Travel operators from Malaysia are reporting a decline in the domestic incentive travel market, due to competition from secondary international destinations and post-pandemic financial pressures.
Adam Kamal, director of Suka Travel & Tours, highlighted that the cost of conducting an incentive trip to secondary destinations like Phu Quoc, Danang, Medan, Bandung, or Phuket is often comparable to, or even cheaper than, travelling domestically to Penang or Langkawi from Kuala Lumpur.
This disparity grows further for air travel to East Malaysia, which tends to be even more expensive when compared to airfares from Kuala Lumpur to West Malaysian states.
He added: “Moreover, the government no longer offers tax breaks to Malaysians holidaying domestically. So, there’s little incentive to hold events locally when you could go abroad, explore new places, and have new experiences.”
Zulkifli Rahman, director of sales and marketing at The Ritz-Carlton, Langkawi, told TTGmice that while the property welcomed incentive groups from the local financial and multi-level marketing sectors in 2023, the number of such groups has significantly decreased this year
However, small, high-level management teams are still travelling. He also noted that with international airfares and hotel rates stabilising this year, overseas travel has become more attractive.
Although domestic business events at the property are on the decline, The Ritz-Carlton, Langkawi, has seen an increase in incentive groups from Australia, Singapore, and China, whose higher spending levels surpass those of domestic corporates.
This could be because the lingering financial effects of the pandemic have forced many to tighten their budgets, resulting in cuts to incentive travel spending.
Hasniza Suid, director of sales at Langkawi MICE Holidays & Tours, pointed out that small and medium-sized businesses are still grappling with the economic fallout from the pandemic.
“For those opting for domestic incentive travel, cost-cutting measures have become common. This includes choosing cheaper accommodations, transport, and foregoing themed dinners in favour of private dining,” she said.
