This article first appeared in The Edge Malaysia Weekly, on January 16 - 22, 2017.

THE Chinese tourists are coming back. And it is expected that the Chinese tourist wave will surge during the upcoming Lunar New Year.

Malaysian Inbound Tourism Association vice-president Liang Wei Hong told a local Chinese daily recently that Malaysia is expected to see a 20% to 30% increase, or about 150,000 visitors from China, during this festive period.

Tourism Malaysia data shows that tourists from China are coming back after a 10% year-on-year drop to 1.61 million in 2014, as they shunned Malaysia following the MH370 and MH17 tragedies.

However, the number of Chinese tourist arrivals has rebounded 5% y-o-y to 1.76 ­million in 2016 —inching close to the historical high of 1.79 million in 2013. The tourists numbered 1.68 million in the previous year and they spent about RM5.7 billion, averaging RM3,500 per tourist.

Deputy Prime Minister Datuk Seri Dr Ahmad Zahid Hamidi revealed last week that a total of 2.2 million entry passes for Chinese tourists — including visas and a special travel note, known as Electronic Travel Registration and Information — were issued last year compared with 1.2 million visas in 2015.

He added that the number of travel documents issued had increased 74% y-o-y in the March-December period last year, and although there was a sharp increase, the government is still making efforts to further “promote Malaysia in China”.

These efforts bode well for tourism-related stocks. Analysts expect the influx of Chinese tourists to bring about a rise in the inflow of income for retail and tourism businesses in the country.

Maybank Investment Bank analyst Samuel Yin sees Genting Malaysia Bhd, AirAsia Bhd and Malaysia Airports Holdings Bhd (MAHB) as the most likely beneficiaries of the influx of Chinese tourists.

“Genting Malaysia is a favourite with these tourists, while AirAsia and MAHB will stand to gain from increased travelling income,” Yin says.

He estimates that Chinese accounted for only 4% of the 800,000 visitors to Resort World Genting in 2015, and believes these figures can grow rapidly.

“If the Golden Week (Oct 1 to 7) figures of Chinese tourists coming to Malaysia are anything to go by, the y-o-y growth appears to be accelerating. It could be possible that the number of Chinese visitors to Genting Highlands might have breached the one-million mark in 2016 and will continue to grow this year. More importantly, they appear to be originating from the wealthier provinces of China,” Yin says.

Meanwhile, AirAsia flies from 13 Chinese provinces to Kuala Lumpur. The low-cost carrier flies from Beijing to 10 states in Malaysia and to nine states from Shanghai.

From Beijing and Shanghai, AirAsia passengers can fly to 16 other countries, including Australia, New Zealand, Maldives, Mauritius, Sri Lanka, Iran, Indonesia, Singapore, Myanmar and Thailand.

Compared with Shanghai, passengers from Beijing have an additional country on their list to fly to, and that is Nepal.

Three top tourist destinations

Head of Malaysia research at AllianceDBS Research Bernard Ching says the sharp increase in Chinese tourist arrivals is coming from a low base.

“But, they are coming back and they have spending power. Chinese tourists normally head to three hotspots in Malaysia — the Klang Valley, Penang and Melaka.

“So, tourism-related stocks that have a business presence in these hotspots could benefit from the influx,” Ching tells The Edge.

Apart from aviation stocks and retail real estate investment trusts, Ching expects Genting Malaysia to be a beneficiary of Chinese tourist arrivals as its Resort World Genting is a key attraction, especially after the completion of its 20th Century Fox world theme park.

Another beneficiary is Only World Group Holdings Bhd (OWG), which operates leisure, entertainment and food and beverage (F&B) outlets in the hill resort. Chin says the group also has a presence in Penang through the Komtar rejuvenation project.

OWG won the tender to undertake the revitalisation project for the Komtar Tower — the tallest skyscraper in Penang — in December 2012.

The project involves transforming five levels to create a high-end commercial space for retail and F&B outlets and a tourist observation deck that offers a panoramic view of the city day and night. The company was granted a 45-year lease at an attractive rental rate, with the option to extend for another 15 years.

The rejuvenated Komtar — The Top — opened its doors to visitors last month. Tickets for the observatory deck on Levels 65 and 68 are RM118 for foreigners and RM88 for MyKad holders. So far, it has attracted more than 100 visitors a day since its opening.

According to a sales executive at The Top, the majority of the visitors are tourists.

Ching also says Yong Tai Bhd could be a potential beneficiary from the influx of Chinese tourists when its tourism-related projects in Melaka come onstream later.

Yong Tai is developing Impressions Melaka — the first of the Impression series to be staged outside of China. The first show at its theatre will be staged by the first quarter of next year.

According to Yong Tai’s FY2016 annual report, the RM300 million Impression Melaka mega theatre, which will also include retail shops and a cultural village, is projected to attract an additional 1.2 million tourists.

Yong Tai is also developing a hotel in ­Melaka that is expected to be ready in 2018. The hotel will come under the Courtyard by Marriott brand. Courtyard by Marriott Melaka is Malaysia’s first hotel under the Courtyard by Marriott hotel chain which operates 1,000 hotels in 46 countries.

Ching also points to OldTown Bhd, whose coffee products are a hit among Chinese tourists.

“We understand that the products are popular souvenirs purchased by Chinese tourists,” he says.

Apart from the Klang Valley, Penang and Melaka, industry observers say Sabah is another favourite with Chinese tourists.

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