Hospitality Industry in Malaysia - Growth, Trends, COVID-19 Impact, and Forecasts (2023-2028)

The hospitality industry in Malaysia is estimated at USD 4 billion in the current year and is poised to register a CAGR of greater than 6.5% during the forecast period.

Malaysia's hospitality industry is rapidly expanding, following the country's tourism industry. The tourism industry has undoubtedly been hit hard by the COVID-19 pandemic, with effects crippling travel and tour operators as well as hotels. According to the Malaysian Association of Hotels (MAH), approximately 120 hotels have closed either temporarily or permanently, and the industry has lost over RM6.5 billion in revenues for 2020, with another RM9 billion likely lost to date in 2021. According to data from the World Tourism Organization (UNWTO), the hotel workforce in Malaysia fell 10% to 208,500 people in 2020 from a pre-pandemic total of 233,800 people in 2019, while MAHO estimates that the hospitality sector lost about half of its overall workforce to other industries and self-employment during the pandemic.

The Government has outlined several strategies in the 12th Malaysia Plan to re-energize the tourism industry (12MP). Among them are restoring tourist confidence in traveling safely in a post-pandemic world, as well as providing higher-quality products and services such as ecotourism and community-based cultural immersion activities that vividly depict the Malaysian experience. All branding and promotion efforts will focus on safety and hygiene. The government has also launched the National Tourism Policy (NTP) 2020 - 2030, a ten-year transformation plan for the tourism industry. The NTP was designed to place Malaysia among the top ten tourist destinations in terms of both arrivals and receipts. Smart tourism is one of the key strategies for remaining competitive far into the future.

Malaysia Hospitality Market Trends

Smart Tourism in Malaysia to Offer Lucrative Growth Prospects

While the tourism industry has suffered as a result of the pandemic, initiatives to build a more resilient and sustainable future in Malaysia include a focus on digitalization and the development of smart products and infrastructure. Tourism is Malaysia's third largest contributor to GDP. The number of tourists visiting Malaysia is expected to reach 9.2 billion by 2022, translating into USD 5.98 billion in revenue. The Malaysian Smart Tourism 4.0 Initiative aims to unlock the full potential of the tourism industry by leveraging IR 4.0 enabling technologies. While the tourism industry has suffered as a result of the pandemic, initiatives to build a more resilient and sustainable future in Malaysia include a focus on digitalization and the development of smart products and infrastructure. Malaysia's Ministry of Tourism, Arts, and Culture has increased the target for tourist arrivals in 2022 to 9.2 million, with tourism receipts of 26.8 billion RM (USD 5.98 billion), after the country has nearly met the initial target of 4.5 million. Also as per the Malaysian Investment Development Authority (MIDA) with the incorporation of Smart Tourism 4.0 Malaysia’s tourism-based revenue is expected to reach about USD 110 billion by 2030 from USD 25 billion in 2018.

Growing Investment in Hotel & Tourism Sector to Surge Hospitality Market in Malaysia

Malaysia's government is working to improve the country's tourism industry. The Malaysian government launched the National Tourism Policy (NTP) on December 2020, as a roadmap for support to the country's tourism industry until 2030. Part of the strategy is to shape Malaysia into a popular tourist destination for visitors from all over the world. An increase in the number of investors in the broader market is expected to benefit Malaysia's hospitality industry.

Malaysia Hospitality Market Competitor Analysis

The Malaysian hospitality industry is a combination of international hotel brands (and their chains) and Asian brands (and their chains). Though both international and Asian brands contribute to an almost equal number in terms of total hotels present in the country, international brands and their chains are dominating the supply of rooms/keys. Many well-established international brands entered the country with a wide range of strategic partnership programs with leading hospitality companies. The market holds great growth opportunities and is embracing many new investors into the industry. Moreover, players including, Genting Group, Accor SA, Shangri-la Hotels and Resorts, Hilton Worldwide Holdings Inc, and Marriott International Inc, among others have been profiled in the report.

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