China is certainly an important player in the global economy, and a widespread epidemic would threaten that growth.– Bill Gates, American business magnate
It is still early to gauge losses in the world’s economy caused by the Covid-19 outbreak until it has peaked, and numbers continued to drop. This global health emergency has impacted international travel and none more severe than into and out of China.
Malaysian outbound tour operators concentrating on tours to China are badly affected as bookings had to be cancelled for various reasons. Many tour companies and customers suffered losses when advance payments were forfeited and not compensated by insurance.
Chinese tourists are no longer found thronging airports, hotels, restaurants and attractions. While foods perish over time, revenue is lost whenever seats are empty in aircrafts, rooms vacant in hotels, restaurants quiet, and attractions deserted.
The local tourism industry is not only affected by the China market. Reports of increasing infections and deaths have dampened travel to East and Southeast Asia. Even domestic travel has been impacted as many people keep a safe distance away from others.
The Covid-19 outbreak has benefited a few such as mask, glove and sanitiser producers but disastrous for many, particularly tourism industry players. It would be difficult to estimate their losses as tourism is a huge business overlapping many industries.
It is also not easy to establish losses in the diverse inbound tourism market, as millions of tourists from all over the world visit Malaysia. However, an interesting and useful estimate could be established by focussing on just the inbound market from China.
Latest figures provided by Tourism Malaysia are from January to September 2019 with 2,413,956 Chinese tourist arrivals. They spent a total of RM12.797 billion or RM5,301.50 per person and stayed an average of 6.2 nights.
If the first nine months’ performance were repeated in the remaining quarter, total Chinese tourist arrivals for last year would be 3,218,608 and total expenditure RM17,063,450,000. The monthly average would be 268,217 arrivals and RM1,466,954 in expenditure.
For Visit Malaysia 2020, the target was to achieve 30 million foreign tourist arrivals. If total for last year were 26,812,270, a 11.9 percent increase is needed to achieve target. And if Chinese tourists were to increase by the same percentage, their number will reach 3,601,622.
Tourism Malaysia also released an interesting report “Malaysia Tourism Performance January – September 2019”, which included all 10 expenditure components in terms of revenue and share of total foreign tourist receipts.
They were for shopping (35.2%), accommodation (21.6%), food and beverage (12.0%), local transportation (7.8%), international airfares by local airlines (7.0%), on-site tours (5.3%), medical (3.7%), entertainment (3.5%), domestic airfares (1.8%), fuel, sports & others (2.1%).
As the target is to achieve RM100 billion in tourism receipts, there is no need to calculate the revenue for each component, as 35.2% is equivalent to RM35.2 billion and so on. As for the targeted share by Chinese tourists this year, it worked out to over RM19 billion.
By now, it appears that the 30 million foreign tourist arrivals will remain elusive, but it is no shame as many countries have or will be revising down their targets. Instead of plucking some figures from thin air, it would be more pragmatic to hope that there is no increase or decrease.
If Chinese tourist arrivals remain the same as last year, their expenditure this year would be RM6,006,334,400 for shopping, RM3,685,705,200 for accommodation, RM2,047,614,000 for food & beverage, RM1,330,949,100 for local transportation, RM1.194,441,500 for international airfares by local airlines, RM904,362,850 for on-site tours, RM631,347,650 for medical, RM597,220,750 for entertainment, RM307,132,100 for domestic airfares and RM358,332,450 for fuel, sports and others.
As for inbound and tourism transport operators, their main losses would be services provided by them directly such as airport and overland transfers (revenue captured in local transportation) plus sightseeing and visits (as in on-site tours).
These two components amounted to RM2,235,311,950 in 2019 or more than RM186 million monthly. If only half of these services were provided by local tour and tourism transport operators, the amount is still substantial. at over RM93 million a month.
Should the number of tourists from China drop to only one-third in February until April, tour operators will be losing RM93 million over this three months for these two components from the China market alone, and more if other incomes are added, such as arranging for shopping, accommodation, meals and entertainment.
It will be tough for tour operators, tourist guides and tour bus drivers that were used to enjoy good profits, commissions, tips and allowances to meet commitments with greatly reduced income.
The views expressed are those of the author and do not necessarily reflect the official policy or position of the New Sarawak Tribune.