Malaysia DMCs swallow GST in the face of soft demand

Inbound tour operators in Malaysia are not raising rates substantially for the new contracting period in 2015 despite the recent 10 per cent hike in fuel prices and the introduction of the six per cent Goods and Services (GST) tax beginning April 1 next year, both of which are expected to add to their costs.

Several Malaysian inbound consultants that TTG-ITB Asia Daily spoke to said they were willing to lower their profit margins by absorbing some of the tour package costs to remain competitive.

“The market has been very soft for us in 2014 due to the two airline tragedies and the numerous kidnapping cases reported in Sabah,” said Mona Abdul Manap, sales and marketing manager of Kuching-based Planet Borneo Tours. 

“Prices will be maintained for the next contracting period as we want to spur demand for existing packages as well as new packages we will introduce (next year).”

While KL Tan, general manager of Borneo Trails Tours & Travel in Sabah, will raise his contract rates by three to four per cent, they will be matched with value-added services such as the addition of more products in the tour itinerary.

Likewise, Ganneesh Ramaa, manager at Luxury Tours Malaysia, said his company “will not increase (rates) too drastically” for fear of losing business. 

“We will introduce new niche products next year so we do not compete with other (agencies). These will include photography tours, bicycle tours and tours targeted at disabled Europeans tourists (those on dialysis or the hearing impaired).”

Buyers at ITB Asia are also expecting next year’s rates from their Malaysian suppliers to hold steady and not dampen demand for the destination.

Angela Wong, Singapore-based global accounts director of Helmes Briscoe, said: “Many Malaysian (consultants) are maintaining ground rates. Some hotels are increasing rates slightly, but it is still at an acceptable level.”

M Raja Arunmozhi, proprietor of Bengaluru-based Spaceline World Travel, said: “Malaysian hoteliers and groundhandlers have maintained contract rates over the last two years to win business due to the depreciation of the Indian rupee against the US dollar.”

MakeMyTrip.com vice president-international markets, Deepak Rawat, commented: “We are still negotiating rates with hoteliers – some hoteliers said they will maintain the same rates as 2014. A slight increase in rates will not have an impact on demand from the Indian market.”

-TTG Asia.