Nov 7, 2006

Tourism boom seen in 2007

Tourism boom seen in 2007
Tuesday November 7, 2006
By Goh Ee Koon

PETALING JAYA: Millions of tourists are expected to visit Malaysia next year and tourism revenue, estimated to total RM35bil this year, is expected to increase at an even faster pace.

There would be a “grand launch” of Visit Malaysia Year (VMY) on Jan 1, which would be followed by a host of events in every month next year.

Visit Malaysia Year 2007 Logo

Tourist arrivals had steadily risen from 3 million back in 1983 to about 16 million last year. Tourist spending has also risen, from just RM5bil back in 1990.

In VMY, tourist arrivals and spending are expected to rise to reach targets of 20 million and RM45bil respectively. This could produce significantly higher revenue for a wide range of companies from hotels and airlines to consumer goods.

Next year also happens to be the 50th anniversary of Malaysia's independence and to ensure that this landmark VMY is a success, there would be 50 major activities spread out throughout the year. The events, varied in scope, have been lined up from February's Malaysia Open Golf Championship to the KL International Buskers Festival held in November.

The Government is expected to expend RM600mil in promotional activities, which are expected to peak in August (coinciding with the National Day), according to a note by a local bank-backed research house.

There are added incentives for tourists from overseas. A recent survey by Swiss banking group UBS AG ranked Kuala Lumpur as the top budget-friendly city in the world.

A UBS economist credited Malaysia's well-controlled inflation as a factor for its success in offering tourists looking for most bang for their buck.

VMY received added publicity in a centrespread in the weekend Wall Street Journal that had sent a journalist to find out how affordable Malaysia is. He found he had to pay just US$107 for a room in Shangri-La Hotel, for which price he would have gotten no more than the Salisbury YMCA in Hong Kong.

The bulk of the tourism dollars last year was spent on accommodation (33%), shopping (21%), and food and beverage, or F&B, (20%). The remaining 26% was taken up by organised tours, local ground transportation, entertainment, domestic airfares and miscellaneous spending.

Hence, the stocks targeted by analysts for growth in VMY are spread across a few sectors.

The tourism and hotel sectors stand to win big. Hotels can expect higher occupancy rates and F&B turnover, and there would be room to raise rates. Hotel workers would also benefit from their share of service taxes.

One of the stocks that interest analysts and fund managers is property player KLCC Property Holdings Bhd which owns the popular Suria KLCC shopping mall and the five-star Mandarin Oriental Hotel.

There would also be indirect beneficiaries as the influx of tourists will spill into retail complexes and transport facilities.

These gainers would include IGB Corp Bhd and KrisAssets Holdings Bhd (which owns Mid Valley Megamall) and Sunway City Bhd (which owns Sunway Pyramid).

Consumer companies that stand to gain from a higher consumption of F&B include Nestle (M) Bhd and Dutch Lady Milk Industries Bhd. Transport companies like AirAsia Bhd will gain from an anticipated increase in load factors. - The Star.