Malaysia Tourism Report 2016

Q1 2016
www.bmiresearch.com
MALAYSIA
TOURISM REPORT
INCLUDES 5-YEAR FORECASTS TO 2019
Published by:BMI Research

Malaysia Tourism Report Q1 2016
Part of BMIs Industry Report & Forecasts Series
Published by: BMI Research
Copy deadline: December 2015
ISSN: 1747-8944
BMI Research 2016 Business Monitor International Ltd

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DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind
as to the accuracy or completeness of any information hereto contained.
Part of BMIs Industry Report & Forecasts Series
Published by: BMI Research
Copy deadline: December 2015
ISSN: 1747-8944
BMI Research 2016 Business Monitor International Ltd

Senator House All rights reserved.
85 Queen Victoria Street
London All information contained in this publication is
EC4V 4AB copyrighted in the name of Business Monitor
United Kingdom International Ltd, and as such no part of this
Tel: +44 (0) 20 7248 0468 publication may be reproduced, repackaged,
Fax: +44 (0) 20 7248 0467 redistributed, resold in whole or in any part, or used
Email: subs@bmiresearch.com in any form or by any means graphic, electronic or
Web: http://www.bmiresearch.com mechanical, including photocopying, recording,
taping, or by information storage or retrieval, or by
any other means, without the express written consent
of the publisher.
DISCLAIMER
All information contained in this publication has been researched and compiled from sources believed to be accurate and reliable at the time of
publishing. However, in view of the natural scope for human and/or mechanical error, either at source or during production, Business Monitor
International Ltd accepts no liability whatsoever for any loss or damage resulting from errors, inaccuracies or omissions affecting any part of the
publication. All information is provided without warranty, and Business Monitor International Ltd makes no representation of warranty of any kind
as to the accuracy or completeness of any information hereto contained.
CONTENTS
BMI Industry View ............................................................................................................... 5

Table: Key Forecasts (Malaysia 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 5
SWOT .................................................................................................................................... 7
Tourism ................................................................................................................................................... 7
Industry Forecast ................................................................................................................ 9

Table: Inbound Tourism (Malaysia 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 13
Table: Tourism Receipts (Malaysia 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 14
Table: Hotel Accommodation (Malaysia 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 16
Table: Tourist Departures and Consumption (Malaysia 2012-2019) . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 17
Industry Risk/Reward Index ............................................................................................. 18

Tourism Risk/Reward Index ..................................................................................................................... 18
Table: Asia Tourism Risk/Reward Index . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 19
Security Risk ......................................................................................................................................... 20
Market Overview ............................................................................................................... 21
Competitive Landscape .................................................................................................... 25

Domestic Hotel Groups ........................................................................................................................... 25
Table: Domestic Hotel Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 25
International Hotel Groups ...................................................................................................................... 27
Table: International Hotel Groups . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 27
Methodology ...................................................................................................................... 29
Industry Forecast Methodology ................................................................................................................ 29
Risk/Reward Index Methodology ............................................................................................................... 30
Table: Weighting Of Indicators . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . . 32
Business Monitor International Ltd Page 4

BMI Industry View

BMI View: We have a highly positive outlook for Malaysia's tourism industry. Awareness of the country's
many attractions is improving and international transport connections are expanding, making Malaysia
much more accessible to potential visitors. As visitor numbers increase over the forecast period we expect
to see greater investment in the hotel and accommodation sector, where the mid-range and high end sectors
are attracting considerable interest, particularly in up and coming tourism regions where real estate
opportunities are plentiful.
Table: Key Forecasts (Malaysia 2012-2019)
2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f
Total arrivals, '000 25,384.27 26,047.48 27,406.49 28,824.70 30,287.81 31,862.78 33,998.39 36,524.31
Total arrivals, '000, % 1.9 2.6 5.2 5.2 5.1 5.2 6.7 7.4
y-o-y
International tourism 68.22 71.91 79.79 99.28 106.08 114.09 121.50 134.64
receipts, MYRbn
International tourism
receipts, MYRbn, % 4.1 5.4 11.0 24.4 6.9 7.5 6.5 10.8
y-o-y
International tourism 22.09 22.82 24.38 24.82 26.52 28.88 31.35 35.20
receipts, USDbn
International tourism
receipts, USDbn, % y- 3.1 3.3 6.8 1.8 6.9 8.9 8.6 12.3
o-y
Hotel and restaurant
industry value, 25.44 27.75 30.66 31.36 33.79 37.41 41.24 45.12
MYRbn
industry value, 8.3 9.1 10.5 2.3 7.8 10.7 10.2 9.4
MYRbn, % y-o-y
Hotel and restaurant 8.2 8.8 9.4 7.8 8.4 9.5 10.6 11.8
industry value, USDbn
industry value, 7.2 6.9 6.4 -16.3 7.8 12.1 12.4 10.8
USDbn, % y-o-y
National Sources/BMI

Key Updates And Forecasts
Malaysia's tourism industry looks set to receive a boost having been named Asia's Leading Destination at
the 2015 World Travel Awards (Asia and Australia). 2015, with the country named Asia's Leading
Destination and Tourism Malaysia rewarded as the Leading Tourist Board in the region.
The country is introducing online visa applications for seven major inbound tourism markets; from early
2016 visitors from China, India, Myanmar, Nepal, Sri Lanka, the United States and Canada will be
eligible for e-Visa applications.
Malaysia Airlines and Emirates Airlines are launching a widespread code-share partnership in 2016,
expanding Malaysia Airlines' access to European destinations and Emirates' access to various destinations
in Asia.
Overall, we expect inbound travel to increase steadily throughout the forecast period, rising from 28.8mn
in 2015 to 36.5mn in 2019 with Singapore, Indonesia and China making up the three biggest source
markets.

SWOT
Tourism
SWOT Analysis
Strengths
The government is highly supportive of the tourism industry, with extensive
investment reflecting the importance of tourism to the wider economy.

Malaysia benefits from a wide and diverse range of attractions, from beaches and
jungles to city-based shopping, cultural and historical destinations.

Strong regional and global travel connections and a good location amid booming Asia
Pacific markets will support the tourism industry.

Steady growth is expected in both tourist arrivals and expenditure levels in 2016 and
beyond.
Weaknesses
State involvement can negate efficiency and distort private sector activity, and current
barriers to foreign investment need to be removed.

Customer care standards need to be developed to meet the international norm.

Transport and accommodation infrastructure would benefit from modernisation in
rural areas, with the high-end hotel sector needing development.

There is a limited awareness of attractions compared with more established regional
markets such as neighbouring Thailand.
Opportunities
The government is committed to expanding the tourism industry, with the Middle East
proving to be a lucrative growth market.

Low-cost travel in the region is being boosted by the expansion of AirAsia X, a
traditionally long-haul operator expanding into short-haul regional travel and improved
air travel connections.

Hotel chains are expanding their presence in the country with a range of new
developments, attracting foreign investment and high-end travelers.

SWOT Analysis - Continued

Medical tourism is proving a growth area, with Malaysia increasingly rivaling
Singapore and Hong Kong as an affordable medical tourism destination.
Threats
A double-dip global economic slowdown would threaten tourism industries
worldwide, and Malaysia could lose out to Singapore, which is a more established
market.

Islamist hardliners are trying to impose a greater degree of shari'a law on the secular
state, creating tensions that could limit tourism growth.

Recent high-profile air travel disasters will affect the perception of air travel, while
relations with China have also suffered.

Large political protests following widespread allegations of corruption at high levels of
the government could also deter potential visitors.

Industry Forecast
BMI View: The tourism industry is growing rapidly in Malaysia, supported by extensive government
investment in transport infrastructure and well funded marketing campaigns aimed at raising awareness of
the country's many attractions outside of traditional regional source markets. We are forecasting healthy
growth in tourism arrivals over our five year forecast period, providing a valuable boost to tourism-related
expenditure and hotel and restaurant industry value.
Latest Updates
We have revised upwards our medium-term forecasts for international arrivals which are now expected to
increase by 5.9% annually over the forecast period to reach 36.5mn in 2019, up from 28.8mn in 2015.
Consequently, we have also revised upwards our forecasts for tourism related receipts which are expected
to reach USD35.2bn in 2019.
Structural Trends
Malaysia offers a diverse range of tourist attractions, from the picturesque beaches of Penang through to
jungle lodges in Malaysian Borneo and the city attractions of Kuala Lumpur. Malaysia is also home to
several UNESCO World Heritage Sites, giving it broad appeal in a competitive region, though in previous
years it has lost out to countries such as Thailand, which has a more established reputation in major
European source markets. As such the country offers substantial long-term potential and we expect to see
sustained growth in international arrivals moving forward, supported by wide ranging marketing campaigns
and investment in transport infrastructure.
Prospects for foreign investors in Malaysia are improving, though entry to the market is still not wholly
without risk. Standards of corporate governance have improved greatly in recent years (Malaysia climbed
two places in the World Bank Ease of Doing Business rankings in 2015 to 18th), more so than in many
neighbouring countries, but there are still bureaucratic barriers to foreign investment. While foreign
companies will continue to be welcomed, with the government offering numerous incentives to attract
foreign direct investment, Malaysia's affirmative action policy, which aims to redistribute wealth in favour
of ethnic Malays, is a serious barrier to foreign firms in a number of key areas. Additionally, doing business
in Malaysia will always, to some extent, mean dealing with the politically well connected, and despite
substantial government efforts to crack down on bribery, corruption remains a key concern.

Healthy Growth Ahead
Tourist Arrivals ('000) & International Tourism Receipts (USDbn) (2012-2019)
40,000 40
30,000 35
20,000 30
10,000 25
0 20
2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f
Total arrivals, '000 (LHS) International tourism receipts, USDbn (RHS)
Tourism Arrivals: Increasingly Popular Destination
Malaysia has seen strong growth in inbound arrivals over recent years and managed to avoid the worst of
the global recession, although the rate of growth slowed between 2011 and 2013 as the credit crunch
continued to affect long-haul travel from outside the Asia Pacific region and domestic security concerns
deterred potential visitors. These declines were largely offset by healthy growth in 2014, when arrivals
remained robust despite several high-profile air travel disasters that saw declines from some key markets. In
2015 we expect to see similar growth, with total arrivals forecast to increase by 5.2% to reach 28.8mn.
Moving forward, BMI is forecasting a promising growth rate of, on average, 6.1% per year between 2016
and 2019, reflecting Malaysia's growing popularity as a tourist destination and ability to compete with other
popular regional destinations such as Thailand, as well as the increasing spending power of its regional
neighbours. We expect that total arrivals will reach 36.5mn by 2019 - indicating a range of opportunities for
hotel operators and other tourism-related industries.

Attracting More Visitors

Total Arrivals ('000, % growth) (2012-2019)
40,000 8
30,000 6
20,000 4
10,000 2
0 0
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Total arrivals, '000 (LHS) Total arrivals, '000, % y-o-y (RHS)
As we would expect, arrivals from the Asia Pacific region dominate the inbound tourism market in
Malaysia and are expected to account for 26.0mn visitors out of the total 28.5mn in 2015, following growth
of 5.3% on the 2014 level. By 2019 arrivals from this region are expected to increase to 33.2mn. Malaysia is
a popular destination in the Asia Pacific region due to the multitude and ease of air transport connections
and road/rail connections as well as regional affordability. Europe is the second biggest regional source
market, far behind Asia on 1.0mn arrivals in 2015. Arrivals from Europe are expected to show a short-term
contraction owing to economic difficulties in major source markets such as Russia before returning to
growth to reach just under 1.1mn in 2019. The Middle East is also a strong market for Malaysia, with
arrivals expected to reach around 287,030 by 2019. This is important, as tourists from the Middle East are
more likely to be higher spenders and offer a substantial potential growth market.
By far the strongest market for inbound tourism is Singapore, which is expected to account for 14.0mn
arrivals in 2015, increasing to 17.2mn in 2019. Malaysia is easily accessible from Singapore - visitors can
take a short rail journey across the connecting bridge, a multitude of ferry connections or one of the many
air connections including budget airlines. Similarly Indonesia, the second largest source market, has many

travel connections to Malaysia and is also one of the fastest outbound travel markets in the region. The UK,
which has strong historical connections to Malaysia, is the only country from outside of the Asia region to
make it into the top ten. In third place China will account for just under 3mn visitors by the end of the
forecast period. Malaysia is taking steps to increase travel from China, recently relaxing visa restrictions to
allow visa-free travel for tour groups from China, which could boost inbound travel from the regional giant.
Singapore A Valuable Source Market
Malaysia, Inbound Tourism, Top 10 Markets by Arrivals (2015) '000s
Source: Tourism Malaysia, BMI
There are some potential downside risks to our current forecasts. An economic slowdown in China, an
increasingly important source market for arrivals to Malaysia, could dampen growth prospects. There is also
potential for political turmoil within Malaysia to deter tourism visitors and investors alike. Upside risks
include rapid expansion of international travel connections which would enable more visitors to reach
Malaysia and the further relaxation of visa restrictions to ease travel.

Table: Inbound Tourism (Malaysia 2012-2019)
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Total arrivals, '000 25,384.27 26,047.48 27,406.49 28,824.70 30,287.81 31,862.78 33,998.39 36,524.31
Total arrivals, '000, % 1.9 2.6 5.2 5.2 5.1 5.2 6.7 7.4
y-o-y
Arrivals by region, 24.31 23.05 21.75 21.68 21.75 21.62 21.79 22.11
Africa, '000
Arrivals by region, -22.7 -5.2 -5.6 -0.3 0.3 -0.6 0.8 1.4
Africa, '000, % y-o-y
North America, '000
Arrivals by region,
North America, % y- 11.0 2.4 6.8 14.3 3.8 1.0 2.3 3.0
o-y
Arrivals by region, 23,466.34 23,993.78 24,652.01 26,024.63 27,377.86 28,864.43 30,860.85 33,209.72
Asia Pacific, '000
Asia Pacific, % y-o-y
Arrivals by region, 1,030.56 1,071.74 1,053.03 957.90 977.79 986.87 1,016.40 1,062.39
Europe, '000
Arrivals by region, 4.7 4.0 -1.7 -9.0 2.1 0.9 3.0 4.5
Europe, % y-o-y
Middle East, '000
Arrivals by region, 2.9 -23.5 2.3 15.2 6.3 4.5 5.0 5.5
Middle East, % y-o-y
International Tourism Receipts: More Visitors Equals Higher Spend
As inbound and outbound travel to and from Malaysia increases, we expect to see substantial growth in the
volume of tourism-related expenditure. Total tourism receipts are expected to increase by around 7.7% per
year throughout the forecast period, rising from MYR99.3bn (USD24.8bn) in 2015 to MYR134.6bn
(USD35.2bn) in 2019, offering enormous potential for tourism retailers and travel/tour providers.
Receipts from travel items account for the vast bulk of spending and are expected to show a high rate of
growth throughout the forecast period meaning total annual receipts are expected to surpass MYR120.8bn
(USD31.6bn) by 2019. Spending on transport services is also forecast to increase over the forecast period to
reach MYR13.8bn (USD3.6bn) in 2019. This growth will be supported by extensive government investment

in the already substantial transport system, including development of more extensive rail connections and
expansion of air travel connections. Malaysia currently has 118 airports providing connectivity across the
country and internationally. Many are local airports, but 38 have paved runways and seven have runways
longer than 3,048 metres and are therefore capable of handling larger-capacity international flights. The
largest airport is Kuala Lumpur International Airport, a major regional hub capable of handling more than
35mn passengers annually. Domestic air travel is an increasingly popular method of travelling around the
two parts of the country, though Malaysia also has a rail network, including an urban network connecting
the capital city and adjoining cities and towns in the state of Selangor, which will benefit from extensive
investment in forthcoming years, supporting our forecasts for increased expenditure on transport.
Table: Tourism Receipts (Malaysia 2012-2019)
2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f
International tourism receipts, USDbn 22.09 22.82 24.38 24.82 26.52 28.88 31.35 35.20
International tourism receipts, USDbn, % y-o-y 3.1 3.3 6.8 1.8 6.9 8.9 8.6 12.3
International tourism receipts, MYRbn 68.22 71.91 79.79 99.28 106.08 114.09 121.50 134.64
International tourism receipts, MYRbn, % y-o-y 4.1 5.4 11.0 24.4 6.9 7.5 6.5 10.8
International tourism receipts, transport services, 5.67 7.95 8.71 10.80 11.40 12.08 12.70 13.83
MYRbn
International tourism receipts, transport services, 4.1 40.2 9.5 24.0 5.6 6.0 5.1 8.9
MYRbn, % y-o-y
International tourism receipts, travel items, MYRbn 62.54 63.96 71.08 88.48 94.68 102.01 108.81 120.82
International tourism receipts, travel items, MYRbn, % 4.06 2.27 11.13 24.48 7.01 7.74 6.66 11.04
y-o-y
Hotels: Attracting Investment
Malaysia's hotel market is relatively underdeveloped, particularly outside of the capital. As inbound travel
increases, barriers to foreign investment are eased and a stronger domestic economy results in more travel
within the country's borders, BMI expects that the number of hotels and establishments will increase by
between 2% and 4% per year between 2015 and 2019. The total number of establishments is forecast to
reach 3,620 by 2019. At the same time, we expect the number of hotel rooms to reach more than 241,750 by
the end of the forecast period. A number of international hotel groups such as Starwood, Accor, Best
Western and Hilton have new hotels in the project pipeline and more are likely to be added as tourism

arrivals grow. Such growth is dependent on the Malaysian market being further opened up to foreign
investment opportunities, as well as continued domestic economic and political stability.
As both the number of tourism arrivals and the number of hotels increase, we expect that the occupancy rate
will remain around 63.8%. This is a relatively strong occupancy rate for the region, though lower than more
well-developed markets such as Hong Kong. Still, the strong occupancy rate and expected increases in
inbound travel mean Malaysia represents an excellent opportunity for long-term returns on investment in
the hotel sector. The average length of stay is relatively long, at 6.8 nights, and as the number of visitors
increase we expect to see substantial growth in the total number of overnight stays.
Overnight Stays and Industry Value

(2011-2019)
250,000 50
225,000
40
200,000
30
175,000
150,000 20
2011e
2012e
2013e
2014e
2015f
2016f
2017f
2018f
2019f
Total overnight stays, '000 (LHS)

Hotel and restaurant industry value, MYRbn (RHS)
This opportunity is further demonstrated by the expected increase in the overall domestic hotels and
restaurants industry value. We expect this to show strong growth of 8.8% in 2015 in local currency terms,
with lower growth in US dollar terms due to currency fluctuations. Overall, we expect industry value to
increase from USD7.8bn in 2015 to USD11.8bn in 2019, reflecting a range of opportunities for investment
in the hotel and restaurant sector. As the value of the industry increases, we expect tourism to make up a

greater portion of the country's overall GDP and to increase in terms of value per capita. The importance of
this industry has not been lost on the Malaysian government, which has launched a series of investment and
publicity campaigns, including the popular 'Malaysia Truly Asia' campaign and new campaigns for 2015:
Year of Festivals. The government is also considering easing visa restrictions to attract more visitors from
key source markets such as China.
Table: Hotel Accommodation (Malaysia 2012-2019)
2012e 2013e 2014e 2015f 2016f 2017f 2018f 2019f
Number of hotels and 2.72 3.09 3.18 3.20 3.28 3.39 3.50 3.62
establishments, '000
Total overnight stays, 173,783.2 178,017.8 186,491.4 195,415.7 204,510.5 214,470.5 228,022.5 243,582.6
'000
Average length of 6.8 6.8 6.8 6.8 6.8 6.9 6.9 6.9
stay, nights
Hotel rooms, '000 195.45 209.53 214.92 216.22 220.73 227.45 234.55 241.75
Occupancy rate, % 62.4 62.6 63.3 63.6 63.8 63.8 63.8 63.8
industry value, 25.44 27.75 30.66 31.36 33.79 37.41 41.24 45.12
MYRbn
industry value, 8.3 9.1 10.5 2.3 7.8 10.7 10.2 9.4
MYRbn, % y-o-y
Domestic Tourism Market: Huge Potential
With a population of over 30mn (estimated in 2015), Malaysia's domestic tourism market has significant
growth potential. The government is keen to promote domestic tourism, with Tourism Malaysia
developing marketing campaigns and discount schemes to encourage travel. In 2014 Malaysia's Department
of Statistics reported that 217.5mn tourism trips took place across the country, up from 193.3mn in 2014
and these figures are expected to grow further as Malaysia's middle class expands and average household
income rates rise.
The domestic travel market does face significant competition from outbound travel. Outbound tourism is
expected to reach 10.8mn in 2015 with the majority of trips to neighbouring states Thailand, Indonesia and
Singapore. As household income increases further, indicating more disposable income for spending on
overseas travel, we expect to see outbound travel rise to 14.4mn in 2019. Despite this growth, spending on

domestic travel will remain strong, with domestic spending on hotels and tourism expected to increase from
MYR62.7bn in 2015 to MYR84.6bn in 2019 making the domestic market a valuable contributor to the
tourism industry.
Table: Tourist Departures and Consumption (Malaysia 2012-2019)
2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f
Outbound, total 9,614.51 10,560.95 10,664.27 10,803.07 11,292.39 12,197.85 13,537.93 14,445.60
departures, '000
Outbound, total
departures, % y-o-y 4.8 9.8 1.0 1.3 4.5 8.0 11.0 6.7
Average Tourist
departure per 1000 of 0.33 0.36 0.36 0.36 0.37 0.39 0.43 0.45
the population
Total domestic
spending, hotels and 47.32 52.54 57.87 62.69 67.83 73.20 78.72 84.57
restaurants, MYRbn
Total domestic
spending, hotels and
restaurants, MYRbn, % 9.1 11.0 10.1 8.3 8.2 7.9 7.5 7.4
y-o-y

Industry Risk/Reward Index

Tourism Risk/Reward Index
Rewards
This is an evaluation of the sector's size and growth potential in each state, along with broader industry/state
characteristics that may inhibit or enhance its development. The reward scores for tourism take into account
the numbers and percentage growth of tourist arrivals over the past year and our forecasts for future growth
over 2016 and beyond. Malaysia has experienced steady growth in tourism arrivals, and this trend is
expected to continue throughout our forecast period. The overall figures for tourism receipts and hotel
occupancy have been similarly enhanced and offset and factored in accordingly, giving Malaysia a tourism
market score of 53.33.
The country structure score takes into account labour costs and infrastructure. Malaysia has a relatively
well-developed transport infrastructure network but would benefit from further investment in the expansion
and improvement of facilities across several areas including rail and air travel. Malaysia has a relatively
strong country structure score of 60.83.
Risks
This score offers an evaluation of industry-specific dangers and those emanating from the state's political
and economic profile that call into question the likelihood of anticipated returns being realised over the
assessed time period. Malaysia's risk to realisation of returns score is a healthy 67.32. The market risks
score takes into account short-term political stability and regional stability, which are strong in Malaysia
given its secure democracy. It also considers Malaysia's vulnerability to external factors, such as threats
posed by Islamist extremists. Malaysia has one of the highest scores in the Asia Pacific region here, scoring
74.72.
Finally, BMI's proprietary country risk scores cover corruption, legal framework, bureaucracy, market
openness and security risks. Businesses operating in Malaysia face ongoing problems with corruption at
high levels and there are many restrictions on foreign investment that could limit growth. As such, the
country scores 61.52 for country risk.

Overall we have maintained Malaysia's score of 59.67 out of 100 on the Tourism Risk/Reward Index this
quarter, keeping the country in 10th place out of 23 Asia Pacific states, behind New Zealand and ahead of
Vietnam.
Table: Asia Tourism Risk/Reward Index
Rewards Risks
Industry Country Industry Country Tourism
Rewards rewards rewards Risks risks risks index Rank
Australia 69.83 68.33 72.06 81.49 76.94 85.22 73.32 1
Thailand 75.99 85.30 62.04 58.23 62.46 54.77 70.66 2
Hong Kong 66.32 68.33 63.29 79.23 78.55 79.78 70.19 3
Japan 67.62 61.67 76.55 69.36 71.54 67.58 68.14 4
Taiwan 69.62 76.67 59.04 62.97 71.12 56.30 67.62 5
South Korea 67.93 66.67 69.83 66.73 71.33 62.96 67.57 6
Singapore 61.29 65.00 55.73 80.44 85.47 76.32 67.03 7
New Zealand 58.88 41.67 84.69 83.85 76.65 89.73 66.37 8
Macau 64.50 69.17 57.50 69.61 65.00 73.38 66.03 9
Malaysia 56.33 53.33 60.83 67.46 74.72 61.52 59.67 10
Myanmar 55.82 51.67 62.04 60.31 62.39 58.61 57.16 11
Vietnam 55.91 51.67 62.26 56.69 68.00 47.43 56.14 12
Sri Lanka 57.66 60.00 54.14 50.63 61.38 41.83 55.55 13
Maldives 53.27 58.33 45.68 59.75 68.96 52.22 55.22 14
Cambodia 57.89 68.33 42.21 39.07 31.35 45.38 52.24 15
Laos 49.48 50.00 48.70 45.21 63.88 29.93 48.20 16
China 42.02 33.33 55.05 59.12 77.97 43.70 47.15 17
Indonesia 36.97 33.33 42.41 50.15 61.77 40.65 40.92 18
French
Polynesia 38.00 36.67 40.00 42.30 50.00 36.00 39.29 19
India 36.22 30.00 45.54 44.27 29.99 55.95 38.63 20
Pakistan 34.28 33.33 35.69 44.53 59.37 32.39 37.35 21
Philippines 28.93 13.33 52.33 56.18 69.58 45.21 37.10 22
Bangladesh 32.51 19.17 52.53 46.39 66.04 30.31 36.67 23
Source: BMI

Security Risk
There is a general terrorist threat in Malaysia. The British Foreign and Commonwealth Office warns that
attacks could be indiscriminate, including in places frequented by expatriates and foreign travellers.
However, Malaysia has not seen the high-profile attacks experienced by many of its regional neighbours,
although Jemaah Islamiyah, which has been linked to attacks in Indonesia, reportedly maintains a presence.
The most notable attacks in recent years have been aimed largely at foreign tourists in the islands and
coastal areas of Eastern Sabah, the blame for which has largely fallen on Abu Sayaf, a terrorist group based
in the southern Philippines. Previous kidnappings in this area include the abduction of foreign tourists and
local hostages from the Malaysian Island of Sipadan in 2000 and of foreign resort workers from a resort
near Lahad Datu in 2003. The Malaysian government has increased security in the region, but there is still a
continuing risk of further incidents.
The overall crime rate in Malaysia is rated as medium by the US Overseas Security Advisory Council.
Violent crime against expatriates is relatively uncommon, with most criminal activity directed against
foreigners limited to non-violent crimes, such as petty theft, purse snatching and credit card fraud.

Market Overview
As travel connections to Malaysia's neighbours and global source markets improve and the domestic
economy continues to expand, we are forecasting healthy increases in inbound and outbound travel
throughout our forecast period, providing scope for the expansion of the hotel market, particularly the mid-
range and luxury travel segments. Malaysia's extensive range of attractions, combined with large-scale
government investments in the expansion and modernisation of transport infrastructure and increasing
international arrivals, make the country's tourism market increasingly attractive to investors.
Malaysia has enormous growth potential due to the wide range of attractions on offer for potential visitors.
It is increasingly highlighting these through major marketing campaigns, such as the ongoing Malaysia
Truly Asia campaign, the Visit Malaysia 2014 campaign and the Year of Festivals 2015 campaign. These
campaigns are allowing the country to broaden its appeal to new markets and tap into the lucrative long-
haul travel market. Malaysia has several UNESCO World Heritage Sites, including Melaka and George
Town, archaeological sites at Perak and Gunung Mulu National Park. As well as these attractions, Kuala
Lumpur is a major business centre and travel hub for the Asia Pacific region, with many historical, cultural
and popular nightlife locations in the city itself. Across the straits, Malaysia Borneo, a major eco-tourism
destination, offers luxury jungle and beach resorts, and the archipelago of Langkawi is another major tourist
destination, with 99 islands drawing tourists from around the world. The country is building on its
reputation as a prime global diving destination, including locations such as Tanku Abdul Rahman Marine
Park, Redang Island a Terengganu and Sipadan Island, Sabah.
The government is highly supportive of the tourism industry, designating tourism as one of the 12 national
key economic areas, and has stated that it will provide additional financing to improve tourism-related
infrastructure. In order to attract 36mn tourist visitors by 2020 (generating MYR168bn for the domestic
economy), the government has launched the Malaysia Tourism Transformation Plan. Malaysia's location is
also conducive to tourism growth. It is a short flight from major source market China, and visitors from top
source market Singapore can make the trip to Malaysia via road, rail and ferry connections (as well as
affordable short-haul flights).

Solid Growth Ahead

Number Of Hotels And Establishments, '000 & Total Arrivals, '000
4 37,500
35,000
3
32,500
2 30,000
27,500
1
25,000
0 22,500
2012 2013 2014e 2015f 2016f 2017f 2018f 2019f
Number of hotels and establishments, '000 (LHS) Total arrivals, '000 (RHS)
e/f = BMI estimate/forecast. Source: National sources, BMI
Malaysia's capital city Kuala Lumpur is the starting point for many visitors to Malaysia. The city itself is
home to many attractions, including the popular Petronas Towers, the Sultan Abdul Samad Building, KL
Bird Park and dozens of shopping malls and districts. The hotel market in Kuala Lumpur is very well
developed, with hundreds of hotels catering to all market levels. Many of the top international hotel groups
present in Malaysia have focused their development on the capital; as such, foreign visitors have the option
of staying in recognised global brands. In terms of transport infrastructure, Kuala Lumpur is well connected
via a metro system, domestic and international rail connections and the country's largest airport, Kuala
Lumpur International Airport (KLIA), which saw more than 48.9mn passengers in 2014. From KLIA
passengers can travel to a broad range of regional and global destinations, which makes Kuala Lumpur
highly accessible.
Outside of Kuala Lumpur, Malaysia offers a broad range of attractive tourist locations. These include
Penang Island, Langkawi (an archipelago of 99 islands), the Cameron Highlands, the Perhentian Islands and
many national parks and coastal resorts. Malaysian Borneo is also a major tourist destination, where the
capital Kota Kinabalu is often used as a starting point, as is second city Kuching. The maturity of the hotel

market in these destinations varies widely. Malaysian Borneo does offer a range of high-end luxury hotels
and resorts, as well as budget hostels, but the mid-range market is less developed. Penang Island and nearby
Butterworth have a broader range of accommodation options. In the central, less developed parts of
Malaysia accommodation options can be restricted to individually owned guesthouses or lodges. Getting
around the country is relatively straightforward in Malaysia. The country has a well developed road
network, particularly between major towns and cities, and has an extensive rail network. Travellers also
have the option of using the country's many domestic and international airports.
In many places Malaysia's hotel market is well-established and many of the top global hotel operators are
expanding their presence in the country through a range of new hotels and resorts, reflecting the confidence
held in the growth potential of the country's tourism market. As the hotel market in Kuala Lumpur is
already well-developed, several developers are turning to up-and-coming destinations. Starwood, for
instance, while it is opening new hotels in the capital, is also opening new hotels in locations such as Desaru
- on the southern coast - and Langkawi - the first UNESCO Global Geopark. Hilton Worldwide also
recently announced plans to open a DoubleTree Resort near the UNESCO World Heritage site of George
Town. Catering to the luxury travel segment, there are also plans to open a Harrods hotel in 2018.
We are also seeing new developments by small domestic and regional hotel groups. Tune Hotels, for
example, a division of the Tune Group, recently opened a new property in Taiping. Pan Pacific Hotels
Group, a wholly owned subsidiary of UOL Group, entered into an agreement with Gagasan Langkawi to
open a new property in Langkawi in 2017. Spanish group Melia is also entering the market with new
properties under development in the Iskandar City project in conjunction with Malaysian real estate firm
Podo Joyo Masyhur.
These expansion plans reflect the range of opportunities for development present in a market that is far from
saturation. Despite the expected increases in the number of hotels, we expect that the rise in inbound
arrivals (as well as more domestic travel) will help to keep occupancy rates at around 64%. While this is not
near the 80% occupancy rate reached in competing markets such as Hong Kong, this is still a very healthy
occupancy rate and reflects the strength of the hotel market and the potential for returns on investment.
As noted above, Malaysia's transport network is well-established, particularly within peninsular Malaysia.
The government has been investing heavily across a range of transport networks, including air and rail
travel, in order to ensure it can keep up with increased demand, not only in terms of tourism but across a
broader range of industries. Further development is needed, with rural east Malaysia suffering from less
efficient road, rail and air connections that are not as extensive or modern. Malaysia's government is

investing in expanding the transport network in general. During a budget speech in October 2014, Prime
Minister Najib Razak announced that Malaysia will look to start work on projects such as highways and
railways worth at least MYR75bn (USD20.7bn). Despite prior concerns about the original budget being cut
due to the impact of lower oil prices reducing expenditure on infrastructure projects, this has not
materialised. In January 2015 the government maintained the MYR48.5bn development expenditure
allocated in the budget. In particular, we see roads, railways and power plants having most opportunities for
growth. This will be underpinned by road and rail projects such as the MYR27bn (USD7.5bn) Pan-Borneo
Highway, MRT and LRT systems, as well as the high-speed rail between Kuala Lumpur and Singapore - the
current train journey takes around seven hours and the new high speed rail aims to cut this down to as little
as 90 minutes when completed in 2022, though we note there is a significant chance for delays. As
Singapore is the largest source market for inbound travel, this could significantly boost visitor figures. The
government is also developing transport infrastructure on Penang Island - SRS Consortium has been
shortlisted as a project delivery partner for the MYR27bn (USD6.48bn) Penang Transport Masterplan. The
project includes five light rail and two tram lines for Penang Island, two commuter rail lines on the
mainland, tram, bus and ferry networks as well as roads to ease traffic congestion, especially on the island.
Malaysia's air transport network is also very well-developed; the country has 118 airports providing a range
of domestic connections that are vital across its hundreds of islands as well as major international airports
providing regional and international connectivity. The range of international air travel connections means
Malaysia is well placed to increase its share of the short-haul and transit travel market in the region. The
demand for low-cost domestic travel is also increasing, and Malaysia Airports Holdings Bhd opened a
new low-cost carrier terminal at KLIA in 2014 in order to take advantage of expected growth. Realising the
importance of air travel, the government has allocated MYR700mn for the construction of a new air traffic
management centre at KLIA, while MYR312mn will be allocated to upgrade several airports in Sabah and
Sarawak, with projects due for completion in 2018.
Malaysia's inbound tourism market is currently dominated by its Asia Pacific neighbours, and most of the
domestic hotel groups are designed to cater for this market. The country is increasingly attracting visitors
from Western markets, as well as affluent regional travellers, and this is the target group for international
hotel developers, which are focusing investment on high end luxury resorts. Another growth area for
Malaysia is tourism from Middle Eastern countries; the government is keen to expand the number of
Islamic tourism facilities and products. With visitors from all regions increasing, there is scope for all
sectors of the hotel market to expand.

Competitive Landscape
The Malaysian hotel market is relatively well-developed, particularly in the capital Kuala Lumpur and other
well-established tourism destinations. Most of the top 10 global hotel groups have a presence in the market,
and several, such as Starwood and Accor, are expanding the number of hotels in the country. Malaysia is
also home to several well-established domestic hotel groups, many of which cater primarily to the high-end
and luxury travel segment.
Domestic Hotel Groups
Table: Domestic Hotel Groups
Hotel Group Presence
Cititel Hotel Management (CHM) opened its first

property in Penang, Malaysia, in 1997, catering to the
high-end travel market with the four-star Cititel Penang.
The group has expanded rapidly, opening another hotel
in the Mid Valley City, Kuala Lumpur, again under the
Cititel brand. In 2010 CHM introduced the St Giles
brand, opening a 512-room hotel in Metro Manila. The
group now has 17 properties, ranging from three-to-five-
star hotels and serviced apartments. This gives CHM
some 3,800 rooms across Malaysia, Myanmar and the
Philippines. The group is pursuing expansion, with
several new hotels opened in 2015: The Wembly St Giles
(Penang) Cititel Express (Penang) and The Tank Steam
St Giles (Sydney). CHM is a subsidiary of Malaysia
property and investment company IGB Corporation
Cititel Hotel Management Berhad.
Genting Malaysia was founded in 1980 under Resorts

World Sdn Bhd and subsequently expanded before
becoming Genting Malaysia Berhad in 2009. The group
has six hotels, 200 dining and retail outlets, as well as
theme parks, entertainment venues and convention
facilities. The group has three hotels in Malaysia: Resorts
World Kijal in Terengganu, Resort World Langkawi and
the flagship resort, giving the group more than 9,000
hotel rooms. The group will also benefit from the
development of the new Twentieth Century Fox World
Theme Park, part of the Genting Integrated Tourism
Plan. It also has a range of properties in Singapore, is
the largest casino operator in the UK and is currently
developing the Resorts World Birmingham complex.
Genting Malaysia also owns Resorts World Casino New
York City and is developing a USD3bn entertainment
and hotel complex in the US state of Florida, called
Resorts World Miami. Other developments include
Resorts World in the Bahamas that opened in mid-2013
and a stake in Genting Hong Kong Limited (which has
interests in businesses including Star Cruises,
Genting Malaysia Norwegian Cruise Lines and Resorts World Manila).

Domestic Hotel Groups - Continued
Berjaya Hotels & Resorts is a well-established

Malaysian hotel company and is a member of the
Berjaya Corporation group of companies. The group has
several hotels in Malaysia: the Berjaya Times Square
Hotel, Kuala Lumpur, the Berjaya Langkawi Resort, the
Berjaya Waterfront Hotel, Johor Bahru and the Berjaya
Tioman. Berjaya Hotels & Resorts also has properties in
the Philippines, Seychelles, Sri Lanka, Vietnam and in
London, UK. Berjaya caters mainly to the high-end travel
market and also operates several luxury resorts
including the Chateau Spa & Organic Wellness Resort
and the Taaras Beach & Spa Resort as well as a range
of independently operated hotels. The group also has a
commercial airline and operates several exclusive golf
Berjaya Hotels & Resorts and country clubs in Malaysia.
Swiss-Garden International Hotels, Resorts & Inns is

a well-established Malaysian hotel group with nine
properties at a range of locations in Malaysia and
Australia. The company operates hotels under three
brands: Swiss-Garden Hotel, Swiss Garden Resort
and Swiss-Inn. These brands cater to a range of
budgets, from mid- to high-end. The hotels in Malaysia
are in Kuala Lumpur, Damai Laut, Pahang, Kedah and
Malacca, while the one hotel in Australia is in Sydney.
The latest hotel to open in 2015 in Kuala Lumpur is
under the new D'Majestic brand, adding 235 suites to
the group's room portfolio. Swiss-Garden also offers
Swiss-Garden International Hotels, Resorts & Inns hotel management services.
Sunway Hotels & Resorts is the flagship brand of

Sunway International Hotels & Resorts, a Malaysian
hospitality group. All of the group's hotels are four- or
five-star properties, in locations described as primary or
secondary cities. The group caters to premier and luxury
travel markets. The hotels range in size, from boutique
properties with 25 rooms through to large 600-room
resorts. Sunway also runs two large convention centres.
Hotels are operated under the Sunway brand as well as
Pyramid, The Duplex and The Villas. Sunway has
hotels in Malaysia, Vietnam and Cambodia. The group is
expanding, with two new properties due to open in
Kuala Lumpur to bring the total hotel number to 11
Sunway Hotels & Resorts properties.
Avillion is a small boutique hotel group, originally set up

in 1990 with a property in Port Dickson. The flagship
property has 240 rooms, ranging from guestrooms
through to above-water villas. The group now has four
hotels, all catering to the high-end luxury travel market.
Locations are diverse, including Layang Layang Island,
off the coast of Borneo, the Avillion Legacy in Melaka, a
UNESCO World Heritage Site and Port Dickson. The
Avillion company also offers a bespoke travel booking service.

Domestic Hotel Groups - Continued

Impiana Hotels & Resorts Management is a wholly
owned subsidiary of KAB Group, a Malaysia-based
company. Impiana is focused on four- and five-star
properties, catering primarily to luxury, high-end and
boutique travel. Under the Impiana brand, the company
owns and manages three hotels and a resort in Malaysia
as well as two resorts and private villas in Thailand.
Impiana also owns the Swasana Spa, which is present
in several hotels owned by the company, including the
Impiana KLCC Hotel Kuala Lumpur and the Impiana
Resort Chaweng Noi. The group plans to expand its
presence in Thailand, including a new hotel in Bangkok.
Impiana is also considering opening hotels in Krabi and
Impiana Hotels & Resorts Management Bali.
Source: BMI
International Hotel Groups
Table: International Hotel Groups

Accor is well-established in Malaysia, with 11 hotels at a range of locations,
including Cheras, Kuala Lumpur, Kuching, Melaka, Putrajaya and Sandakan.
Accor is present in the market under several brands, including Pullman, Novotel,
Ibis Style and Avangio, which enables it to cater for a broad range of markets,
from budget travel through to high-end business and tourist travellers. The most
recent additions to Accor's Malaysia portfolio were an Avangio brand hotel and
an additional hotel under the Novotel brand that opened in 2015. Across
Accor Malaysia, Indonesia and Singapore, Accor has 75 hotels in development.
Best Western currently has four hotels in Malaysia, under the Best Western
brand and Best Western Premier. These hotels are located at Ipoh, Petaling,
Sandakan and Sha Alam and crater primarily to mid-market travellers. The group
has plans to open a further five new properties in the country, including the new
Best Western Ion Delemen in the Genting Highlands, due to open in 2016, which
will add 500 rooms to Best Western's Malaysian portfolio. Best Western has also
entered a management agreement for a new upscale hotel and convention centre
in Kota Kinabalu; the company has signed a deal with Sabanilam Enterprise for
the management of a new Best Western Plus to be located at the ITCC
Best Western Penampang complex, adding a further 330 rooms in 2016.
Hilton currently has six hotels in Malaysia at a range of locations, including luxury
rainforest resorts and major business centre facilities in Kuala Lumpur. The group
is present under several brands including DoubleTree. It caters primarily to high-
end business and tourist travellers. The Kuala Lumpur DoubleTree hotel's leisure
facilities are currently being refurbished. Hilton is expanding in Malaysia, with a
Hilton DoubleTree Resort due to open in Penang in 2016.
Hyatt has three hotels in Malaysia at present, located at Kuala Lumpur, Sabah
and Kuantan Pahang, including the 455-room Grand Hyatt in Kuala Lumpur,
which opened in 2012. The other two hotels are operated under the Hyatt
Regency brand. All of the hotels offer extensive business and leisure facilities
Hyatt including swimming pools, on-site restaurants, gyms and business centres.
InterContinental Hotels Group (IHG) has a limited presence in Malaysia at
present, with three hotels. All are located in Kuala Lumpur and are operated
InterContinental Hotels Group under the Holiday Inn, Holiday Inn Express and InterContinental brands. They

International Hotel Groups - Continued

cater to mid-range and high-end travellers, giving IHG relatively solid market
coverage. Both offer business facilities; the Holiday Inn hotel also has two
ballrooms with space for up to 500 guests.
Marriott currently has eight hotels in Malaysia, making it one of the leading
international hotel groups in the country. The hotels are operated under several
brands: Ritz Carlton, Renaissance, JW Marriott and three individually named
Marriott hotels. As well as three hotels in Kuala Lumpur, Marriott also has
properties in Johor Bahru, Miri and Mulu. Several of the properties are large
Marriott resort-style hotels with extensive amenities.
Starwood currently leads the way among the global top 10, with 11 hotels
operational in Malaysia. The group is expanding extensively in Malaysia, with two
new hotels due to open in 2016, three new hotels due to open in 2017, and
another in 2019 and 2020. Starwood is present under a range of brand names,
including Sheraton, Le Meridien, Aloft, St Regis, W, Westin, Four Points and
The Andaman. Several hotels offer conferencing facilities, most have spa
services and all of them have leisure facilities, including indoor or outdoor
Starwood swimming pools.
Wyndham group opened its first hotel in Malaysia in 2013, followed by a new
357-room Ramada brand hotel in Kuala Lumpur in early 2015. This new hotel
features extensive facilities, including four onsite bars and restaurants, 10
meeting rooms, a spa, children's pool and a fully equipped fitness centre with an
infinity pool. Wyndham is expanding in Asia as a whole and plans to open a
Wyndham further four hotels in Malaysia by 2016.
Source: BMI

Methodology
Industry Forecast Methodology
BMI's industry forecasts are generated using the best-practice techniques of time-series modelling and
causal/econometric modelling. The precise model we use varies from industry to industry. In each case this
is determined, as per standard practice, by the prevailing features of the industry being examined.
Common to our analysis of every industry is the use of vector autoregressions. Vector autoregressions allow
us to forecast a variable using more than the variable's own history as explanatory information. For
example, when forecasting oil prices, we can include information about oil consumption, supply and
capacity.
When forecasting some of our industry sub-component variables, however, using a variable's own history is
often the most desirable method of analysis. Such single-variable analysis is called univariate modelling.
We use the most common and versatile form of univariate models: the autoregressive moving average
model (ARMA).
In some cases, ARMA techniques are inappropriate because there is insufficient historic data or data quality
is poor. In such cases, we use either traditional decomposition methods or smoothing methods as a basis for
analysis and forecasting.
BMI mainly uses OLS estimators. In order to avoid relying on subjective views and encourage the use of
objective views, we use a 'general-to-specific' method. We mainly use a linear model, but simple non-linear
models, such as the log-linear model, are used when necessary. During periods of 'industry shock', such as
poor weather conditions that affect agricultural output, dummy variables are used to determine the level of
impact.
Effective forecasting depends on appropriately selected regression models. BMI selects the best model
according to various different criteria and tests, including but not exclusive to:
R2 tests explanatory power; adjusted R2 takes degree of freedom into account;
Testing the directional movement and magnitude of coefficients;
Hypothesis testing to ensure coefficients are significant (normally t-test and/or P-value);
All results are assessed to alleviate issues related to auto-correlation and multi-collinearity.

BMI uses the selected best model to perform forecasting.
Human intervention plays a necessary and desirable role in all our industry forecasting. Experience,
expertise and knowledge of industry data and trends ensure that analysts spot structural breaks, anomalous
data, turning points and seasonal features, while a purely mechanical forecasting process would not.
Sector-Specific Methodology
A number of principal criteria drive our forecasts for each tourism sector variable.
Figures for the tourism sector data are based, where possible, on industry associations/operators,
government/ministry sources and official data. Where these are unavailable, tourism forecasts are based on
a range of variables:
Government policy, industry trends and expenditure levels stated in international and national press.
Industry trends and expenditure levels stated in tourism companies' official financial reports or releases.
Likely expenditure and growth patterns owing to international developments and demographic patterns.
Likely alterations in expenditure patterns owing to economic/political activity.
Risk/Reward Index Methodology
BMI's Risk/Reward Indices provide a comparative regional ranking system evaluating the ease of doing
business, and the industry-specific opportunities and limitations for potential investors in a given market.
The system divides into two distinct areas:
Rewards: Evaluation of sector's size and growth potential in each state, and also broader industry/state
characteristics that may inhibit its development. This is further broken down into two sub categories:
Industry Rewards. This is an industry-specific category that takes into account current industry size and
growth forecasts, and the openness of a market to new entrants and foreign investors, to provide an
overall score for potential returns for investors.
Country Rewards. This is a country-specific category, and the score factors in favourable political and
economic conditions for the industry.
Risks: Evaluation of industry-specific dangers and those emanating from the state's political/economic
profile that call into question the likelihood of anticipated returns being realised over the assessed time
period. This is further broken down into two sub categories:

Industry Risks. This is an industry-specific category whose score covers potential operational risks to
investors, regulatory issues inhibiting the industry, and the relative maturity of a market.
Country Risks. This is a country-specific category in which political and economic instability,
unfavourable legislation and a poor overall business environment are evaluated to provide an overall
score.
We take a weighted average, combining industry and country risks, or industry and country rewards. These
two results in turn provide an overall Risk/Reward score, which is used to create our regional ranking
system for the risks and rewards of involvement in a specific industry in a particular country.
For each category and subcategory, a country is scored out of 100 (100 being the best), with the overall
Risk/Reward score a weighted average of the total score. Importantly, as most of the countries and
territories evaluated are considered by BMI to be 'emerging markets', our indices are revised on a quarterly
basis. This ensures that they draw on the latest information and data across our broad range of sources, and
the expertise of our analysts.
BMI's approach in assessing the risk/reward balance for industry investors globally is fourfold:
First, we identify factors (in terms of current industry/country trends and forecast industry/country
growth) that represent opportunities to would-be investors.
Second, we identify country- and industry-specific traits that pose or could pose operational risks to
would-be investors.
Third, we attempt, where possible, to identify objective indicators that may serve as proxies for issues/
trends to avoid subjectivity.
Finally, we use BMI's proprietary Country Risk Index in a nuanced manner to ensure that only the
aspects most relevant to the industry are incorporated. Overall, the system offers an industry-leading,
comparative insight into the opportunities/risks for companies across the globe.
Sector-Specific Methodology And Weighting
In constructing these indices, the following indicators have been used. Almost all indicators are objectively
based. Given the number of indicators/datasets used, it would be inappropriate to give all subcomponents
equal weight. Consequently, the following weighting has been adopted:

Table: Weighting Of Indicators
Weighting, %
Rewards 70, of which

Industry Rewards 60, of which
Tourist arrivals, '000 20
International tourism receipts per visitor, USD 20
Arrivals growth, % 20
Tourism receipts growth, % 20
Hotel occupancy, % 20
Country Rewards 40, of which
Physical infrastructure 50
Labour costs 50
Risks 30, of which
Industry Risks 45, of which
Stability of exposed region 50
Short-term political stability 50
Country Risks 55, of which
Legal framework 20
Corruption 20
Bureaucracy 20
Market openness 20
Security risk 20
Source: BMI

Malaysia Tourism Report 2016

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Malaysia Tourism Report 2016

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Q1 2016

Published by:BMI Research

Part of BMIs Industry Report & Forecasts Series

Published by: BMI Research

Copy deadline: December 2015

BMI Research 2016 Business Monitor International Ltd

Part of BMIs Industry Report & Forecasts Series

Published by: BMI Research

Copy deadline: December 2015

BMI Research 2016 Business Monitor International Ltd

BMI Industry View ............................................................................................................... 5

Industry Forecast ................................................................................................................ 9

Industry Risk/Reward Index ............................................................................................. 18

Market Overview ............................................................................................................... 21

Competitive Landscape .................................................................................................... 25

Business Monitor International Ltd Page 4

BMI Industry View

Table: Key Forecasts (Malaysia 2012-2019)

2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f

Business Monitor International Ltd Page 5

Key Updates And Forecasts

Business Monitor International Ltd Page 6

Business Monitor International Ltd Page 7

SWOT Analysis - Continued

Business Monitor International Ltd Page 8

Business Monitor International Ltd Page 9

Healthy Growth Ahead

Tourist Arrivals ('000) & International Tourism Receipts (USDbn) (2012-2019)

Tourism Arrivals: Increasingly Popular Destination

Business Monitor International Ltd Page 10

Attracting More Visitors

Business Monitor International Ltd Page 11

Singapore A Valuable Source Market

Malaysia, Inbound Tourism, Top 10 Markets by Arrivals (2015) '000s

Source: Tourism Malaysia, BMI

Business Monitor International Ltd Page 12

Table: Inbound Tourism (Malaysia 2012-2019)

2012 2013 2014e 2015f 2016f 2017f 2018f 2019f

International Tourism Receipts: More Visitors Equals Higher Spend

Business Monitor International Ltd Page 13

Table: Tourism Receipts (Malaysia 2012-2019)

2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f

Hotels: Attracting Investment

Business Monitor International Ltd Page 14

Overnight Stays and Industry Value

Total overnight stays, '000 (LHS)

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Table: Hotel Accommodation (Malaysia 2012-2019)

2012e 2013e 2014e 2015f 2016f 2017f 2018f 2019f

Domestic Tourism Market: Huge Potential

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Table: Tourist Departures and Consumption (Malaysia 2012-2019)

2012 2013e 2014e 2015f 2016f 2017f 2018f 2019f

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Industry Risk/Reward Index

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Table: Asia Tourism Risk/Reward Index

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Solid Growth Ahead

e/f = BMI estimate/forecast. Source: National sources, BMI

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