Surviving The Impact of Covid-19: Tourism industry waits to cruise out of the doldrums

Impact of Covid-19 on the Tourism Industry in Malaysia

Surviving The Impact of Covid-19: Tourism industry waits to cruise out of the doldrums

The tourism industry remains “unpredictable and fragile” as the pandemic is taking an extremely long time to end, causing most of the association’s agencies to enter hibernation mode while awaiting a return to normal.

The MCO and its multiple variants — CMCO, Recovery MCO, Enhanced MCO and Targeted MCO are keeping our borders shut and disrupting travel. “The tour and travel agent industry is facing immense cash flow problems with near to zero revenue since March,” Tan laments.

Apart from the 95 tourism agencies and tourism activities operators who have gone bust, others whose income has been affected include experienced independent professionals such as tour consultants and tour guides, he says.

If he could go back in time to January, Tan would have the entire spectrum of the tourism industry value chain pool their resources, talent and ideas to find ways to weather the adverse economic conditions.

“With the pandemic unresolved, coupled with the global recession, there will be weak demand, especially in the leisure travel segment,” he says. He expects things to get worse in 1Q2021 before the industry starts to stabilise.

Travel has become a lifestyle, so being confined at home can be frustrating for many, he says. Matta expects to see pent-up demand for travel in 2Q2021. However, Tan cautions that spending may be curtailed given people’s lower purchasing power and the poor economic conditions.

Matta also hopes that a vaccine will be widely available for travellers and most Malaysians by 1Q2021 and that health and safety protocols, including policies for quarantine measures, will be reviewed.

Tan believes prudent easing of protocols will encourage leisure travel. “At the moment, quarantine policies and PCR testing are major deterrents for leisure travellers,” he says.

The emphasis next year, Tan points out, should be on new business models and for tour and travel agents to diversify their offerings instead of relying on traditional sightseeing tours and mass tourism.

Matta would like to reset tourism and offer more experiential travel and implement changes to travel packages in accordance with travel patterns and business models without compromising on health and safety protocols. Tan acknowledges the need for new tourism strategies to create demand for travel.

The tourism industry can expect to take a fresh approach to destination marketing based on the new travel patterns, with emphasis on digitalisation and product and infrastructure development, he says. “This could be significant to all stakeholders as it can be an opportunity for reflection and reinvention — towards a better and more sustainable tourism future.”

Adapted from Vasantha Ganesan, The Edge Malaysia, January 11, 2021

It was so unfortunate to have Visit Malaysia Year in 2020. The corona virus (covid-19) pandemic ruined all hopes of receiving tourists and the associated income which can run into billions of ringgits. The recent spike in covid-19 cases worries people more and causing Malaysian economy to bleed. The tourism industries in Malaysia severely impacted and already hit the rock bottom. To date, many economic stimulus packages worth billions of ringgits have been announced by the Malaysian government and the latest being the Pemulih Economic Stimulus Package, released on 28^th June 2021, for 150 billion ringgits to improve the economic environment.

1. The global spread of covid-19 impacting all the industries throughout the world.  However, there are some industries profited during this trial times. Analyse the effectiveness of the industries during this crisis in Malaysia. Using the knowledge of ‘demand and supply’, explain why some industries able to make profit and successful while some failed in Malaysia. (Hint: Provide at least two industries that profited & two industries that faced losses) (25m)

2. Assume that there are two critical industries in Malaysia, one being the petroleum industry (inelastic DD) and another car industry (elastic DD). Using the knowledge of ‘elasticity demand’, explain how would you increase the revenue of each industry? Demonstrate the method you employ to enhance the saleability of the product in each industry. (Hint: This question is not related to covid-19 or the story above) (25m)

3. Due to covid-19 pandemic, Malaysia experienced low turnover in GDP which indicates economic slowdown in 2020. Based on expenditure method, GDP significantly decreased due to the reduction in consumption (C) and gross investment (I). Assume that you are an economic advisor of Malaysia, how would you suggest employing the Fiscal policy and Monetary Policy to avoid the country going into doldrums. (25m)