Slower economic growth affects growth of multiple categories in travel and tourism in 2013
Despite slower GDP growth during the review period, some consumers still preferred to travel but would rather choose to spend less during travelling. As such, they traded down to travel accommodation with lower prices or travelling with transportation at a cheaper cost, flying with low cost carriers such as Airasia to save on spending. Thus, the switch led to slower growth in certain categories, such as travel accommodation. On the contrary, economic factors led to higher growth in categories such as transportation, mainly boosted by the rising use of low cost carriers.
Missing flight MH370 causes uncertainties in travel and tourism
On 8 March 2014, a Boeing 777-200ER flight operated by Malaysia Airlines went missing from the radar screen after less than an hour after departing from Kuala Lumpur International Airport (KLIA) on a route from Kuala Lumpur to Beijing. A multinational search effort was later carried out in the Gulf of Thailand and the South China Sea, extended to the Strait of Malacca and Andaman Sea. The mysterious disappearance of MH370 continued to confound search crews over its whereabouts, which in turn led to insecurity about travelling by air amongst most of the public. Such event has caused uncertainties in Malaysia travel and tourism.
Highly fragmented environment leads to strong degree of competition
Travel and tourism in Malaysia is highly fragmented with a large number of international and domestic players competing with each other. Categories such as car rental, travel accommodation, transportation and travel retail are highly fragmented with a large number of small players competing. However, international chained players appeared to gain more of an advantage amongst these categories due to the fact that consumers are more convinced about the strong brand reputation established internationally.
Growing number of online distribution channels identified
Malaysia was ranked second in the world for its broadband penetration ranking by having its rate exceed 67% in 2013. Malaysia surpassed ASEAN countries such as Thailand, Vietnam, Philippines and Indonesia in terms of broadband penetration due to constantly upgraded infrastructures network in the country. Therefore, the online distribution channel is becoming rapidly tapped into by many players in travel and tourism, eyeing the potential group of the customer base which can be connected through the internet. In 2013, some leading travel and tourism players such as Airasia, Agoda, Expedia and Hertz were showing strong sales performance through its online websites. Malaysians who gradually show positive gratitude towards online shopping also tend to boasts demand in online sales.
Unforeseen incident could dampen performance of travel and tourism in Malaysia over the forecast period
The disappearance of MH370 is likely to have a negative impact on travel and tourism in Malaysia over the forecast period due to a drop in consumer confidence levels in travelling by Malaysia Airlines. Apart from reduced confidence levels of travelling with Malaysia Airlines as mode of transportation, tourist arrivals from overseas could be affected negatively as well since Malaysia is cancelling several Visit Malaysia Year (VMY 2014) marketing campaigns in order to pay respect to those who were on board MH370. The scale back of tourism promotional campaigns are likely to dampen growth in travel and tourism in the short-term, with the effect of being more significant in certain categories, for example transportation with air in particular.
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The Travel And Tourism in Malaysia market research report includes:
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