Global tourism slowdown seen to trigger stiff competition among destinations

With global tourism expected to slowdown due to the financial crunch, tourist destinations and service providers are seen to intensify competition through rate cuts and more promotional schemes.

With this, Jojo Clemente, president of the Philippine Travel Agencies Association, said the stakeholders in the local industry—including travel agents, airlines, hotels and resorts—should be proactive and make the necessary adjustments ahead of their counterparts in the region.

“It should be a time to think about adjusting how much we price ourselves, otherwise we will be losing out to other Asean destinations that are quicker to adjust, quicker to adopt to the situation,” he said at the press conference of the United Federation of Travel Agents’ Associations (UFTAA), which held its 42nd Congress at the Sofitel Hotel on Saturday.

He said Singapore has already reacted by reducing the hotel rates there.

In the Philippines, Clemente said that due to lack of infrastructure, hotels are still enjoying high occupancy of up to 80 percent, which is why they are still holding on to their rates that are already among the highest in the region.

However, the country, he said, must not relax because if the global situation worsens, travelers might start skipping the Philippines due to the high cost.

“Why wait for that to happen.”  “Those hotels that are not full, they should start offering attractive prices.”  “Generally, we should already be adjusting, although because of lack of infrastructure, right now demand is still bigger than supply,” he said.

Prasad Challagalla, UFTAA chairman, said since the financial crisis is only just a month old, there are no concrete figures yet on the drop in global tourism, although they are beginning to notice it.

Tarek Shallah, the Congress chair, said they also have to know if the decline in travels is just due to postponement, as tourists are probably just suspending their trips until the situation has become better.

Challagalla said they are hoping that the resulting heightened competition among destinations will not be about pricing, but on value proposition.

“That’s the way it should be.”  “We don’t want the competition to be about price,” he said.

The Philippines, he said, should strive to be affordable, but not cheap.

Other UFTAA officials agreed that the basis of the competition should be the quality and value-for-money products, which is why countries must make sure that they will have perfect destinations.

Clemente said, in the Philippines, those hotels and resorts that are higher-priced have added attractions, and beefed up more inclusions in their packages, like free lunch, in addition to the usual free breakfast.

“That is where the competition is now, not necessarily on price but on experience, although lowering the price is a good option,” he said.

Challagalla said that aside from the US and Europe, countries that depend most on exports will be hit by the crisis for a longer period than those that can rely on domestic production and resources. He said it would be best for the Philippines to focus marketing on countries such as India and China.

Clemente said they are really worried about the US, Europe and other long-haul markets.

“We are now looking at the short-haul to make up for potential losses from the long-haul markets.”  “We want to stimulate Asean travelers and those from North Asia and India, which are closer to the Philippines,” he said.

The focus of the UFTAA Congress in Manila, Challagalla said, is on finding ways that will allow the industry to survive and even thrive in this global situation.

Clemente said one way to do it is for hotels to lower their requirements for the period of payment for reservation to 15 days from the date of arrival, so travelers can have more time in raising the money.

Currently, Clemente said there are hotels in the Philippines that require payment for reservation of up to three months in advance.

A Report by The Mole