Malaysia tourism escapes threat of twin tragedies

The Sultan Abdul Samad Building is reflected on a marble surface at Merdeka Square in Kuala Lumpur, Malaysia.
Brent Lewin | Bloomberg | Getty Images
The Sultan Abdul Samad Building is reflected on a marble surface at Merdeka Square in Kuala Lumpur, Malaysia.

Two aviation disasters put Malaysia's vital tourism sector at risk earlier this year, but latest government data suggest the Southeast Asian country may be more resilient than many had expected.

Malaysia welcomed 16.1 million tourists for the first 7 months of 2014, up 9.7 percent on year, statistics from Immigration Department of Malaysia show. Chinese tourist arrivals declined 11.8 percent on year to nearly 1 million, but the world's second-largest economy remained Malaysia's third-largest tourist market after Singapore and Indonesia.

Tourism revenue also improved, up 13.2 percent on-year at $10.6 billion (approximately RM35.3 billion).

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The figures contrast with analysts' expectations for a drop in tourist arrivals and a minimum loss of $1.3 billion in tourism revenue after the disappearance of Beijing-bound Malaysia Airlines flight 370 in March and the downing of flight 17 in eastern Ukraine four months later.

The former was seen as a heavy blow to Malaysia's booming tourism sector, which is increasingly dependent on Chinese tourists. Contradicting statements by Malaysian authorities during the investigation of flight MH370 triggered criticism from the mainland, leading some to call for boycotts against Malaysia.

Promotional efforts

Malaysian tourism minister Seri Mohamed Nazri Abdul Aziz attributed the upbeat visitation figures to the government's recent efforts in wooing travelers beyond China, according to Malaysian media.

Apart from participating in international tourism fairs in European and U.S. markets, Malaysia targeted promotional efforts at its regional neighbors. The shift yielded higher tourist arrivals from Asia, particularly from South Korea and Vietnam, for the first seven months of this year, the minister said.

Read MoreChinese tourists, angry over missing plane, shun Malaysia

South Korean tourist arrivals rose 42 percent on year to 189,083 for the seven-month period, while Vietnamese tourist arrivals rose 26 percent to 112,782.

"The 'Luv U Malaysia' TV program in the Philippines and other promotional efforts have driven up interests in Malaysia. Airfare promotions also contributed to the surge in arrivals from ASEAN," said a representative from Malaysian Association of Tour and Travel Agents.

"This growth in tourists has been obvious and to a certain extent, improved the industry's outlook," he added.

Malaysian authorities believe the data show it's "closer to its goal of 28 million tourist arrivals" this year, set in conjunction with "Visit Malaysia Year 2014." The year-long campaign aims to fuel growth in the travel and tourism sector, which accounted for 16.11 percent of gross domestic product in 2013, according to the World Travel and Tourism Council.

A Tourism Malaysia advertisement promoting Kuala Lumpur is displayed behind commuters sitting at a bus shelter in Malaysia.
Brent Lewin | Bloomberg | Getty Images
A Tourism Malaysia advertisement promoting Kuala Lumpur is displayed behind commuters sitting at a bus shelter in Malaysia.

Chinese tourists are back, slowly

While arrival numbers from China declined, analysts believe Chinese tourists won't stay away forever.

"People's memories tend to be short and where the destination has a robust brand, a strong visitor appeal, and a sound track record of delivering satisfied visitors, then any such dip is likely to be only temporary," said a research analyst from Malaysian Institute of Economic Research.

Malaysia is also stepping up efforts to reach second-tier mainland cities like Wuhan, Chengdu, Tianjin and Changsha, by organizing direct flights. The thrice weekly Wuhan-Kuala Lumpur charter flight, for instance, commenced in June and is estimated to generate $23 million in tourist receipts up to end-June next year.

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But even as Chinese tourists gradually put the vanishing of MH370 behind, other issues raise concerns, according to David Scowsill, president and CEO of World Travel & Tourism Council: "Apart from loosening visa regulations, Malaysia could improve its competitiveness and demand by increasing connectivity."

"Destinations usually take 6-12 months to recover after a major incident of this magnitude. The re-building of Malaysian Airlines is a key part of this recovery, along with a concerted marketing campaign to re-launch the destination," he added.