort was below RMB10,000 in Thailand, Indonesia and the Philippines, compared to RMB14,000 in Malaysia.

With tour packages in Malaysia becoming more expensive, he added that agents in Singapore might choose to twin with destinations other than Malaysia.

China is Malaysia’s fifth largest market, and the largest outside South-east Asia.

Last year, there were 689,293 visitor arrivals from China, and almost 17 per cent or 101,774 came in the super peak months of July and August.

Visitor arrivals from Hong Kong in 2007 totalled 94,495, with 19,419 arrivals in July and August.

PTS Travel & Tours general manager, Mr Saw Beng Teik, said although a clause in his contract allowed for rate adjustments, his counterparts in China could not accept the sudden notice as tour packages had already been sold.

“As we have not raised our prices, we are making a loss of RM400 per trip for a four-day/three-night package, which covers about 300km to 400km of ground travel.

“Bookings in June were down by 50 per cent due to the Sichuan earthquake.

“Otherwise, we would have had to lay off workers to cover losses. As we have our own coaches, we are able to cushion the effect,” he added.

Discover Orient Holidays, manager, Ms Mint Leong, said by sticking to existing rates, it was making a loss of about RM500 per group for a five-day/four-night package covering some 800km.

It had sold 200 packages in June.

Last year, it sold 500 packages in July and August.

Honey Holidays targets the Hong Kong market and general manager, Mr Bobby Eng, said the gap between Malaysia and close competitor, Thailand, was widening as Thai agents were undercutting and selling below cost.

He added: “Air travel from Hong Kong to Bangkok is about half the cost of flying in to Kuala Lumpur.

“A four-night package to Malaysia costs about HK$2,700 compared to HK$1,200 to Thailand.”

At press time, inbound agents were awaiting the outcome of an appeal letter sent by MITA to tourism minister, Datuk Seri Azalina Othman Said, on June 11, for the Malaysian government to subsidise the cost of diesel for tour transport operators.

Operators of city and express buses already enjoy the diesel subsidy.

MITA deputy president, Dr Amir Hashim, said the letter also sought a dialogue with the tourism ministry to explore co-operation with the public and private sectors “to save the destination”.

Source : TTG
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