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2 Jun, 2003

Post-SARS Tourism Bunfight Starts

Over the next few weeks, Thailand’s tourism industry will be facing ferocious competition as Asian destinations mount vigorous big-budget campaigns to recoup the significant losses of the past few weeks.

While 9/11 and the Iraq war hit tourism worldwide, SARS specifically struck a slew of regional destinations like Hong Kong, Singapore, Malaysia, the Philippines, China and Taiwan, plus Thailand, all of whom will now be spending millions of dollars to market cut-price discount campaigns designed to bring back the visitors and perk up cash flow.

That has become standard operating procedure for crises recovery in the travel & tourism industry: Slash prices across a broad range of products and services and give it saturation coverage, in partnership with airlines, tour operators and global multinationals.

This time, however, the chances of success of such standard operating procedures are muted by a whole range of new realities.

One major casualty of the spate of crises has been the mood to travel. A holiday is supposed to be a fun, pleasurable experience that everyone looks forward to.

However, the daily barrage of shock-horror news, be it SARS, terrorism or other conflicts, have led to increased security restrictions, visas and airport checks, and reinstated one of the biggest threats to travel — the hassle factor.

Visa liberalisation policies, a major facilitator of the 1990s travel boom, are being reviewed by Indonesia and a number of countries. Add to that the security and health concerns, and it is more than likely that people will opt to travel within their own countries until the clouds lift.

The campaigns to be mounted by regional destinations are designed to make the discounts mouth-watering enough to make this hassle factor worth facing. Countries that still have visa-free or visa-on-arrival policies, like Hong Kong and Thailand, will have an edge over the others.

Next, much will depend on consumer purchasing power in the target markets. The crises have affected economies, jobs and job security, which means that people could well choose to hang on to their money rather than take a holiday in uncertain times, especially if they have families.

At the same time, the strengthening of regional currencies against the dollar means that visitors are getting a lower exchange rate. That further negates the value-for-money marketing mantra in the last few years of devalued currencies.

Of what discretionary spending money that may still exist, competition will be high from domestic sources as department stores, restaurants, hotels and other affected businesses all launch their own campaigns to grab a share.

Next question: Even if people have money, will they have the time? How many school holidays or long-weekend periods are still there in the region over the next few months? Yes, there are still plenty of laid off people with plenty of time on their hands but it is unlikely they will be in a mood to travel.

Competitive pressure in each target market will be intense. With China temporarily out of the equation, all are pursuing the same markets — Australia, New Zealand, Japan, Korea, the Middle East and India.

Intra-ASEAN travel, one of the higher flyers of past years, has also been a major casualty; Singaporean travel to Thailand has plunged significantly in the last two months, and vice versa.

At the recent meeting of the ASEAN National Tourism Organisations in Kuala Lumpur, Malaysian Tourism Minister Dato Abdul Kadir called for intra-ASEAN travel to be positioned and promoted as an extension of domestic travel.

Indeed, Malaysia, Thailand, Indonesia, the Philippines and Australia have all embarked upon major domestic-travel campaigns.

Because the Hong Kong and Singapore tourist boards don’t have much of a domestic market to tap, they will be competing even more vigorously for the international market, especially the corporate meetings business.

THAI Airways International, too, will be facing heavy competition from heavyweights like Singapore Airlines and Cathay Pacific, both of whom have superior products and were worse affected than THAI.

In essence, the travel & tourism industry will be spending more money in order to breathe life into a stagnant, if not shrinking market. As per the famous marketing adage, half the money will be wasted, except no-one will know which half.

Nevertheless, doing something is better than nothing, especially with the next crisis already on the cards — more turmoil in the Middle East as the US government embarks upon its policy of trying to create ‘regime change’ in Iran.

Travel & tourism has awakened to the reality of a globalised world being a riskier world. Incidents in one place quickly spread to other distant places.

This applies as much to terrorism and currency crashes as viruses. Indeed, the World Health Organization has pointed out that travel was a significant contributor to the spread of the SARS virus.

How investors re-evaluate the entire chain of travel, tourism and transportation interests in an atmosphere that makes the industry the first victim of any political, economic or health crises remains to be seen.

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