KUALA LUMPUR, April 2 — Did you know that if you bought a travel package last year for a trip this month, you as a tourist will not have to pay more? Yes, even when fuel prices are soaring high amid the month-old Middle East tensions.

The Malaysian Tourism Federation (MTF) said the Malaysian government needs to urgently help the local tourism industry now, as the tourism operators’ financial burden continues to increase.

MTF president Sri Ganesh Michiel explained how Malaysia’s travel industry works, where tour package prices are locked in advance:

  • Malaysia’s travel agencies design travel packages and then negotiate and sell them to travel agencies abroad. These travel packages are sold months in advance.
  • Malaysia’s travel agencies will sign binding contracts or agreements with their international counterparts.
  • “These agreements set prices ahead of time, leaving no flexibility to adjust rates when unforeseen cost increases arise.”

“Tourists, having purchased these packages well before their travel dates, are protected under these agreements.

“As a result, travel agencies are unable to pass on additional costs, particularly those arising from fuel price increases, and are instead forced to absorb them,” he said in a statement today.

Sri Ganesh Michiel, president of Malaysian Tourism Federation, should immediately give out fuel subsidies to tourism transport operators, as the local tourism industry may otherwise be forced to absorb higher costs and bear losses. — Picture courtesy of Sri Ganesh Michiel
Sri Ganesh Michiel, president of Malaysian Tourism Federation, should immediately give out fuel subsidies to tourism transport operators, as the local tourism industry may otherwise be forced to absorb higher costs and bear losses. — Picture courtesy of Sri Ganesh Michiel

MTF said many local travel agencies do not own transport vehicles and rely heavily on third-party providers, such as tour bus operators, boat and ferry services.

But those tourism transport operators are also impacted by the rising fuel costs and cannot operate at a loss, which has led to unavoidable increases in the prices they are charging for their services, MTF said.

Sri Ganesh said this would create a “cascading financial burden” across the tourism industry. For example, travel agencies will have to absorb the increased costs and bear losses when they rent the tour buses at higher prices.

Just on Monday, the Malaysian Inbound Tourism Association (Mita) announced price increases by up to 80 per cent for tour bus and tour vans to enable operators to survive, citing rising diesel prices and a lack of diesel subsidies from the government.

For example, where tour bus operators may charge a maximum of RM1,205 to rent out an entire bus for a day trip from Kuala Lumpur before the Iran war began on February 28, Mita’s new guide says operators can charge a maximum RM2,200 for the same rental when the diesel price is at RM5.52.

The diesel retail price in Peninsular Malaysia increased to RM6.02 from today, but you can see the chart below for an idea of how rising diesel prices is impacting the local tourism industry:

In light of these challenges to the Malaysian tourism industry, MTF urged the government (especially the Ministry of Domestic Trade and Cost of Living (KPDN) and the Finance Ministry) to carry out immediate and targeted relief measures, such as:

  • Fuel subsidies or financial aid for tourism transport operators (including buses, boats, ferries);
  • Temporary cost-relief mechanisms to support travel agencies bound by contracts;
  • Short-term stabilisation policies to prevent disruptions across the tourism ecosystem;
  • A coordinated approach across different ministries to ensure timely, effective intervention.

MTF said challenges faced by local travel agencies and transport operators will impact the broader tourism industry, as the entire tourism ecosystem is interconnected.

With the tourism industry being a key contributor to Malaysia’s economy in terms of businesses and employment opportunities, MTF cautioned that there would be long-term consequences if the travel industry does not receive help with its financial challenges now.

“The current cost pressures, if left unresolved, may lead to long-term structural damage, reduced competitiveness, and loss of confidence among international partners,” MTF said.

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