Inbound agents wary of strengthening ringgit

INBOUND agents in Malaysia are anticipating that the strengthening of the ringgit against the US dollar will make the destination more expensive (See related story).

The ringgit reached a 13-year high of 2.99 against the dollar on Monday, and is expected to continue to rally higher in the short-term.

Yap Sook Ling, managing director of Asian Overland Services Tours & Travel, believes that the pinch would be felt in the next contracting season in November. This is the period when the company would also have to add a buffer for exchange rate fluctuations, as well as an increase in the cost of living, which will result in ground arrangements becoming more expensive.

She anticipates that package prices would increase by 15 to 20 per cent for the next season. She said: “That’s a lot. To price sensitive markets such as longhaul markets, outbound agents’ main concern will be the higher prices. It will make the destination become more expensive, compared to regional destinations such as Thailand, Bali and Vietnam.”

Red Apple Travel & Tours is a major player in the Indian inbound market. Managing director, Arokia Das Anthony, said: “Our margins are already low, as India inbound is a volume market. We have to bite the bullet for whatever has been quoted and guaranteed.

“For the next contracting season, we will work on a different rate of exchange, bearing in mind that we will also have to ensure the destination remains competitive.”

To minimise risk of losses due to currency fluctuations, Tina Travel & Agencies managing director, Adam Kamal, has included a clause in the confidential tariff given to partner agents, where rates are subjected to change upon confirmation of bookings.

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