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Malaysian incentive specialists mired in price war
S Puvaneswary, Kuala Lumpur, May 24, 2013

INTENSE competition for Indian incentives to Malaysia has resulted in a price war among local inbound event specialists, with some reporting weaker bookings and thinner margins.


Luxury Tours Malaysia senior manager, Arokia Das, told TTGmice e-Weekly that "unhealthy competition" and price undercutting had caused a 30 per cent year-on-year dip in business.


He said: "A three-night ground package in Kuala Lumpur inclusive of twin-share accommodation in a four-star local hotel used to cost about RM800 (US$265.70) per night three years ago. Now it costs about RM600 to RM650. With inflation, prices should go up, not down."


He added that the price sensitive nature of Indian incentive clients fan the flames of the ongoing price war.


A Aruldass, managing director of Tourland Travel, one of Malaysia’s largest Indian inbound operators, said: "Sometimes we have no choice but to operate at nett cost in order to sustain the business. With (industry) liberalisation and (the entry of) more foreign players opening inbound agencies in Malaysia, the price war will get more acute over time."


According to Aruldass, foreign competitors are able to operate at lower costs as they have small operations in Malaysia, while their headquarters are in their country of origin, allowing them to save on exchange rate losses when clients pay for some of their services back home.


Meanwhile, to counter the weaker business in Malaysia, Tourland Travel has diversified into new markets in Asia and the Middle-East, starting with a specialisation in leisure segments before moving into MICE.


Asian Famous Tours & Travel chief operating officer, Pradeep Kumar, believes that competition from new players is inevitable and calls for fellow business event specialists to work together.


He said: "It is not fair to blame (the new players) for the price wars. (Specialists) should come together and agree on minimum rates. They should hold their rates and maintain service standards in order to compete with other destinations on service and value. Otherwise, Malaysia will lose out as an attractive MICE and leisure destination."

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