Hotel Online Special Report
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Signs of a Revival in 
Tourism Growth
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Charts: Arrivals in Pacific Asia by Selected Markets, 1997 - 1998
Top 10 Airports for Shopping and Prices
 
December 1998 

Asia's economic and financial crisis has had less impact on travel and tourism worldwide than earlier feared, according to the results of a survey of national tourism organisations (NTOs) just released by the World Tourism Organization (WTO). The next two years could be difficult, the WTO report concludes, hut strong growth rates-at least in terms of arrivals-are expected to return soon after. 

WTO estimates point to an increase of 1.5-2 percent in international arrivals worldwide in 1998. This compares with 2.8 percent in 1997 and 5.6 percent in 1996. The majority of the world's destinations will record positive growth in arrivals in 1998-the impact of the Asian crisis has been very limited outside the region. 

A survey of key NTOs in Pacific Asia-South Asian countries were, for some reason, not included-highlights the different performances from one destination to another in the region. Singapore and Hong Kong turned in the most disappointing results in the first eight months of 1998-of -17 percent and -14 percent respectively-but the first seven months produced healthy increas-es for Korea-ROK (+7 percent) and Thailand (+6 percent). Both are confident of maintaining growth levels through the full 12 months of 1998. 

Hong  Kong's  performance, meanwhile, has picked up in the second half of the year, with the result that it is now pre-dicting a less severe drop in arrivals of six percent by year end. For the Pacific Asia region overall (excluding South Asia), total arrivals are expected to fall by 5.6 percent in 1998 to 84.2 million. Intra-regional arrivals are estimated at 64.1 million, down 9.8 percent on 1997's level, while long-haul markets are projected to grow by 11.7 percent-an additional 400,000 arrivals from the Americas, +6.4 percent, and another 1.5 million from Europe, +15.0 percent. The only important source market in Europe to record a decline in arrivals for the region is Russia. 

A word of warning, meanwhile. Although a use-ful indicator of trends-not to mention welcome news for Pacific Asia - these forecasts should nevertheless be considered in the light that they focus almost entirely on arrivals and do not address other meaningful measures of performance such as overnight volume and receipts. 

As an example, Indonesia's international tourism receipts fell by a reported 24 percent in the first half of 1998 and the decline for the full 12 months of this year is expected to be far worse that the six percent fall in arrivals currently projected. As for Hong Kong, China, despite a steadily improving arrivals outlook, its receipts are down 30 percent on 1997's level. Industry analysts, meanwhile, all seem to agree that while there are clear signs of a revival in tourism in some countries of the region, yield is likely to remain severely depressed for some time to come. 
 
 

Arrivals in Pacific Asia by Selected Markets,  
1997 - 1998
Market
1997
% Change Actual ( No. of months)
Estimate (Year end)
Australia 4,286 -5 (8) -5
China 23,770 -3 (7) 5
Hong Kong 10,406 -14 (8) -6
Indonesia 5,036 na -6
Japan 4,223 -4 (6) na
Korea-ROK 3,908 7 (7) 7
New Zealand 1,615 -10 (8) na
Singapore 6,542 -17 (8) na
Thailand 7,263 6 (7) 6
Sources: Respective national tourism organizations (NTO's);World Tourism Organization (WTO).

Markets & Destinations 

According to the latest survey by travel research consultancy JRA Data & Forecasts, Singapore's Changi airport is considered the best in the world for shops and variety of goods for sale, while Dubai comes out top for best prices. No other Pacific Asia airport was rated among the world's best airports for shopping by the 10,000-plus business travellers polled for the survey. However, Singapore, Sydney, Kuala Lumpur and Bangkok were all ranked among the top 10 airports in terms of prices. 

  • Overseas arrivals to the U.S. fell by one percent in the first half of 1998. As expected, Asia's economic situation was the main reason for the overseas short-fall, with the region's arrivals declining by 13 percent. Despite a six percent fall, Japan remained the top overseas market for tourist arrivals, with 2.4 million. By comparison, Western Europe increased by four percent.
  • In the first nine months of 1998, Canada registered a 16.0 percent decline in arrivals from Japan. Chinese Taipei (Taiwan) was down by 16.5 percent, Korea (ROK) by 59.6 percent and Australia by 3.1 percent. Among the growth markets, Hong Kong, China increased by 6.3 percent, Mexico by 16.9 percent and the U.S. by 10.2 percent.
  • The Australian Tourist Commission estimates that backpackers made up eight percent of all visitors arrivals in 1997 while their contribution, excluding airfares, was 15 percent of all visitor expenditure.
 
Top 10 Airports for Shopping and Prices
Best Airports for Shopping
Best Airports for Price
1. Singapore 1. Dubai
2. Amsterdam 2. Amsterdam
3. Dubai 3. Singapore
4. Copenhagen 4. Copenhagen
5. Zurich 5. London Heathrow
6. Frankfurt 6. Sydney
7. Rome Fiumicino 7. Kuala Lumpur
8. London Heathrow 8. Frankfurt
9. Paris Charles de Gaulle 9. Bangkok
10. Vienna 10. Zurich
Source: JRA Data & Forecasts

Hotels & Resorts 

The Japanese have never been as successful internationally in the hotel business as they have been in other sectors such as the motor industry or electronics. Among the existing hotel groups, Okura and Prince have little international presence and ANA's and Nikko's expansions are currently constrained by the problems of their airline parents. All Nippon Airways has sold its San Francisco and Washington hotels and removed them from ANA Hotels' portfolio. 

That leaves Tokyu, which once showed an interest in international expansion-when it started a joint venture with what became an independent Regent Hotels-but which has changed direction significantly since then. It has been reasonably aggressive in terms of regional expansion with its Pan Pacific Hotels, but there are no signs of an aggressive move onto the global stage. 

  • Room revenue at the Peninsula hotel group dropped a startling 60 percent in the first half of 1998. Travel Business Analyst (TBA) says the Hong Kong group is not alone in experiencing a drop of this magnitude, but it points out that many weaker companies in the travel business in Asia would not be able to sustain revenue falls like this. Travellers themselves are certainly getting great travel bargains, TBA points out, but will they still travel in this economic climate when those bargains have gone? Worse, will the travelling public now be counting on travel bargains before booking any kind of trips?
Aviation 

Airline alliances in Pacific Asia are increasing. All Nippon has joined the Star Alliance, as have Air New Zealand and its Australian partner Ansett, and Singapore Airlines is almost a Star member. Cathay Pacific and Qantas have joined Oneworld and Japan Airlines and Cathay have linked with each other. One aspect of alliances has yet to be addressed, however-that of liability regarding code-share flights-although a legal precedent may already have been set. 

Just one month before the Swissair crash into the Atlantic, the U.S. Department of Transportation found against Swissair and its code-share partner Delta in a case which occurred earlier this decade. In 1994, the U.S. government had issued an order to stop U.S. airlines overflying Afghanistan-at that time considered a security risk. In 1995 this ban was extended to code-share partners. In other words, a Swissair flight also operating with a Delta flight code was considered a Delta flight, and therefore the over-flight ban applied to the Swissair flight as well. The U.S. decision on that case was to fine Swissair for over-flying Afghani air space. Given this precedent, would Delta also share responsibility for a Swissair flight that crashed? Or would Cathay Pacific, for instance, be responsible for what happens to its passengers when they fly on other airlines in the same alliance? 

  • Some short air routes might produce fuel savings, but they cost more in en route navigation charges. The most costly routing in terms of navigation charges for Cathay Pacific flying Hong Kong, China to London, for example, is over China and Germany.
  • Whether or not the result of the economic down-turn, two ventures to build a 100-seat jet aircraft in the Pacific Asia region have been abandoned in 1998. One was in Japan. The YSX project was originally a venture with Boeing and was kept going for almost a year after Boeing bought McDonnell Douglas. It has since decided to develop the B717 at the Douglas factories as a 100-seater. Also after 40 years, Airbus and its partners-Avic from China, Alenia from Italy and Singapore Technologies-have cancelled plans to build a 400-seat jet aircraft in China. Airbus now plans to build the A318, a shortened version of its A319, for the 400-seat market segment.
These moves indicate that after attempts to develop a full aircraft manufacturing industry, aircraft companies in the region will once again have to be satisfied being parts' suppliers to the two big U.S. and European companies, Airbus and Boeing. 

Travel Agents & Tour Operators 

Japan Travel Bureau says its revenue through convenience stores over a three-month period in early 1998 was US$8.5 million (YI.2 billion)-a fairly modest US$2.8 million monthly, and US$237 per store. Bookings for tour packages, hotels and domestic tourism attractions can be made from terminals, first installed in June 1997 and now available in 12,000 stores throughout the country. However, JTB says almost 50 percent of the total transactions were made during the early mornings or evenings-when JTB offices are closed-so these could be producing additional revenue for the company. 

  • A new' wetland tour has just been introduced-not in Bangladesh, Borneo or India, but in Hong Kong, China! The destination is generally associated with a city culture built around skyscrapers, shopping and dining. However, the World Wide Fund for Nature (WWF) and Grayline have started half-day tours to the territory's Mai Po Nature Reserve, which not only has its own resident animal, insect and bird life, but is also on an annual migration route for thousands of waterbirds.
  • Another new tour may soon become accessible to international travellers Twice-weekly ferries are due to start at the end of November between North and South Korea (Korea-ROK). Costs for the overnight trip on a 1,200-passenger ship, will be between WI million and W3 million.
  • The Australian tour operator/travel agency sector achieved revenues of A$1,980 million in 1996/97 (ended June 30, 1997), according to the Australian Bureau of Statistics. Some 65 percent of total earnings came from ticket sale commissions and international business accounted for 62 percent of this. The overall profit margin of the industry was two percent, although retail travel agencies recorded an operating profit margin of 8.1 percent and inbound tour operators achieved 6.5 percent. Wholesalers and ticket consolidators, on the other hand, had a negative profit margin of -16.8 percent.
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Contact:
For additional information contact:
 Ms. Nancy Cockerell, Editor and Researcher
   Pacific Area Travel Association
 Web Site: http://www.pata.org/
  Email: patacom@ix.netcom.com
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Also See:
Increased Pressure on National Promotional Budgets / Government Role in Tourism Promotion / PATA / Nov 1998 
The Youth Travel Market - Important Generator of Tourism / PATA / Oct 1998 

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