23 Jun, 2003
The ATE, First Major Travel Show After SARS, Ends Strongly
Melbourne – Australia’s most important annual travel trade show, which came close to being cancelled a month ago, ended strongly last week amidst rising optimism and clear signs of a rebounding regional travel & tourism industry.
The Australian Tourism Exchange (ATE) was the first major international travel event of the post-SARS era, billed as the worst thing to hit the industry in the last few years. A total of 650 buyers from 44 countries turned up for the show, anxious to get business back to one of the region’s most popular destinations.
Moving to ward off cancellations, the Australian Tourist Commission (ATC) gave all sellers a 20pc discount and all buyers from Asia a 50pc discount on delegate fees. Buyers from Europe, North America and the Middle East got no discount because there was less concern about them cancelling.
Australia was severely hit by the SARS crisis, especially as it is totally dependent on aviation for its arrivals. Total arrivals in the first quarter of 2003 were down 4pc to 1.21 million. The second quarter was looking much worse, with steep declines of 40-50pc from China, Thailand, Hong Kong, Malaysia and Singapore.
ATC Managing Director Ken Boundy said he expected a bounce-back in July and return to to normalcy by the fourth quarter. However, the forecast is for a 5.3pc decline in total arrivals this year, or about 200,000 fewer visitors.
At the ATE, Australian sellers were expecting Asian buyers to squeeze them on prices and rate-cuts. This did not materialize to the extent projected.
Said the ATC’s Regional Director for Asia Richard Beere, “There was an element of mutual respect. Everybody has been hurt and I don’t think anybody wanted to give the impression that there were taking advantage of each other during hard times.”
Added Greg McAllan, the ATC’s General Manager Japan, “Pricing is not the problem. Psychology is. We’ve got operators and airlines dumping rates in Japan and nothing is working.”
The other concern was that of bill-collection. Mr. Beere said it had been a big issue over the last two months as Asian buyers pushed for extension of payment terms, sought discounts if they paid earlier than the contracted period or used it as a negotiating tactic to get even more extensions.
“That’s been ongoing and was highlighted as a concern (before the ATE). But there have been only isolated incidents here. We’ve been pleasantly surprised,” he said.
Noting the huge amounts being spent by Asian governments on their recovery campaigns, and anxious not to loose market share, the ATC announced a fresh A$20 million extra-budgetary allocation to help the industry recover from the slump.
This will include A$10 million in Federal Government funding which will be matched by industry partners like Qantas, Japan Airlines and Singapore Airlines. Adding to money allocated earlier, the Australians have a total tourism war-chest of A$33.2 million. The expenditure breakdown is A$ 17.8 m in Japan, A$ 6.9 million in UK/Europe, A$ 4.7 million in the US, A$ 2.3 million in Asia and A$ 1.5 million in New Zealand.
On June 15, a three-month campaign began across Japan, Singapore, Hong Kong, Malaysia, Korea and Taiwan. However, unlike some of the Asian recovery campaigns which throw most of the money at the global TV conglomerates, the Australian money is being spent on local media and specific niche-markets that can deliver measurable results.
For example, the Korea campaign is targeted at honeymooners whose numbers have jumped from 30,000 couples in 1999 to 57,000 in 2002. Couples now comprise about a third of all Korean visitors to Australia.
The big issue is rebuilding aviation linkages. Qantas, which flies in 35pc of all visitors to Australia, drastically cut services after SARS, dropping Hong Kong from 35 to seven a week, London from 21 to 17 and suspending Paris.
It is now reallocating capacity to markets in which there is still growth. Paris has been re-linked through a code-share with oneworld alliance partner Cathay Pacific over Hong Kong. The US will get most of the new capacity with an increase from 25 to 28 flights by the end of June and 35 flights in August.
Rebuilding the Asian routes is being left to Qantas’ low-cost, wholly-owned subsidiary which is slowly going back to pre-SARS level from Hong Kong, has started new flights to Sabah in Malaysia and is anticipating reinstating capacity to Japan as demand picks up.
However, the airline to watch is the Dubai-based carrier Emirates which is boosting capacity and will soon have daily services from Dubai to Perth, Brisbane, Sydney and Melbourne, giving a major boost to through-traffic from Europe to Australia.
Waiting in the wings are other Middle East airlines like Qatar Airways and Gulf Air, now run by an Australian CEO, James Hogan. That will put more competitive pressure on both Qantas and the Southeast Asian airlines which fly Europe-Australia traffic (the so-called Kangaroo route) through points like Kuala Lumpur, Bangkok, Singapore and Hong Kong.
“It’s going to be interesting to watch how the dynamics of the Kangaroo route will change as a result of the Middle East airlines coming in,” said Tony Mayell, the ATC’s GM for Europe.
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