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8 Aug, 2003

Post-SARS Recovery Is On, Say Global Distribution Systems

In this dispatch








The backbone of the Asian travel industry, intra-Asia travel, is stronger than ever and travellers across the region have returned to the skies, says the Singapore-based global distribution system Abacus in an announcement earlier this week.

Total bookings going through Abacus, which is partly owned by Sabre, have nearly doubled over the past eight weeks. In Week 20 (May 11-17) total bookings hovered around 400,000 as a result of aftershock of SARS. For Week 28 (July 7-11) total bookings were about 800,000, an 18 percent increase over last year.

“Clearly, not only are we witnessing an ongoing recovery, but also a surge of travellers to destinations in Asia and beyond,” Abacus President and CEO Don Birch was quoted as saying in a Press release. “While SARS was scaring travellers away, we were telling our travel agents to do their best to ride out the rough patch, because a strong and fast recovery would soon follow… and it is doing just that.”

Intra-Asia travel, historically a good litmus test of the health of the Asian travel industry, appears to be returning to full glory. Week 28 bookings are nearly 50 percent higher than Week 13 bookings. Mr. Birch attributed the increase to both increased traveller confidence and competitive airfares.

Travel to the South Pacific (Australia and New Zealand) has returned fast. Asia to South Pacific bookings experienced a 50 percent increase from week 20 to 28. Asia to US and Asia to Europe – two markets that were not hit as hard as the others, did experience a slight drop in bookings. This is because many travellers who planned to travel in Asia, changed their travel plans to Europe or the US as news about SARS spread.

“Asia to US and Asia to Europe travel are experiencing a bit of right-sizing with regard to bookings. While now at pre-SARS booking levels, they aren’t experiencing the sharp increases of markets hit hardest by SARS,” Mr Birch said.

While business and regional travel return to normal, one of the constant strengths of the travel industry during SARS was domestic travel in markets like India, Indonesia, Malaysia and Thailand.

In India, domestic travel bookings remain steady, representing 23 percent of all Abacus bookings involving India.

Indonesians had an opportunity to explore some of their own destinations like Bali. In Indonesia, domestic travel bookings remain steady. Intra-Indonesia bookings are 279 percent above last year. “Travellers felt safer travelling within their home country. Many of these travellers have acquired a taste for it and will probably continue to travel domestically,” Mr Birch said.

While Mr Birch says that Abacus bookings are running above the same period of 2002 to the tune of 10-20 percent, there is still a long way to go before the SARS crisis can be declared over. “The second half of 2003 provides us with an excellent opportunity to get the industry back to full strength. While bookings are back to or above pre-SARS levels, some trips never get rescheduled.”

Mr Birch said companies which held off expansion plans because of SARS need to look again at those plans. Those that forged ahead during the crises are in a good position for 2004, he said.

He added, “You’re going to hear more in the coming months about low-fare regional airlines, ongoing migration to e-ticketing and a return to emerging markets. Prior to SARS, China and Vietnam were the destinations in Asia garnering the biggest buzz. You are already hearing that buzz again.”


Meanwhile, the Amadeus global distribution system says that SARS and the Iraq conflict contributed to a 32 % decline in Asia-Pacific bookings in the second quarter 2003 compared to the same period in 2002. Nevertheless, total worldwide bookings invoiced by Amadeus for 2Q 2003 rose 1.1% to 104.4 million, of which 86 million were air bookings.

Overall, Amadeus still expects net income to grow over 5% to 155m Euro in 2003. In June, the travel industry was clearly recovering on a global scale, with reservations growing in all regions except South America. This positive trend has continued through July.

The 9.5 % decline in global air reservations contributed to a total revenue decline of 1% but was compensated for by a 13.7 % growth in non-reservation revenue like IT services. This rise in non-reservation revenue is the result of a business diversification strategy and now represents almost 25% of Amadeus total turnover.

Amadeus also reported the following operational highlights for the second quarter ended 30 June 2003. They are indicative of broader trends in the shifting sands of travel industry partnerships and distribution:

  • Leading German low price carriers Hapag-Lloyd Express (owned by TUI, the world’s largest travel and tourism group), and Germanwings decided to distribute to travel agents through Amadeus.
  • Amadeus electronic ticketing has been implemented in a further 40 markets for 19 carriers.
  • Amadeus acquired 30% of Optims, a European supplier of Property, Revenue and Reservation Management Systems to the hospitality industry, providing services to 5,500 hotels in over 70 countries, which includes groups such as Accor, Méridien, Four Seasons, Thistle, Radisson SAS and Barceló.
  • Amadeus’s new Hotels Dynamic Access product is raising hotel booking levels due to no-error availability and pricing. 30 major groups are available through this high-level access.
  • New travel agency accounts agreements signed during the quarter included Griffin Marine, the world’s largest travel agency specialising in crew transportation for the merchant shipping, cruise and offshore industries. Important contract renewals include the VIA Travel Group, one of Scandinavia’s largest business and leisure agents.
  • The Aergo corporate booking tool has been upgraded and a module has been introduced for Oracle E-Business suite users. It already caters to corporations using SAP’s enterprise management tools.
  • e-Travel has added new clients with differing requirements for its Planitgo website solution, such as Alitalia, Finnair, TAROM, Philippine Airlines and Ethiopian. Thanks to an alliance with SAS, the Scandinavian carrier will make its web fares available to Scandinavian Aergo and Planitgo customers.



Lastminute.com reported a record third quarter earlier this week, with the value of bookings through its sites increasing 147 per cent year-on-year from £61m to £150.9m, despite Sars, war and the terrorism concerns troubling the travel industry, the Financial Times reported.

Lastminute said its margins on this total transaction value (TTV) increased from 12.9 per cent to 19.5 per cent over the same period. Gross profits rose 274 per cent from £7.9m to £29.5m and profits before tax, goodwill amortisation and exceptional items were £1.65m, compared with a £4.23m loss.

The FT said Analysts at Altium Capital had expected a higher TTV of £160m but lower profits of £1.1m for the quarter to June 30. Allan Leighton, chairman, was quoted as saying that summer bookings had started strongly for the key fourth quarter and he remained “confident of a positive outcome for the full year”.

Mr Leighton told the FT that Lastminute’s programme of acquisitions coupled with strong organic TTV growth of 50.2 per cent demonstrated that the “last minute” space continued to grow materially. The company has acquired Holiday Autos – which added £48.8m in TTV in the quarter – Destination Group, Travelprice.com and eXhilaration over the past year.

The chairman said the quarter’s performance confirmed the company’s belief that £1bn in TTV was attainable in the medium term. “We remain confident that we will meet our expectations of continued material growth and overall group profitability (pre-goodwill amortisation) for quarter four and the year as a whole,” Mr Leighton said. Lastminute shares rose after the announcement.



Tourist arrivals in Nepal by air rose by 31% in July 2003 compared to same month last year, according to the Nepalese Department of Immigration. The total arrivals of 17,611 last month included a 41 % increase in Indian arrivals.

Indian arrivals have never been down this year, thanks to sustained market promotion in India. Nepal Tourism Board, Royal Nepal Airlines and Pashupati Area Development trust have jointly launched another Pashupatinath Darshan package in South India.

Other markets that rose were US, Japan, France, Australia, Holland, Spain, Italy, New Zealand, Norway, Belgium, Canada, Denmark, Israel and Sweden. The only two major markets to fall were UK and Germany, by 6% and 11% respectively.

The Nepal Tourist Board says this growth clearly shows the kingdom is “back on the recovery track” after the series of recent international incidents. The suppressed demand in international tourism is gradually “emerging out”, the NTB said, anticipating an even better second half.

Highlights of arrivals in July 2003: India +41% to 8,578; US +25% to 1,075; Japan +9% to 815; France +34% to 665; UK -6% to 956; and Germany -11% to 407.

Nepal also last week announced a new policy of waiving the visa fee for all tourists visiting the country for upto three days. This is mainly intended to attract tourists from Nepal’s neighbours in the South Asian region, namely, India, Sri Lanka, Bangladesh, Pakistan, Bhutan and Maldives as well as People’s Republic of China, all of whom will get the visa fee-waiver.

Free visas will also be granted to any national for re-entry to Nepal provided those tourists have stayed at least for 15 days and more in the country in a visa year (Jan-Dec). The new visa regulation took effect on August 6, 2003.

The government has taken a series of recent steps to boost the tourism industry by opening up more mountain peaks for climbing, new rivers for rafting and relaxed restrictions to pristine and protected areas of the country. The provision of liaison officer has also been revoked in many of the trekking areas. Now the total number of peaks open for climbing has reached 326, out of which expeditions to 121 peaks do not require a liaison officer.




Tourist offices in 18 of the world’s most popular destinations, from the stylish cities of Barcelona, Paris and New York to the sun, sea and sand of the Balearics, Canaries and Florida, took part in an Expedia.co.uk vote which revealed that:

== Italians are the world’s best dressed tourists, followed by the British and French. Germany scored worst of any country mentioned, followed by Russians and Australians.

== Italians were praised for their chic shoes, designer sun glasses and tailored suits, keeping them looking cool in all conditions.

== Brits came second, having ditched football shirts for elegant evening wear, but were criticised by some as letting themselves down in the day with skimpy swimwear.

== The fashionable French were highly praised for their exquisite taste and like the Italians, noted for their admirable accessories.

== German swimwear leaves little to the imagination, and their ‘Frankfurter hammock’ posing pouches and thong bikinis left them exposed at the bottom, literally.

== The glamour of Sex and the City has not persuaded Americans to swap the sporty look for stilettos – they continue to opt for the comfort of white socks, trainers and brightly coloured Bermuda shorts.

== Perhaps the Americans should learn from the smart Japanese who are acclaimed for taking great pride in their appearance – particularly Japanese women who are always to be seen with perfectly applied make up.

‘We may not be as stylish as the Italians, but we are shaking off the typical British holidaymaker images of shell suits at the airport, socks with sandals, hankies on heads and football shirts,’ said Dermot Halpin, Managing Director of Expedia.co.uk.

The World’s Best Dressed Tourists: 1. Italians; 2. British; 3. French; 4. Spanish; 5. Canadians; 5. Japanese; 6. Chinese; 7. Irish; 7. Danish; 8. Americans; 9. Swedes; 10. Australians; 11. Russians; 12. Germans.




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