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Mon, Jun 16, 2008
NST
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Opinion: Tour agencies hope for clear skies again
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>JUST a few weeks ago, Angelina Chin was looking forward to a shopping expedition in Ho Chi Minh City, Vietnam, with three of her childhood friends.
The group had researched their destination and held several excited discussions over accommodation and other tour arrangements. But just when they were about to make bookings with a travel agency, came the glum announcement of a hike in fuel prices.
"My friends and I decided unanimously, on the very day of the announcement, to abandon our trip," says Chin.
"It was a difficult decision as we had made so many preparations, even applied for leave from work."
But they felt that travelling right now would not be prudent, since they have to pay an average of RM50 extra for a full tank of petrol.
"Besides, the amount we have to pay for almost everything else has gone up.
"Travelling is a luxury we will have to do without for the time being," says the senior marketing manager of Ekowood International Berhad.
The Malaysian Employers Federation has noted that with 30 per cent of economic activities related to the cost of petroleum products, consumer spending will reduce in areas such as travel and tourism.
Economists predict that consumer spending will be hit, resulting in a cutback on non-essentials.
Bank Islam Malaysia senior economist Azrul Azwar Ahmad Tajudin believes that tourism and travel are likely to be badly affected.
According to tour and travel agents, the industry will experience a jolt as the cost of transportation is affected by the increase in oil prices.
Actual transportation costs, operators say, have gone up by between 15 and 25 per cent. Each agency will have to decide how much of the costs it can and will absorb in order to keep the price of tour packages down.
But even if the price of packages are maintained, more budget-conscious Malaysians, who comprise the mass market for tourism, are expected to be travelling less for leisure.
Malaysian Association of Tour and Travel Agents (Matta) president Ngiam Foon says the effects of the fuel hike will indubitably be felt by tour and travel agents, many of whom are already in "a dire situation" due to a variety of other factors.
"Among the problems faced by agencies are a slowing down of the global economy, being bypassed by consumers who make their own travel arrangements, the special low-fare promotions by local airlines, and the global and now local hike in fuel prices," he points out.
"Already, the special promotions by the airlines have taken a heavy toll on many travel agents.
"Those doing ticketing especially are badly affected by this change in the marketplace.
"People are bypassing agencies and making bookings directly."
This was already quite a major issue even before the hike in fuel prices, Ngiam says.
"Demand has reduced, and at the same time we are facing rising costs. The cost of staffing, travelling and others are all going up."
Kuala Lumpur-based Hwajing Travel and Tours is one of the many tour agencies already feeling the consequences of the rise in oil prices, with 40 per cent of customers cancelling their tours following the announcement.
Its senior manager, May Lim, says that these are customers who have made bookings but have not submitted payment.
"We experienced something similar during the outbreak of Severe Acute Respiratory Syndrome, but we covered our losses when it was over. We hope it will be the same this time around."
However, she says: "If the situation remains the same, we will have to hold more aggressive promotions and make more effort, together with hotels and airlines, to come up with better deals for customers."
Hwajing, which has branches in Ipoh and Penang, focuses on cruises and tour packages around Asia.
Lim notes that it is not just tours to foreign destinations which are affected but also travel within the country.
"For local tours, agencies depend a lot on coaches to bring people around," says Lim.
The fuel price hike, she explains, will translate into higher costs for operators and this in turn will likely affect business.
However, the situation is not entirely bleak. Inbound tourist arrivals are expected to be only marginally affected.
The Tourism Ministry is confident it can achieve its target of attracting 22.5 million foreigners this year compared with 20 million last year.
Its minister, Datuk Seri Azalina Othman Said, says that more than five million foreign tourists had already come to Malaysia and have spent RM12 billion up to March this year.
Well-heeled Malaysians are also expected to continue travelling. Furthermore, steps can be taken to mitigate some of the effects of the fuel price hike on tourism.
Encouraging Malaysians to opt for local destinations is one.
Azalina says Malaysians should forget overseas vacations in view of rising costs.
"We should support the domestic tourism industry. It will help us to save more."
The ministry had, in fact, just launched a new domestic tourism campaign called Zoom! Malaysia, in place of Cuti-cuti Malaysia.
Zoom! Malaysia aims to excite travellers by promoting new holiday destinations instead of focusing on "over sold" places.
Ngiam says Malaysians can still afford to go for holidays if they take certain measures.
He advises them to plan ahead, don't travel during weekends and peak season, and to stay in budget hotels.
"If a holiday is planned in advance, they can take advantage of the special deals and fares offered by the airlines.
"They can also join set departure date tours which are cheaper as the cost will be shared by all passengers. All these steps will compensate for the increase in fuel price."
He says that tour agencies and hotels can also work together to come up with better deals in terms of tour packages for travellers.
Ngiam is, however, confident that the impact of the fuel price hike on tourism will only be temporary.
"Whatever adverse effects will only be for the short term. When people come to grips with the current situation and adjust their budget, they will start travelling again.
"Actually, after factoring in the road tax cash rebate, consumers do not really spend that much more on transport compared with before."
The Malaysian Chinese Tourism Association shares Ngiam's sentiments.
It is also confident that the tourism industry will recover once Malaysians "get used to" the new price of fuel.
Its president, Chay Ng, notes that while many people may be putting off their travel plans now, the situation is only for the short term. The shock of having to pay more for petrol will wear off in time.
"People need to take the pressure off their daily lives."
"The availability of cheap travel packages will eventually tempt many people to travel again." -NST
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