ASEAN for ASEAN: Crisis will boost domestic and regional tourism

YOU could say this month’s ASEAN Tourism Forum (ATF), to be held in Hanoi, Vietnam, until January 12, is taking place at one of the toughest times in its history.

The global financial meltdown that began in mid-2008, combined with various natural disasters and political issues throughout the region, have impacted consumer sentiment worldwide and led to the slowing down of travel demand from key markets.

While there have been reports of some ASEAN countries benefitting from the problems faced by their neighbours, there is no running away from the fact that in a region as intertwined as ASEAN, one country’s misfortunes is the whole region’s as well.

With the tourism sector’s fortunes closely tied to political agendas, the ATF will be held amidst a backdrop of uncertainty and concern for the short and medium-term future of the region’s tourism industry.

While the theme at this year’s ATF is “ASEAN Tourism – Striving For a New Height”, the key priorities of ministers, tourism boards and the private sector attending the annual travel trade show will be focused on how to stop tourist arrivals from plunging to new lows in 2009.

Nearly every ASEAN nation is seeing a slowdown and is lowering its targets for 2009.

Since June 2008, Singapore’s arrivals have slipped and in November, registered a 9.7% drop against November 2007 to receive 760,000. But the total time spent in Singapore rose 0.1% to 3.1 million visitor-days.

Hotel room revenues also fell an estimated six percent to S$161 million in November 2008 from a year ago.

Malaysia is projecting a 9% drop in tourist numbers this year, an AFP report quoted Deputy Premier Najib Razak as saying. The country is expecting 20 million foreign visitors in 2009, down from the 22 million projected for this year.

Thailand too, is expecting a fall in its 2008 tourism figures. Conservative estimates suggest that Thailand will lose one and a half to two million tourists this year, cutting arrivals down to slightly more than 13 million.

In 2007 the country welcomed 14.4 million visitors. During 2008, the target was revised to 15.48 million. However, Kasikorn Research Centre, in a more optimistic assessment, suggests that arrivals could recover to 14 million in 2009.

Countries in Indochina, whose fortunes are most linked to Thailand’s, have also seen falls in arrivals.

In Cambodia, arrivals in October 2008 dipped about two percent compared to the same month the year before. Total arrivals for October stood at almost 157,000.

Cambodia’s Ministry of Tourism statistics showed that arrivals started to decline for the first time in October. Six major markets, out from its top 10, were down – Korea; Japan; US; China; Thailand and France. However, it said that over the first 10 months of 2008, the country still recorded an 8.5% growth with about 1.7 million arrivals. In 2007, Cambodia received approximately two million visitors, a 18.5% increase over 2006.

Vietnam has also said it was unlikely to meet its five million tourist arrivals target in 2008. Arrivals to Vietnam slipped into negative territory from August 2008 when the month ended with a 4.8% drop, and Minister of Tourism, Hoang Tuan Anh, was quoted in Travel Trade Report as saying that “tourist arrivals would decline this year for the first time since 2003, when the SARS crisis hit the region”.

Laos too has revised tourism forecasts for 2008. It had previously set a target to grow its visitor arrivals by 15% to 1.8 million visitors in 2008, but is now expecting about 1.6 million arrivals instead, according to Travel Trade Report. With 80% of its tourist arrivals coming from Thailand, Lao tourism officials said the country could lose 30% of arrivals in December.

Indonesia, however, remained confident that it would not have to lower targets for 2008. On its website, www.tourismindonesia, it said that as the increase in the arrivals during the first half, almost 12%, was in line with its expectations, “we see no reason to modify our forecasts this quarter, especially as historically the second half of the year has proved a stronger period for tourist arrivals”.

Bali continues to be the engine driving the wider Indonesian tourism industry, with about 967,000 tourists arriving by air on the resort island during the six-month period, up almost 24%.

The Philippines is also continuing to hold steady – for the first 10 months of 2008, its arrivals hit a record of 2.6 million and there have been no indications that the republic is looking at lowering forecasts for the year.

Luzi Matzig, group managing director of Asian Trails, which handles inbound clients throughout ASEAN, said that with Bangkok still the major gateway for countries like Laos and Myanmar, it expects sales to these countries during the first three months in 2009 to be down by 20%, “slightly less for Cambodia and Vietnam”.

Despite the apparent gloom and challenges that 2009 will likely present, there are still opportunities that ASEAN destinations can tap on, which is why this year’s ATF will be looked upon with greater importance.

It will not only provide a gauge for the months that lie ahead but also enable ASEAN destinations to look around them for business recovery measures.

With long-haul markets, particularly those in Europe, expected to decrease further in 2009, tourism players in ASEAN are setting sights on increasing traffic from within the region, which already accounts for the lion’s share of arrivals in most ASEAN destinations.

For example, for the first 10 months of 2008, Philippines’ tourist arrivals from ASEAN rose by almost nine percent to 210,000 with tourists from Vietnam, Indonesia and Thailand posting growths of about 32%, 11% and 10% respectively as Cebu Pacific and Philippine Airlines increased its flight frequencies to these ASEAN countries.

With the ASEAN Open Skies agreement going into effect this year, there is also optimism that increased air links between new ASEAN points will boost traffic. The Singapore to Kuala Lumpur sector, for instance, is now served by both low cost airlines and flag carriers, and new routes such as Singapore to Kota Kinabalu by Jetstar Asia hold promise of growth.

“This crisis will make everyone rethink their travel plans. A lot of people will either stay home or choose to discover their immediate surroundings and neighbours,” said Mr Matzig.

While noting that the events in the third quarter of 2008 were unprecedented, and “predicting the future is more difficult than ever”, chairman of Accor Asia Pacific, Michael Issenberg, said that 2009 would see a greater dependence on regional travel markets.

“Whilst we anticipate lower demand for long haul leisure travel, the short haul feeder markets are likely to be stimulated by airline and tourism association promotions,” he added.

He expects that 2009 may benefit from a stronger demand in the small meetings market. “In times where companies are reorganising or re-focusing their priorities, meetings play a crucial role. Midscale hotel brands will likely benefit from these sectors,” he said.

The Singapore-based Issenberg also noted that Asia still offers a strong value proposition, and with the cost of oil returning to lower levels resulting in lower travel costs, the region will recover more quickly than more expensive destinations.

“This, coupled with the expansion of low cost carriers in the region, will stimulate the return of long and short haul travellers at a faster rate than previously experienced during major economic events. We may have to wait till late 2009 or even 2010 to see any significant signs of recovery.”

David Brett, president of Amadeus Asia Pacific, said he remained optimistic “because travel is still regarded as a necessity on both a corporate and personal level. In an era where companies become more globalised and people are more internationalised, travel will remain an important aspect of life and the demand will remain”.

While there has been a softening of passenger traffic in the last few months of 2008, the Bangkok-based chief said he was confident that travel numbers would eventually pick up again. “The travel industry is highly resilient and it has weathered many storms in the past, including the Asian Financial Crisis in 1997 and SARS in 2003.”

He added, “In order to overcome the downturn, travel professionals and providers should review existing resources and engage the right tools to ensure they capitalise on every single opportunity for returns. The right solutions can help travel providers and corporations alike to cut costs and manage resources efficiently, allowing them to weather the economic storm with lessened impact.”

Despite the softening of the market towards the last quarter of 2008, vice president-Asia Pacific for WORLDHOTELS, Roland Jegge, whose company represents unique, independent hotels, said WORLDHOTELS finished 2008 on budget.

While there will be some adjustments to 2009 targets, the Singapore-based executive said every crisis brings opportunities and he believes his organisation has a unique opportunity to do well in the new year as travelers look for alternate accommodation choices to global brands and stay closer to home.

Matzig said his company would continue to attend major trade shows such as ATF.

“Destinations in ASEAN still offer bargain deals, best value for money with top quality accommodation and services, best shopping, super climate, plenty of activities and sights to discover and all the entertainment and fun you can wish for.”

Perfect storm or not, that has not changed.