No Turn-Around for Malaysia Tourism

Malaysia, data, statistics, China, Singapore, Australia

Tourist arrivals to Malaysia continue to decline with worrying trends for important source markets such as Australia India, the USA or Singapore. Will China be the savior of Malaysian tourism?

Years are passing and Malaysia still struggles to reverse the negative trend in tourist arrivals. After reaching a peak of 27.5 million foreign arrivals in 2014, the country has lost two million tourists since then. And 2018 does not seem to revert the trend according to data available for the months of January to April.

According to official statistics, Malaysia welcomed 3.4% less visitors during the first four months of 2018 compared to 2017. This represents a loss of 300,000 travellers on a year-to-year basis.

Most worrying is the negative evolution of arrivals from Singapore, Malaysia number one market as it represented 12.44 million arrivals in 2017. Since the tourism year peak of 2014, where Singaporean arrivals were close to 14 million, Singaporean visitors declined by 10.7%. In absolute terms, this meant that 1.5 million visitors from the City State vanished in a four-year timespan! Unfortunately, January to April 2018 did not see a revival of Singaporean arrivals. Malaysia tourism statistics show a further decline of 18.3%. This extremely negative figure is probably due to the fact that general elections were taking place in Malaysia in May with many Singaporeans most likely postponing a trip across the border. However, if the trend goes on, Singaporean total arrivals would be around 10.5 million this year…

Indonesia is the second largest source market to Malaysia, generating 2.79 million travellers last year, a figure down by 1% compared to 2014 but down by 9% over 2016. Fortunately, the market seems to bottom out this year with arrivals for the first four months of 2018 up by 8.4%.

January to April marked a revert in trends for many important source markets which experienced a drop in arrivals in recent years. Such as India. After reaching a peak of 770,000 visitors back to 2014, the erosion in total Indian arrivals has been constant to finally settle last year at 553,000, a drop of over 28% in four years. However, January to April 2018 have seen Indian figures bouncing back with total arrivals growing by 21.5%. Same trend for US arrivals, up during the same period by 23% after experiencing a drop of 24.5% between 2014 and 2017.

Two other important traditional markets continue however to look sluggish. UK arrivals to Malaysia, which used to hang around 447,000 travellers in 2014, reached only 358,000 visitors last year and only progressed for the first four months of 2018 by 1.6%; Australia, which also reached a peak of 571,000 visitors in 2014, has seen the largest drop in total arrivals until 2017. Last year, Australian holidaymakers represented only 351,000 arrivals, a drop of 38% over 2014. January to April 2018 saw a further blow in Australian arrivals by 4.8%. A diminution in air seats – particularly by Malaysia Airlines- explains the drop but they are also questions to be asked about the image promotion of Malaysia towards Western markets…

Will China be however the savior for Malaysia tourism as China outbound has turned already into a major drive for many ASEAN countries? This is possible, although Chinese arrivals growth has been less spectacular than in neighbouring countries such as Cambodia, Thailand or Vietnam. From 2014 to 2017, total Chinese arrivals grew by 41%, jumping from 1.61 million to 2.28 million. All eyes are now turned  in 2018 towards China. Total arrivals from January to April progressed by close to 32%.

Despite the underlying hostility of Malaysia new government towards Chinese investments in the country, there is little sign that this would have a real negative impact on China outbound market. If Chinese arrival figures grow this year in a range of 20% to 25%, Asia superpower might be able to take over Indonesia as the second largest source market for Malaysia. If not, wait for 2019!