Malaysia Tourism Report Q4 2012

The Malaysia Tourism Report examines the strong long-term potential being offered by the country’stourism industry, bolstered by fast-rising demand from emerging markets such as China, Russia andSaudi Arabia. However, we caution that demand from traditional source markets, notably Thailand,Australia and Singapore, could well fall during H212, following a change in the methodology used torecord tourist arrivals by Malaysia’s Immigration Department.

The report also analyses the growth and risk management strategies being employed by some of theleading players in the local tourism sector, such as airlines, gaming companies and hotel chains, as theyseek to maximise the tremendous growth opportunities being offered by the Malaysian market.

Tourist arrivals to Malaysia over the first half of 2012 stood at 11,632,478, an increase of 2.4% year-onyear(y-o-y). This would imply some downside risks to BMI’s current forecasts of 25.9mn arrivals for thefull year. However, we choose to await the release of Q312 data to see whether any downwards revisionsto BMI’s current forecasts become necessary. Overall, ASEAN continues to be the most significantcontributor of tourists to Malaysia, accounting for some 73.8% of total arrivals, according to TourismMalaysia. Strong growth was seen in arrivals from the Philippines (up 45.3% y-o-y), China (34.2% y-oy),Japan (up 32.5%) and Indonesia (up 20%).

China’s strong growth in arrivals over H112 was partly due to increased flights on both Beijing-KL andHong Kong-KL routes. Arrivals from Japan have also benefited from greater flight frequencies from KLKansaiand KL-Haneda, operated by AirAsiaX.

Beyond 2012, BMI believes the government’s target of attracting 36mn tourist arrivals by 2020 isachievable based on current trends, with our own forecasts projecting an increase of 28% in arrivalsbetween the end of 2011 and the end of 2016. We also forecast a 36.2% increase in tourism revenuebetween 2011 and 2016, which should take annual tourism revenue to more than US$25bn by the end ofthe forecast period.

Over the last quarter, BMI has revised the following forecasts and views:

BMI has upgraded its forecasts for tourist arrivals from China over the coming four years, withChinese demand for regional travel continuing to grow strongly. BMI now believes that annualarrivals from China can double between end-2012 and end-2016, taking overall Chinese arrivalsto in excess of 3mn by the end of our forecast period.

BMI believes that inbound tourism flows to Malaysia should be boosted by the September 2012opening of Legoland Malaysia, the first Legoland theme park to be opened in Asia. The locationof the park in Johor state should also boost tourist flows to the south of the Malaysian peninsula.