MAJOR shifts in the Malaysian tourism industry in the last two years have marked another stage in the constant process of evolution and reinvention this industry has enjoyed since its foundation in the 1960s.
Short-term rentals blossomed during the border closures and social distancing measures of the pandemic.
But their continued popularity reflects a new trend in which domestic Malaysian vacationers and international business travellers are more willing to break from convention during their trips.
New research by Oxford Economics shows that Airbnb's contribution to the Malaysian tourism industry surged from 2.2 per cent in 2019, the last year before the pandemic struck, to 4.9 per cent in the 12 months to March 2023 — the period when travel began to reopen.
Airbnb (Air Bed and Breakfast) sits at the heart of various new trends reshaping travel and has enabled the Malaysian travel sector to take advantage of them.
Firstly, when international arrivals fell close to zero in 2021, Airbnb helped the sector survive by pivoting quickly to a domestic market.
While spending by overseas visitors inevitably dropped, spending by Malaysian Airbnb guests travelling to other parts of the country more than doubled from RM1.8 billion in 2019 to RM3.9 billion in the year to March 2023.
Secondly, Airbnb's flexible supply of accommodation enabled the tourism industry to accommodate volatile shifts in traveller preferences.
When travel restrictions tightened and fears over Covid were at their peak, we saw demand shift from urban to rural destinations, as travellers looked for a safe haven from busy cities. Since those restrictions have unravelled, we've seen demand shift back to Malaysia's tier 1 destinations.
Servicing these shifts in demand has been made possible by flexible short-term accommodation providers, most notably Airbnb. Whilst new hotel rooms take years to construct and dismantle, short-term rentals can rapidly respond to changes in demand, providing flexible accommodation capacity as a core service.
Certain destinations — in particular in Peninsular Malaysia — saw the biggest change.
For example, in Selangor non-urban bookings rose from a fifth of the total in 2019 to more than a quarter in the 2022/23 period (in value terms), and in Johor, the non-urban share rose from 4.8 to 5.9 per cent of the total. As travellers then shifted back to the cities, Airbnb's own data suggests it was able to accommodate the reversal, too.
Thirdly, travellers have become more accustomed to extending the length of their stays, mixing business with leisure, and working from anywhere.
Kuala Lumpur was the number one destination in Malaysia for long-term trips in the most recent 12-month period, accounting for almost 13 per cent of this long-stay market on the Airbnb platform.
Malaysia was one of the first countries in the world to systematically target this segment of the market with its Digital Nomads visa.
Some 600 certified Airbnb listings are featured as accommodations of choice for remote workers and promoted to Airbnb's community of travellers looking for longer-term accommodation options.
Oxford Economics estimates that Airbnb contributed RM5 billion to Malaysia's GDP during the 12 months to March or 0.3 per cent of the country's economic output.
This total captures the economic activity stimulated directly in frontline tourism activity, indirectly via the domestic supply chain, and also the additional consumer spending induced in the economy via earnings and wage spending by Airbnb hosts.
Whilst international Airbnb guest spending in Malaysia is 17 per cent lower than pre-pandemic levels in real terms, Airbnb's economic footprint is more than 16 per cent larger than it was in 2019, buoyed by growth in domestic Airbnb guest spending.
The growth has also been jobs-rich. We estimate that the economic activity stimulated by Airbnb businesses in Malaysia supported an estimated 57,000 jobs across the economy in the 2022/23 period, exceeding the 48,200 supported in 2019.
In 2024, our forecasts suggest international trips will finally recover and surpass their pre-pandemic levels in Malaysia, but the tourism industry is still in flux. Travel demands have changed, and new obstacles have arisen.
In that context, Malaysia's embrace of travel platforms and the trends reshaping travel leave it well placed amongst the competition to benefit from the return of tourism's economic footprint in the years ahead.
The writer is Director of Consulting for Oxford Economics, Asia