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15 Dec, 2012

PATA, Saved By A Crisis-Free Year, Lays Plans for 2013

Bangkok – Saved from collapse by the absence of a global crisis in 2012, the Pacific Asia Travel Association is looking ahead to 2013 with fingers crossed.  Specific plans falling into place could help it turn the corner and regain financial stability. An annual conference has been set for Bangkok between April 26-30, the annual travel mart is to be held in Chengdu, China, between September 25-27. Smaller events such as the City Hub Forums are to be buttressed with new events such as an Academy for senior management executives. TripAdvisor and PhocusWright have signed on as “strategic partners.”

Fourteen months into his presidency, the smooth-talking and unflappable former aircraft salesman Martin Craigs has spent the last year doing what he does best – travelling the world making speeches, attacking the British government over the Air Passenger Duty and being photographed with global leaders such as Burmese Nobel laureate Aung San Suu Kyi and New Zealand Prime Minister John Key. Although this has delivered negligible business-building benefits to members, it has, however, sent a message that PATA is still hanging in there.

Discussing his achievements and plans at a year-end Press conference on 14 December, he said he is trying to shape PATA’s mission in response to the feedback from members. His job is to link up the travel chain — the “links” of booking, travelling, staying, touring and returning back home. “That’s a chain and one of my jobs is to strengthen the weakest link.” His inspiration came from the London Olympics, which he attended, and the Olympic slogan “Citius, Altius, Fortius”, Latin for “Swifter, Higher, Stronger.”

He says, “We are aspiring to be higher in our ability to deliver travel experience, stronger in many respects to make it safer and convenient but ultimately have to deliver everything faster on mobile communications tools.” He added, “The Olympic celebration brings out the best in people. It was great to see the Paralympics and unique moments such as the Saudi female athlete participating for the first time. PATA should follow in that spirit.”

New nomenclature is emerging as Mr. Craigs strives to deliver his message across a territorial turf of 104 destinations in 12 subregions and 17 time zones. This area is now what he calls “Pataland”. He also wants to refer to tourism as “the visitor economy” a term that he claims “is much more accurate and all embracing” in reflecting the real importance of tourism in the context of real globalisation of the economy.

He notes that he began his job just when the Thai floods had struck in October 2011, bringing him face to face with both an environmental crisis and a national economic crisis. Thai industry leaders, asked how PATA could help, told Mr. Craigs to speak out against the allegedly imbalanced and overwhelmingly negative coverage of the floods by the global TV networks. That was music to his ears, allowing him to work the TV cameras and argue the case.

However, one key advocacy effort — against the APD — has failed. The UK has rebuffed the attacks from all quarters and is to raise the APD in the next budget. Mr. Craigs has now changed tack, claiming that it would have been “unrealistic to expect to have it repealed.” With the British government paying UKP400 million in annual interest on its national debt, it needs the money. UK visitors shift their plans to domestic travel, which creates jobs and keeps money in the country.

During the press conference, Mr. Craigs again denounced the APD as being “politically hypocritical, morally reprehensible and economically unsound.” He claims that it will hurt both the UK economy and other economies which receive UK tourists by giving airlines a disincentive to fly to the UK. “Politicians will not act on any issue unless they face a political downside. It is the job of the (travel & tourism industry) to make it a political downside. If other industries such as banking or finance were being taxed in such a way, they would not be sitting back doing nothing.” He says the APD battle is not lost as it is an “ongoing war.” The task now, he says, is to get the UK to “slow it down.”

At the same time, Mr. Craigs is claiming victory over the stay-order by the European Union on the Emissions Trading Scheme levy. “We have won,” he declares, insisting that “The EU has no legal right or moral justification to impose a tax on other countries. I am delighted that the EU has been taught a lesson.” However, the role of PATA and other travel/aviation industry groupings in getting the EU ETS stayed is questionable. Had many global heavyweight governments such as India, China and the United States not weighed in on behalf of their aviation industries, and threatened retaliation, the travel/aviation sector on its own most likely would have failed.

Either way, Mr. Craigs says the aviation industry needs to keep up the pressure. “The aviation industry is world class at talking to itself. We have to work more together to get outside the comfort zones and see people who don’t believe what you believe and get them to change their minds.”

Two important issues that went unmentioned at the news conference were PATA’s membership and financial status this year. In 2011, according to the tax returns filed with the US Internal Revenue Service (PATA is registered in the U.S. as a non-profit organisation) the Association reported a loss of US$512,781 in 2011, worse than the loss of US$412,145 in 2010. The primary cash-guzzler, the Research & Intelligence Centre incurred expenses of US$723,807 while generating revenues of only US$104,510. By contrast, the Events division, which runs the PATA Travel Mart, chalked up a huge surplus, based on revenues of US$1,015,086 and expenses of US$723,807.

Membership income, the largest source of revenue, fell from a high of US$ 2,132,899 in 2009 to US$1,740,057 in 2011 as the global economic crisis bit and members began to make cost-cuts. The membership slide is said to have been staunched in 2012. Click here to access all of PATA’s U.S. tax filings.

The performance of the events and intelligence units will be critical to the financial health of PATA, especially as both are key to the delivery of membership benefits. This year’s PATA Travel Mart in Manila was affected by the near-total absence of the Chinese as a result of the maritime border dispute with the Philippines, but still managed to generate a surplus. In turn, the Research and Intelligence Centre is marketing its new statistical database and analysis service, mPower. Whether it generated any income this year will emerge when the figures are published.

By cutting staff, and drawing on reserves, PATA has been able to tide over this year. In 2013, the return of the PATA annual conference will help. As with the PATA CEO Challenge in 2008, the Thai taxpayer will come to the rescue. Talks are under way with the Thailand Convention and Exhibition Bureau and the Tourism Authority of Thailand to underwrite costs and provide various levels of sponsorship support. A personally autographed book by Ms Suu Kyi, presented to Mr. Craigs during his courtesy call on her in Yangon, is to be auctioned at the PATA conference. It will be interesting to see how much that fetches.

The Chengdu mart will also make money, thanks to local Chinese government support. Attendance will be high as the trade pursues access to the Chinese inbound/outbound market. Mr. Craigs says that mart delegates will also get a chance to see the endangered panda and think a little more deeply about sustainability issues. “If you can’t save what is one of the most adorable, fascinating creatures in the world, how are you going to save anything?”

Other events on the agenda for 2013 are five City Hub forums, including one in Hanoi possibly on the subject of spiritual tourism. PATA is working on common research programmes with the UN World Tourism Organisation and the World Travel & Tourism Council. One new event is the launch of a PATA Academy, high-level short courses designed for seasoned management executives across the travel chain. The first one is planned at the end of February 2013 at the PATA HQ in Bangkok to be followed by one every three months. These will be priced at US$200 per day and open only to PATA members. “We expect them to become the most sought-after courses in the region,” Mr. Craigs says.

He says he keeps being told by industry CEOs that demand is no longer the problem, the challenge is keeping up with it and finding the people to manage and staff the emerging facilities. “Asia is good at building hardware but not at keeping up with the demand for staff,” he says. “Every hotel manager I meet is telling me that they are getting 20-30% staff turnover. The Philippines produces 26,000 students a year, and most of them go overseas. Many destinations are now facing a shortage of Russian tour guides. It’s all about quality, not just quantity.”

Also in the pipeline is another debate with Travel Impact Newswire Executive Editor Imtiaz Muqbil similar to the inaugural “Thrilla in Manila” debate last October. Mr. Craigs refers to this as “one of our most successful events” last year.

Mr. Craigs is proving good at linking up with legislators and policy-makers, using the charm offensive of a suave salesman, criticising without offending, ego-massaging and spreading the credit around to ministers, chairpersons and others in decision-making positions. He is adept at deflecting criticism and dancing around flops and failures. Most importantly, he does not take opposition personally. His big weakness, however, is a poor sense of Asian history and an inadequate grasp of the issues in the emerging Asian century. His critics say he spends too much time travelling and promotes himself with as much gusto as he promotes PATA.

The press conference was held on the day after the UNWTO announced the one billionth global tourist and on the same day as IATA was holding its Media day press conference. Along with PATA, all these travel organisations know that their lucky streak only extends as far as the next geopolitical or economic crises, and that travel will boom as long as nothing disrupts it. This year, there were no disruptions and PATA survived. Mr Craigs needs at least one more such year. Will the Year of the Snake bring sunny skies or more hurricanes and typhoons? Stay tuned.