Posted on: Wednesday, December 19, 2001
Asian economies hit hard by tourism dip
By Claire Leow
Bloomberg News Service
SINGAPORE — Frank Sinatra's smooth voice graces the lounge of the luxurious, burgundy-carpeted JW Marriott Jakarta, which opened at a time when travel to a Muslim country was the last thought on the minds of the well-heeled.
"Let's take a boat to Bermuda, let's take a plane to Saint Paul, let's get away from it all," Old Blue Eyes croons.
The 333-room hotel, nestled between international companies and embassies, opened two weeks after the Sept. 11 terrorist attacks in the United States. It remains less than a quarter occupied.
Many Asian countries depend on tourism for the foreign exchange it brings. It accounts for 8 million jobs and $5.7 billion in annual revenue in Indonesia, and makes up 6 percent of Thailand's gross domestic product and 5 percent of Hong Kong's economy. That income is dwindling as people stay home, companies trim travel budgets and exhibition organizers cancel events.
"We can't depend on the outside market anymore," said Liezl Flores, a reservation officer at Bohol Beach Club, an upscale resort in the central Philippines, a destination boasting white beaches and spectacular dive sites. "We have to come up with packages that are light on the pockets of locals."
Visitor arrival forecasts for this year and next are being slashed across Asia as terrorism fears make would-be tourists and corporate travelers wary of flying and as slowing economies make people and businesses tighten their wallets.
A corporate air travel survey done in November by the International Air Transport Association showed that less than half the respondents expect their business travel plans to return to normal within six months, with a further 39 percent indicating their travel patterns will return to normal within a year.
Of those with plans to attend conferences, more than half the respondents indicated that conferences or exhibitions have been canceled or delayed as a direct result of the attacks.
Fewer business travelers from Japan and the U.S. have left a mark on hotels and airlines in the region.
"It is the affluent market that we really lost, the businessmen and rich people who travel business class," said Philippine Airlines President Avelino Zapanta. "People are still afraid to take risk."
Before Sept. 11, the Japan Association of Travel Agents had forecast 3.3 percent more Japanese would travel overseas this year to reach a record 18.4 million. Now the association expects an 8 percent drop, spokeswoman Toshiko Kato said.
"Travel demand has been weak, and the final number may be lower than the current estimate revised in October," Kato said.
Until there are stronger signs of a tourism recovery, hotels continue to offer special packages to try to attract more visitors, and airlines cut ticket prices to encourage people to fly rather than take another means of transport or stay at home. Domestic tourism, often neglected in favor of high-spending tourists from Japan to France, is also suddenly in vogue again.
Hotel Borobudur, Jakarta's best-known local hotel named after a ninth century temple and a World Heritage site, is offering residents weekend packages for about $118 excluding tax, with breakfasts and evening checkout. Weekend packages for nonresidents start at $150, normally a night's rate at five-star hotels.
Shangri-La Asia Ltd., which runs 38 hotels in Asia and is one of the region's largest luxury hotel operators, brought forward the start date of its special winter offer to October from the end of the year in the wake of the attacks.
"There are discounts of up to 40 percent, including a complimentary breakfast," said Julia Record, a spokeswoman for Shangri-La Asia. "That promotion will continue until Feb. 28."
There are some signs that business is picking up as advertising campaigns and promotions start to pay off.
"There is a recovery, people are now beginning to travel again," but the numbers are not back to pre-Sept. 11, said Lee Liat Cheng, president of the National Association of Travel Agents Singapore, which represents travel agents that control 80 percent of the market.
Similar sounds are being heard in neighboring Malaysia.
"Initially everybody was feeling the slowdown after Sept. 11, but by early November things had started to pick up," said Hira S., manager at Malaysia's MSL Travel Sdn., where business this year is expected to be 20 percent to 25 percent lower than last year. "Hopefully things will pick up even more in the next six months as airlines offer more promotions."
People's concerns about air travel safety may be receding as the necessity and convenience of traveling by plane come to the fore, particularly for managers who need to visit overseas offices, expatriates who want to return home or honeymooners looking for tropical island getaways.
Instead, the economic slowdown that started even before the attacks is keeping travelers at home. Recession in the United States and Japan is leading to job cuts, and people are saving money rather than splurging on travel.
"Business is 30 percent down from a year ago," said Lee at Singapore's association of travel agents. "The question is whether it's Sept. 11 and the fear of flying, or it's more the economic downturn. We are thinking the second issue may be stronger."
