Apr. 28, 2003 - September 11th, terrorism fears, war in Iraq and now the SARS virus have given the travel and hotel sectors almost two years of unremitting gloom. Empty beds and empty seats on aircraft have decimated earnings around the globe. 

Indeed, worldwide the airline industry has lost more money since 2001 than all the money it made since the Second World War. The cost of the war in Iraq alone to the industry is estimated at $2 billion. 

With the hotel and travel industry now about to gather in Dubai for the annual Arabian Travel Market trade show, this is not a bad time to ask what happens next. 

The financial strains are only too apparent with the Le Meridien hotel chain effectively in the hands of its bankers and several US carriers in Chapter 11 bankruptcy protection. As anyone familiar with business cycles knows, it is as an industry starts to recover that the banks pull the plug on its weakest members. 

On the positive side, the signs of recovery are already apparent in the Middle East. The savage 50 percent fall in air passenger numbers seen in the first week of April is now much reduced, and airlines such as British Airways and Lufthansa report a tentative return to business, almost, as normal. 

Similarly the Dubai hotels, which looked unnaturally quiet at the start of April, have begun to fill up again. But the damage to annual financial results is already done and, with Ramadan in October this year, this will not be a good year for the Dubai hotels. The situation in Jordan and Egypt is considerably worse by all accounts. 

So the outlook is one of recovery, and it would be hard to think of another emergency that could hit hotels and travel in the near future. The downside is that the damage of the past two years to the finances of some big players is likely to prove fatal, and that suggests a radical restructuring of the aviation and hotel sectors is in prospect. 

The creative destruction of capitalism is all right if you happen to be in the right company at the right time, less so if you are working for one of the industry giants that crashes. But a re-organised travel and hotel sector will emerge from this crisis, with a more efficient financial structure albeit with a few famous names missing. 

For the Middle East, the big question is whether the region can settle down to become the sort of place that Western and increasingly Far Eastern visitors feel is safe. That will depend on wider political moves and the regional reaction to the early end of the Iraq War. 

Yet with winter sunshine, affordable luxury, excellent shopping and an interesting culture, the region still has a lot to offer. The visitors will surely return. 

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(c) 2003, AME Info, Abu Dhabi, United Arab Emirates. Distributed by Knight Ridder/Tribune Business News. BAB, LHA, DLAKY,