KUALA LUMPUR, April 9 — Barely having recovered from the travel restrictions imposed during the Covid-19 pandemic, Malaysia’s tourism industry is now facing disruption from the war in West Asia, triggered by the US-Israeli attacks on Iran and closure of the Strait of Hormuz, where a fifth of the global oil passes through.

Reports have come out daily of flight delays and other disruptions, and visitors cancelling their bookings, as well as the rising price of oil and Malaysia’s fuel subsidy bill ballooning to RM4 billion a month.

Under Visit Malaysia Year 2026 (VM2026), the government has set a target of 47 million international tourist arrivals and RM329 billion in revenue. VM2026 has had a strong start, with March’s number of international visitors showing an increase, from 2.76 million arrivals during the same period last year to 2.8 million this year. Tourism, Culture and Arts Minister Datuk Seri Tiong King Sing was quoted as saying recently that the increase in tourists was supported by strong demand from major Asian markets.

“It’s (been) challenging, to say the least,” Malaysian Association of Tour and Travel Agents (Matta) president Nigel Wong told Bernama via Google Meet. 

“The main problem here is the rapid escalation of costs (due to the higher fuel prices). Nobody is able, especially in the tourism industry, to factor in the significant price hikes into the business of delivering tourism services to our clients.”

But when the doors opened and thousands of people poured in searching for the best travel deals at the Matta Fair 2026 at the Malaysia International Trade & Exhibition Centre here last weekend, the crowd’s palpable enthusiasm for travel deals brought home an unerring fact. 

Tourism does not end, it shifts.

Changing focus

Tour and travel operators at the fair were worried about the Iran war and how the rising cost of fuel and diesel would cause a ripple effect on their businesses. While they have several backup plans, such as budget-friendly packages and focusing on tourists from South and East Asia, as well as from Asean, they are nevertheless concerned that they will soon have to increase the prices of their services.

Ghani Generation Travel Holidays marketing executive Wan Mohd Shahfiz Wan Shah Jaman told Bernama that they have had to provide more flexibility to their Sabah packages by introducing a budget option along with their exclusive packages.

“For the budget package, we’ve changed the hotel from three-star to two-star,” he said. “We also chose places that are cheaper for our clients to visit.”

He added that many people who contacted his company decided against visiting Sabah because they noted that flying to Sabah or Sarawak was more, or as, expensive than flying to other destinations like Bangkok and Bali.

Saying the bulk of his clients are from China and Japan, Wan Mohd Shahfiz hoped visitors from these countries would continue coming despite the Middle East crisis. 

Other operators echoed his sentiments. Thistle marketing manager Farah Najwa and director of sales M. Shamini said they are seeing a lot of cancellations and postponements of conferences and meetings. As such, they have had to be more flexible with the bookings at the Port Dickson resort.

“Now we have to reduce our prices according to their (clients’) budgets,” said Shamini.

Farah added that the activities their resort offers will likely see price hikes, which will worsen things.

Leow Cheng Seong, director of Langkawi-based Legend Admire and Golden Eagle Cruise, said they have not seen price hikes per se but are preparing for it. He worries that tourism operators may compromise safety to protect their bottom line, such as increasing the number of passengers on boats while reducing the number of rides.

“It’s not right, but other companies are already doing it. They want to reduce the price, then they increase the number of passengers to cover (the loss),” he said.

He added that his company has a backup plan should things get worse, such as cutting unnecessary expenses.

Matta’s Wong said the organisation hoped the government would allow them to impose an adjustable surcharge for their services as long as the conflict continues.

Opportunity

Yesterday (Wednesday), Iran and the United States agreed to a ceasefire for two weeks, with Iran retaining control of the Strait of Hormuz.

Analyst Maryam Ismail, meanwhile, encouraged the tourism industry to seize this chance to turn Malaysia into a transit and travel hub.

According to the World Travel and Tourism Council (WTTC), airports in West Asia, namely in Dubai, Doha, Bahrain and Abu Dhabi, handle five percent of international arrivals and 14 percent of global air transit traffic.  

“The people responsible for making tourism possible will have to rethink how they promote… people assumed GCC (Gulf Cooperation Council comprising Bahrain, Kuwait, Oman, Qatar, Saudi Arabia and UAE) was safe. Now that illusion is shattered,” said Maryam, who is the analyst in charge of West Asia at the Institute of Strategic and International Studies (ISIS) Malaysia.

She said the West Asia conflict has demarcated the tourism industry into East to East and West to West, not just North and South anymore.

“There’s a great potential for them (Malaysia’s tourism industry) to rebuild because we are in a very good location to become a bigger transit hub. For the East,” she said when met at the sidelines of the Kuala Lumpur-Ankara Dialogue 2026 here earlier this week.

Maryam said this is an opportunity for Malaysia as the country turns to the East for tourism. It is a chance to turn the country into a transit hub for the East and the Pacific, she said.

The WTTC reported on March 11 that West Asian destinations are losing US$600 million daily in tourist spending since the conflict began on February 28.  

According to travel reports, Turkey is poised to take up the transit traffic since Dubai, Doha and Abu Dhabi cannot handle it, while the Caribbean countries, as well as Spain, Italy, Greece and Portugal have reported increased bookings. — Bernama