Latest cut is the deepest

Tourism Malaysia finds ways to deal with hefty budget cut as competition heats up. S Puvaneswary writes

  10/02/2010 08:43
1 How big a cut is Tourism Malaysia facing in its 2010 budget? Malaysia achieved its 2010 target of 22 million arrivals a year ahead of schedule by bagging 23.65 million visitors last year but instead of getting a pat on the back, the NTO was rewarded with an inexplicable budget cut from RM200 million (US$59.2 million) to RM150 million as part of a government cost-cutting drive. Worryingly, the reduction occurs as the industry moves towards recovery and Singapore hogs the limelight with its two integrated resorts. 

Picture by Awana Porto Malai

But the headline reduction figure understates the true extent of budget rollbacks.  The NTO’s advertising and promotions earmark has been capped at RM200 million since 2001 without annual adjustments for inflation. With the cost of media space and the tab for overseas office rental and operations having climbed during much of the ensuing eight years, the latest cut in effect represents a sharp rollback.

2 How will the NTO cope with this sharp budget reduction? Tourism Malaysia has been forced to go back to the drawing board with the reduced marketing firepower at its disposal.

Marketing strategies for 2010 will be revised. Most notably, participation in B2B trade shows will be scaled back and presence at B2C shows increased since demand for FIT travel is on the rise. The use of social media platforms – cheaper and with a growing audience base – will be increased. The Tourism Ministry has also recently created a web TV channel-cum-booking engine called Truly Asia TV ( to distribute recorded programmes on the destination and accept bookings.

At press time in early January, the NTO was still awaiting approval for a supplementary budget of RM50 million from the Treasury.

3 What does the private sector make of the budget rollback? There is a sense of disappointment and resignation. Tunku Iskandar, Melewar Group chairman and past Malaysian Association of Tour & Travel Agents and ASEAN Tourism Association president, called the cut unfair and urged  the government to increase funding.

“Tourism is a key foreign exchange earner – some RM40 billion estimated in 2009 – and that was earned through Tourism Malaysia having RM200 million to spend. Every RM1 spent earned RM200. To look at it another way, it costs only RM8.70 to attract one tourist (based on 2009’s 23.65 million arrivals) who, on average, spends over RM1,800 per person. Surely these are very effective and efficient correlations.”

Dorsett Regency Hotel Kuala Lumpur general manager Christina Toh stressed the urgency of staying competitive in the region. “(Singapore’s) integrated resorts will pull a percentage of tourists away from Malaysia. Singapore has long beaten us in promotions and product enhancements but we seem to be in denial. Being a value-for-money destination doesn’t necessarily make you an automatic favourite among tourists. You still need to promote the destination continuously.”

World Avenues executive director Ally Bhoonee said the budget cut would limit the NTO’s drive into new markets this year. “The budget cut may mean that we, travel agents, may to an extent be left on our own to look for new markets.”

4 How should Tourism Malaysia stretch limited funds for a bigger promotional bang? To make do with less, the NTO has to be effective and efficient in both the messaging and the allocation of its promotional spend.

AirAsia X CEO Azran Osman-Rani said Tourism Malaysia should stay focused on target markets and use its allocation prudently to create campaigns with high visibility for maximum impact.  Discovery Travel & Cuisine executive director Lee Choon Loong suggested focusing promotional activities on target markets with  the best yield.

Firefly managing director Eddy Leong said there is a lot of room for more collaboration between the NTOs of Malaysia and neighbouring countries, Thailand, Singapore and Indonesia, for destination marketing and to push for the concept of “one destination, four countries” at international travel trade fairs.  

Grace Holidays general manager Godwin Miranda believed Tourism Malaysia would do better in regional markets, which are well served by flights and can provide immediate gains. He added that the NTO should also study the needs of volume-producing markets such as China, India and the Middle East to determine how to better woo them.

But the jury was out on the NTO’s plans to leverage social media. Triways Travel Network managing director Akil Yusof applauded the use of cheaper online platforms for mass marketing, while Lee called for a study of the market’s demographics to determine if the strategy was the right fit. According to Lee, Malaysia’s traditional markets include Europe, which comprise mainly older travellers, while online platforms such as Twitter tend to attract a younger following.

5 What does the NTO see as challenges in 2010?  Tourism Malaysia is determined to see opportunities in potential threats. Accordingly, Amirrudin Abu, deputy director-general (marketing), said the NTO would look for ways to leverage new opportunities from the opening of Singapore’s integrated resorts to the staging of the World Cup in South Africa and the World Expo 2010 in Shanghai.

“We must see how Malaysia can ride on the integrated resorts by complementing Singapore’s city offerings with our ecotourism products, nature, cultural and heritage offerings. We must develop more bilateral agreements with Singapore’s NTO and work more closely with the trade there.”

A tie-up with a TV station to create awareness of Malaysia to the World Cup audience is being eyed, and Tourism Malaysia, which will be participating in the World Expo, plans to develop incentives to encourage expo goers to visit Malaysia.

(Source: TTG Asia)


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