Visitor arrivals in 2024 shy of government target

• According to Malaysia tourism data, Malaysia welcomed about 25.0 million international arrivals in FY2024, approximately 96% of 2019 levels.
• The government recently announced visa exemptions for Indian nationals until the end of 2026, expecting to spur arrivals with anticipated improved connectivity between India and Malaysia.

Supply accelerates due to new mega-infrastructure projects in 2025

• A total of 2,520 rooms from seven new hotel projects are expected to enter the market in 2025, with luxury and upscale hotels leading supply growth.
• Furthermore, investments into new mega-infrastructure projects with a hospitality component have been announced, such as the Golden Triangle and Palace of Golden Horses, which will drive supply in the medium- to long-term.

No new hotel transactions so far in 2025

• The hotel capital market in Kuala Lumpur has been muted since 2024, with no new transactions in the market as owners hold on to their assets in light of inbound tourism.
• In terms of trading performance, the record year in 2024 has seen some market correction, with luxury RevPAR declining 3.1% y-o-y due to occupancy rates contracting by 3.8 ppts.

Outlook: Global economic uncertainty could slow tourism recovery

• With concerns rising over a potential recession and a global trade war, a slowdown in the economies of key Malaysian tourism markets could dampen the hospitality industry.
• However, the government has been ramping up efforts to promote Malaysia as a top global destination with the launch of the Visit Malaysia 2026 campaign, which sets an ambitious goal to welcome 35.6 million tourists to Malaysia.