THE ringgit’s continually shifting exchange rate has made it difficult for Malaysian tour operators to put a fixed price on their packages.
The ringgit had earlier strengthened against the US dollar on April 14, but then took a dip as brent crude prices plunged after major oil producers failed to come up with an agreement in Doha to freeze output and address a supply glut.
Explaining the problem agencies are facing, Ally Bhoonee, executive director of World Avenues, said: “If we put a bigger buffer, we safeguard ourselves but we take a big risk of losing the customer to the competition, which includes OTAs. If we keep the margins very thin, we then take a big risk if the ringgit depreciates.
“Some of our partners overseas understand when we tell them that the price quoted may change due to currency fluctuations in Malaysia but some argue that this is not the situation in other countries such as Singapore where the dollar is more stable.”
Concurring, Arokia Das, senior manager at Luxury Tours Malaysia, said: “If we mark up too much, we lose out. If it is too little, we lose profit on exchange. On top of this, there are agents who are undercutting for business as they need to survive. They don’t mind making nett to nett or making a slight loss as they are drowning.”
But the operators interviewed are not too worried and are instead countering the unpredictability of the ringgit with different strategies.
“I find the best way to compete in today’s market is by providing personalised services for high yield tourists and to go for smaller volumes,” advised Bhoonee.
As for Luxury Tours Malaysia, Das said: “We remain confident for this year because we have confirmed business from a reasonable number of wholesalers in India who have guaranteed us good volumes.”
