Once booming, Penang tourism stalls as visitors fade and tighten belts

Visitors to Penang have reduced in 2015 and are also more cautious when spending. ― Picture by KE Ooi
Visitors to Penang have reduced in 2015 and are also more cautious when spending. ― Picture by KE Ooi

GEORGE TOWN, Feb 25 ― A slowdown has beset Penang’s tourism sector that has thrived since George Town was recognised as a world heritage site, hit both by fewer visitors and reduced spending.

Room occupancy rates in the state has fallen by 18 per cent even though passenger traffiic at the international airport here as recorded by the Malaysia Airport Berhad saw an increase last year compared to 2014.

This decline in tourism is already being felt by local traders, particularly businesses located within the booming heritage zone where tourists have flocked to most since 2008, with most reporting marked reduction in sales.

One business owner, Chew Siew Eng, has been selling hats at a roadside stall in the past few years and said that last year was the worst she has experienced.

“Business has reduced by almost half last year; even tourists are more careful with what they are buying,” she said.

Her stall is located near the iconic wall mural of two children on a bicycle, where there is a significant foot traffic by on a daily basis.

But Chew said there was notably fewer visitors in 2015 compared to previous years. Those that do still visit also were not as willing to patronise her stall, she added.

“We can see the visitors, locals and foreigners, but they don't spend as much anymore and even if they stop to look, they will try to bargain for impossibly low prices that do not even cover the cost of my products,” she said.

Chew is not the only one noting the decline. A check on various traders, local businesses and shops all around George Town showed the same complaint ― fewer visitors and lesser spending.

Guan Seang Trading Cafe owner Choo Beng Chuan, 59, said mainland Chinese tourists have reduced significantly last year compared to 2014.

“We now get more domestic tourists and we do see crowds of tourists sometimes but this does not translate to more business for us because most of them do not spend as much as they used to in 2014 or 2013,” he said.

He cited the sale of ice cream at his cafe as an example, saying that previously, visitors appeared to pick ice creams without regard for cost, whereas now there was a notable tendency towards cheaper brands over choices such as the more expensive Magnum, for instance.

With both factors combined, Choo estimated his sales to have suffered as much as 40 per cent versus 2014.

He believed the decline could be due to both the economic slowdown, a reduction in the people's spending power due to increasing costs, and the Goods and Services Tax (GST).

“People are not spending as much anymore and they are extremely careful on their spending,” he said.

According to figures released by Penang Global Tourism (PGT) and sourced from Malaysia Airports Berhad, Penang recorded passenger traffic totalling to 6.03 million in 2014.

The number comprising domestic and international arrivals as well as transit and departure were at 5.65 million as at November 2015 but increased to about 6.3 million by December.

The top 10 nationalities of visitors to Penang for 2015 were Indonesia (39.32 per cent), Singapore (21.14 per cent), China (9.1 per cent), Japan (4.45 per cent), Australia (3.29 per cent), Taiwan (3.23 per cent), US (3.22 per cent), UK (2.76 per cent), Thailand (2.59 per cent) and Germany (1.11 per cent).

When contacted, Malaysian Association of Hotels (MAH) Penang chairman Khoo Boo Lim reported a decline in occupancy rates for last year. 

The occupancy rates for 2014 was 66.36 per cent and it dropped to 54.23 per cent in 2015, he said.

“This is because the occupancy rate for the first six months of 2015 was very  low and things only started to pick up in the second half of the year,” he said.

The period coincided with the duration of reduced consumer spending in anticipation of the GST in April 2015, from which the larger economy has arguably not recovered.

But Khoo did not attribute the lower occupancy rate solely to fewer visitors, saying that the growth of unlicensed outlets in the main tourist areas of the state may have skewed the accuracy of the reported numbers.

“I think we may have a slight drop in tourists but also, there are now so many illegal boutique hotels so visitors may be staying in all these places that are cheaper and within the heritage zone,” he said.

He added that the drop in crude oil prices and uncertain global economy has hurt the sentiments of consumers both foreign and domestic.

“People are more cautious in their spending these few months but we hope things will pick up this year,” he said.

MAH Penang is hoping to record more than 60 per cent occupancy rates for this year.

George Town was listed as a UNESCO World Heritage site in 2008 together with Malacca City.

The tourism sector in Penang accounts for more than 40 per cent of the state's economy in recent years. The state, dubbed as the Silicon Valley of Malaysia, had previously relied mostly on the manufacturing sector.

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