This article first appeared in Digital Edge, The Edge Malaysia Weekly on July 25, 2022 - July 31, 2022
The country began its transition to the endemic phase of Covid-19 in April, and the reopening of borders has seen many Malaysians reunite with family members and resume travel plans. However, this has yet to bring respite to the tourism industry, which lost a whopping RM300 billion in 2020 and 2021.
“The [tourism] business completely disappeared [due to the Covid-19 pandemic],” says Yogesh Sangle, global head of consumer business at Instarem, a financial technology (fintech) firm that offers individuals and businesses cross-border money transfers.
“Employees in the tourism sector had to undergo reskilling as customers were required to undergo Covid-19 tests, and educate themselves on other healthcare services [to survive]. A lot of tourism businesses are not going back [to where they used to be] after having to downscale [during the pandemic]. We are just not ready for it.”
The global tourism industry is facing a similar quandary. Recalling his recent business trip to Europe, Yogesh says he had to queue for hours at immigration in London after returning from Malta — a dreadful experience that he never faced before the pandemic.
Hotels, restaurants, rental services and other tourism-related businesses are all struggling to stay afloat, having had to navigate through a storm of challenges that include labour shortages and high charges, he adds.
The ecosystem is in dire need of employees as managers are struggling in having to juggle multiple duties to make up for the lack of manpower. The situation has been exacerbated by the fact that those who were retrenched or furloughed have refused to return to the industry.
The founders of Flow, a hotel room booking service provider headquartered in Hong Kong, concur. According to Eric Lai and Norton Wong, as their service allows consumers to book rooms for four to eight hours, participating hotels are requiring more manpower to clean the rooms because occupancies have increased. It is a Catch-22 situation for hotels but it is undeniable that hourly bookings bring more revenue.
“In the beginning [after the service was launched in 2018], where we gave hotels only one to two bookings per day [because] it didn’t make sense for them to get more bookings only to hire more housekeeping staff to clean the rooms. But now, since there are more bookings [for hourly stays] at hotels, it is worth investing in more manpower because apart from [increasing] their occupancy rates, we’re also increasing their revenue,” says Wong.
Occupancy rates remain a major concern, he adds. The Malaysian Association of Hotel Owners told the Malay Mail that occupancy rates at hotels were only about 30% to 40% before April 1. But these gradually increased to 70% to 80% during peak periods such as the Hari Raya holidays.
Despite the encouraging numbers, inbound travel is still low as many countries are still cautious about fully reopening their borders. According to Ganneesh Ramaa, vice-president of inbound and domestic at the Malaysian Association of Tour and Travel Agents, countries like China and Taiwan, which make up the bulk of Malaysia’s inbound tourists, are still in lockdown. Japan only reopened its borders on May 27 — almost two months after Malaysia did.
While it may appear that people are travelling more, industry pundits predict that the tourism sector will only return to “normal” or pre-pandemic levels next year at the earliest.
“Some reports estimate that international tourism is not likely to return to pre-crisis levels until 2024, and we can expect the pandemic to be on and off, which will dampen people’s interest in travelling abroad. It is crucial for hotel and travel operators to adjust their service offerings to cater for local demand, which will be the new normal for the industry,” says Wong.
Easing the industry’s burden
Although government initiatives helped spur the local tourism industry, digital technology has been pivotal in facilitating its recovery.
“Enhanced technology and operational capabilities can ensure seamless management of a property, from accurate revenue tracking to automated price adjustments and ensuring memorable day-to-day guest experiences,” says Tan Ming Luk, OYO’s country head for Malaysia and Singapore.
He points out that OYO’s revenue management technology (known as RMS) helps traditional hotels to forecast demand and optimise prices to increase their occupancy rates and revenue.
Rolled out to partners at no cost, the technology includes a “smart pricing manager” tool, which allows them to adjust room prices according to a specific range, and a “cancellation prediction engine”, which calculates the probability of customers actually turning up and checking in, based on the customer profile, booking characteristics and historical trends of the property.
To further increase bookings, Flow’s Lai believes that the way forward is to offer customers more flexible options. “That is because domestic travellers tend to stay for much shorter durations compared with international visitors.”
He says offering more packages such as club activities, dinner or a workshop with hotel rooms, will also boost revenue since local customers look for curated experiences.
While Flow currently offers room bookings of four to eight hours, it plans to include add-on services. At the moment, most of its partners are in the F&B sector such as restaurants within the hotels themselves.
OYO’s Tan says customer relationship management (CRM) technology can be used to clean up data and eliminate duplicate entries. This can help foster relationships between hotels and their guests, even after their stays.
CRM tools also power guest satisfaction surveys, marketing automation, loyalty programmes and pre-stay and post-stay communications with guests. “CRM propagates further customer understanding to proactively impact online reviews and ratings,” he adds.
Furthermore, digital marketing is an “inevitable part of all future-forward businesses” to engage travel consumers in their decision-making phase to re-engaging with them again after their stay.
“Combined with the use of RMS and CRM, hoteliers will be able to create a novel experience for guests while optimising the hotel’s resources for maximum potential,” says Tan.
Over 800 hotels nationwide under OYO recorded an average of 2.5 times more bookings after implementing RMS and CRM tools.
The future of tourism
The tourism industry is expected to continue growing despite the current conundrum. According to the Kuala Lumpur Hotel Market Outlook & Prospects 2022 report by CBRE Asia-Pacific, Malaysia’s capital alone will welcome more than 3,000 hotel rooms and suites this year. The wave will eventually hit other holiday destinations across the country as well.
“Tourism is going to be back with a bang and Malaysia will be the centre of it,” says Instarem’s Yogesh on his observation of tourists from around the world flocking to the country.
While he foresees that economic disruptions may happen along the way, he is optimistic that the tourism boom is coming. “Companies such as ourselves can really play a key part in driving trade through our SME solutions, offering options to people [by allowing them to] not only carry cash with them, but also be able to collect cash in other countries and use the card without having to pay exorbitant fees.”
Flow’s Lai believes that the sharing economy concept in the travel industry is the answer. “With technology, people will want and be able to look for more flexible and customised travel options rather than traditional packaged tours,” he says.
He adds that there will be a growth of individual tour operators who will join the online scene with the assistance of technology, as people tend to look for curated travel experiences.
This is definitely an exciting time for the tourism sector to digitalise their businesses, not only to enhance revenues, but also to brace themselves for future challenges in the ecosystem.
“Investments in travel technology, in the long run, will directly address these issues and lead to improved costs, time and manpower efficiency while enabling hoteliers to track and assess business performance,” says OYO’s Tan.
FIT-ting around the world
According to the Tourism Malaysia Marketing Plan 2022-2026, one of the strategies to attract Southeast Asian tourists is by partnering with travel portals or online travel agencies to increase by 5% the arrival of free independent travellers (FITs) in Malaysia in the 12 months following the reopening of the country’s borders on April 1.
Some people may be more familiar with the term “frequent independent traveller” or “foreign independent traveller”, but all of them share the same concept: independence. FITs are tourists who plan their own travel itineraries, often choose to avoid overcrowded destinations and prefer to immerse themselves in the local culture.
Traveloka Malaysia country manager Angelica Chan says FITs are preferred over other kinds of travellers, especially during the pandemic, as more travellers are becoming conscious of their health and safety. This is significant when large group tours are seeing a decline and small group travels are now sought after.
“There are multiple contact points throughout a journey. These include hotels, transport and even standing huddled around a tourist attraction,” she says.
“Small groups, or even solo travel, reduce the risk of contracting illnesses, as travellers and service providers can pay better attention to each person and cater to their individual needs.”
Travelling as a FIT is perceived to be cost-effective and experiential because it can be customised, she adds. “After the global lockdown, people want to travel without being bogged down by the superficiality that is often associated with group travel. Instead of seeing three attractions in a day, they would much rather spend time at one and not have to adhere to schedules.”
It is given that FITs travel solo and in smaller groups, but it is important for them to utilise the necessary travel tech to stay safe during their trips. “When it comes to travelling, keeping loved ones in the know is important. As such, we have made it easy for travel superapp users to know about their flight status by expanding our aggregation technology,” says Chan.
As a travel superapp, Traveloka shoulders the responsibility of keeping their users safe by making sure that only legitimate tourism businesses are onboarded to the app and allowing users to easily add on travel insurance to their bookings.
Superapps empowering FITs
Planning your travel as a FIT is indeed an exhilarating experience, but it can also be stressful. From choosing the best accommodation to booking flights and activity slots, there is a likelihood that one may lose booking information if it was done on different websites.
This is where apps such as Traveloka come in — users can book everything from transport to accommodation and activities that suit one’s budget.
FITs can also benefit from the discounts and promotions provided by the travel superapp and its various platform partners.
“For solo travellers managing every aspect of the trip on their own, convenience is important in order to have a hassle-free travel experience. Traveloka is currently the only app that provides all of the above,” says Chan.
To elevate travellers’ experience, Traveloka has made doing travel-related research seamless for users through various local recommendations according to their locations and interests. For example, a dedicated foodie is able to find the best cendol in Taiping through the app apart from discovering other must-visits in the district.
“Being part of a lifestyle superapp in the region, we will always be learning best practices from our regional counterparts that have rolled out other additional features under the same app such as financial services, food delivery and shopping. With our rich database of Malaysian-bound travellers, we continue to observe their needs and wants and will roll out these additional features when the time is right,” says Chan.
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