Tour operators face financial constraints due to the slowdown in tourist arrivals and tight credit situation. Feedback from the industry indicated that 85 per cent of tour bookings for September to December 1997 were postponed or cancelled. At the same time, there is a decline in outbound travel. Small-sized travel agents that concentrate purely on ticketing and outbound travel are facing cashflow and capitalisation problems. Low tour bookings continue to be recorded for the first quarter of 1998 because of the uncertainty that the haze might recur.
Foreign tourists are concerned about their personal safety when travelling in the Asian region.
The hotel industry is facing an oversupply of hotel rooms particularly in the Klang Valley. In 1997, the number of hotels had increased to 1,365 and over exceeded the target under the Seventh Plan of 1,340 hotels by the year 2000. There is a tendency for taxi operators to overcharge foreign tourists. Past experience in promotions indicated a direct correlation between expenditure on promotions and tourist arrivals. However, in line with the Government s decision to reduce public sector expenditure in 1998, the allocation for tourism promotion has been reduced from RM79 million in 1997 to RM63 million in 1998.