The situation is dire for both inbound and outbound tour operators.
In recent years, many of the new-rich in China travelled overseas on impulse, mainly for shopping. As prices of luxury goods in foreign countries are much lower than back home, the savings are more than enough to pay for airfares, hotels stay and all other travelling expenses.
Last year, tourists from China made more than 169 million overseas trips and spent over US$290 billion globally. Malaysia received 3,114,257 Chinese tourists and earned over RM16.5 billion in tourism receipts, and both figures are likely to drop by 80 percent this year.
If so, inbound tour operators specialising on the China market would be taken to the cleaners, as there will be little or no revenue to pay for salaries of office and field staff. Many of them operate tour buses and vans and will be repossessed if leasing or loans are not serviced.
Many banks and leasing companies will be saddled with a huge fleet of repossessed buses and vans with exceptionally low market value. They may eventually be sold off as scrap if not offered cheaply to Bas Sekolah operators.
The China market is just one example. Those handling inbound tours from regions such as Northeast Asia, South Asia, West Asia, Europe, North America, and Australasia are also in the same boat, if not worse, if countries there take a longer time to recover from the pandemic.
The situation is also dire for Malaysian outbound tour operators, as no amount of advertising and promotions could get Malaysians to travel overseas if other countries remain locked down fully or partially.
International flights will be mostly for essential travel and air tickets and travel insurance are likely to go up by 33 percent for both premier and budget airlines if middle seats are left vacant for physical distancing, and coverage includes reimbursement of all expenses when stuck in a sudden lockdown.
Most travel and tour operators depend on inbound and outbound tours for business as domestic tours can only sustain about 10 percent of the existing 5,000 companies. How can this be when the Statistics Department reported that there were 221.3 million domestic visitors making 302.4 million trips and spending over RM92.6 billion in 2018?
But over 90 percent was spent on shopping, automotive fuel, food, beverage, visited households, accommodation and others, with only nine percent on public transportation, package, entrance fees and tickets. The 14.7 percent spent on fuel meant that Malaysians drove their own vehicles, including balik kampungs, during festive holidays.
In the past, large and successful outbound tour operators, including those offering Umrah packages, have earned fortunes. It would be interesting to see whether they have asked their staff to go on furlough, take a pay cut or accept a voluntary separation scheme.
Such measures are necessary to keep the company in suspended animation as the rest of the year is a washout for tourism businesses, particularly international travel. If lucky, next year can be breakeven for some if businesses are operated the same way as before.
But many people have not woken up to the new reality or are desperately clinging on hope. As soon as the movement control order MCO) is lifted, it would be wise to hold industry forums, with adequate physical distancing of course, to discuss options and opportunities available.
In such forums, reality will sink in and this will allow industry players to mitigate losses and shift their old business towards the unpredictable future. They will only be successful if the authorities measure their key performance indicators (KPI) based on the health of the industry.
The public sector must also reinvent itself and not remain as ineffective regulators as poor enforcement empowers illegal operators while victimising legitimate businesses. This include overhauling or replacing the “Travellers Outbound Terms and Conditions” under the Tourism Industry Act 1992.
And it was a shame for the Malaysian Aviation Commission (Mavcom) to have renegaded its role of providing a mechanism for protection of consumers when it allowed airlines to delay refunds indefinitely for cancelled flights.
Instead of near chaos or free-for-all, future international travel must be governed strictly by equitable rules with standard terms and conditions understood, accepted, and practised by all suppliers and consumers.
The views expressed here are strictly those of The True Net reader YS Chan from Petaling Jaya.