STRATEGY FOR COMPETITION IN TOURISM

By : OXFORD BUSINESS GROUP

Development experts are finalising the second Sabah Tourism Master Plan (STMP),which will provide a comprehensive strategy for the sector for 2011-25. Along with a wide range of reforms, the STMP will introduce a number of investment opportunities.

The new agenda will also require significant capital expenditure from the private sector for development activities.

"The new master plan is heavily focused on private investment, emphasising the creation of value-added products to help Sa bah compete more effectively with other regional destinationsf Albert Stafford.the director ofthe Stafford Group, a tourism consultancy involved in the formulation of the second STMP told OBG.

EVOLVING PLANS: When the first STMP was formulated in 1994, visitor numbers were nearing 100,000 up from 40,000 in 1987. Along with rising occupancy rates, the increasing arrivals showed the tourism industry was ready to expand.

The first STMP aggressively promoted growth and expanded commercial accommodation. This approach bore fruit, as annual arrivals reached 1m in 2002 and 2.5m in 2010, with the latter year generating RI\/l4bn ($1.25bn) in revenue.

The second STMP comes at a time when Sabah is setting new goals and addressing new challenges. Given the fragility of Sabah's ecosystem and the governments target to attract 445m tourists by 2020, the new plan will prioritise growth management to achieve a balance between development and environmental preservation.

The new STMP is also expected to address key sector weaknesses, including human resource shortages and a poor road network that prevents tourists from easily accessing much of Sabah's territory

OPPORTUNITIES: Perhaps the most enticing investment area highlighted by the new plan is a coastal development project to be implemented north-west of Kota Kinabalu.The project is divided into two phases,the first of which is between Tuaran and Kota Belud and the second between Kota Belud and Kudat.

The venture, which will require funding of up to $3bn, is intended to create a string of shoreline resorts to satisfy demand for upscale beaches in Sabah. This project will support the broader industry objective of attracting high-yield, long-stay travellers.

According to early reports, a number of international boutique hotels have expressed interest, though the project will require substantial investment from property developers to construct waste management facilities and connecting roads.

The second STMP will identify other development initiatives to reposition Sabah as an upscale destination. Along with a dedicated cruise terminal, the plan is expected to recommend the construction of a sophisticated performing arts venue, a major cultural centre and convention facilities supported by an internationally branded hotel.

"The STMP will involve a wide range of public and private authorities in Sabah’s tourism industry," Alex Cham, the general manager ofthe Promenade Hotel, told OBG.

"In particular many expect the plan to provide excellent opportunities for global hotel chains, which can leverage name recognition to attract high-yield international clientele?

REFORMS: The second STMP is also reform-oriented, identifying a lack of transportation infrastructure as a fundamental weakness in the secton Sabah has been unable to create an integrated transport system due to the state's rugged terrain and a shortage of capital for public works. This has made it difficult for visitors to travel and increased risks for developers, many of which are reluctant to open businesses in areas that are potentially isolated from customers

"There is room for expanded profits in Sabah’s tourism industry, but investors are waiting for connectivity to match that of Thailandland indonesia?" Cham said.

The new plan is expected to address these concerns by introducing a more government-led approach to infrastructure development. This is in contrast to past policies, which have expected private investors to shoulder the costs. This new strategy has proven that the government is taking the infrastructural weaknesses seriously and is willing to make significant changes to keep them from hindering development in the sector.