Newsletter - February 4, 2002

SIX CONTINENTS SAYS BID FOR NH HOTELES “PURE SPECULATION”

AFX News  -  Six Continents PLC, operator of Holiday Inn and Inter-Continental hotel chains, said stockmarket talk of a bid for Spain's second largest hotel group NH Hoteles SA was "pure speculation."

"There is so much speculation about all sorts of acquisitions which we may or may not be making.

As far as what we may or may not do it is pure speculation," said a Six Continents spokeswoman.

Six Continents, formerly known as Bass PLC, has around 2 bln stg of cash available for acquisitions following the sale of Bass Brewers in August 2000.

The group has stated publicly it wants to drive the mid-scale Holiday Inns and Express hotel chains in western Europe.

The company has around 60 mid-scale hotels in Germany, France and Italy and about 90 Holiday Inn in the UK following its acquisition and rebranding of the Posthouse chain.

But in Spain it has just 15.

"Spain is one of the key markets in which we are looking to increase our distribution," said the Six Continents spokeswoman.

"We feel there will be opportunites to make acquisitions in the current downturn at a lower value. Any acquisition which we look at is subject to very strict financial and strategic criteria," she added.

"I can't comment on speculation about specific companies."

For Six Continents any acquisition target must be Net Present Value positive, above the weighted average cost of capital by year three and earnings positive in the first full year. 

BEIJING’S NEWEST FIVE START HOTEL – THE PRESIDENTIAL PLAZA – JOINS SRS-WORLDHOTELS

Hong Kong, January 30, 2002 - SRS-WORLDHOTELS, one of the world's leading and most dynamic hotel marketing and representation consortia, has announced its latest member as Beijing's newest ultra-luxurious five star hotel, The Presidential Plaza Beijing. It joins SRS-WORLDHOTELS exclusive Deluxe Collection - the first hotel in mainland China to belong to this elite grouping.

"With China's accession to WTO and the run up to the Beijing Olympics in 2008, we foresee much more business traffic to the Chinese capital and so it is an important part of our growth strategy for China to have a prestigious property such as this as our flagship in China," said Roland Jegge, Vice President Asia/Pacific for SRS-WORLDHOTELS.

This brand new hotel, which is located in the banking and financial district of western Beijing, close to government ministries, Tiananmen Square, The Forbidden City and the Hi-Tech industrial basin, comprises over 500 rooms and suites on 16 levels and is lavishly furnished in an elegant European boutique style. It is set to become one of the Chinese capital's most exclusive properties.

The hotel is also offering special introductory rates, available through SRS-WORLDHOTELS which start from USD122.50 per night.

Guests enter the hotel through a distinguished neo-classical four-story lobby with 16 roman-style columns. The hotel's superb facilities include a large indoor swimming pool, a state of the art fitness centre and three restaurants, as well as the unique indoor Four Seasons Roof Garden Bar and Lounge on the fourth floor.

All rooms feature 3 telephones including two two-line speakerphones and data ports. All have high-speed Internet access, international Satellite TV channels and a video on demand system. There is also 24-hour room service. Guests on the three Plaza Club Floors also have access to special private lounges.

Mr Roland Jegge, Vice President Asia/Pacific for SRS-WORLDHOTELS said. "We are delighted to welcome this highly prestigious new hotel to our portfolio. We are confident that our extensive international sales and marketing network will assist this property to quickly become a market leader in Beijing."

Currently, SRS-WORLDHOTELS has more than 400 member hotels in its portfolio, representing over 70,000 rooms in 65 countries and 250 destinations worldwide. In 2000, SRS-WORLDHOTELS generated over 1.2 million room nights for its members and a total turnover of US$192 million - an increase of 17% over the previous year.

SRS-WORDLHOTELS' Asia/Pacific operation has grown dramatically to 20 staff in four offices around the region. The company has over 50 properties in Asia/Pacific and SRS-WORLDHOTELS saw an increase of over 40% in it room night production from the Asia Pacific region in 2000. 

Contact:  SRS-WORLDHOTELS:
Mr Roland Jegge,  Vice President Asia/Pacific   Singapore Tel: 65 227 5535    
E-mail: rjegge@srs-worldhotels.com

HOTEL BUSINESS CREEPING BACK TO HEALTH

TheStreet.com  -  Hotel chains Starwood Hotels - and MGM Mirage Thursday posted stronger-than-expected fourth-quarter earnings, suggesting the struggling travel business continues to mend.

The healing trend is playing out most notably in the nation's sin capital, where MGM's operations are focused. "Its now seems clear that no city in the United States has rebounded as quickly and profoundly as Las Vegas," said Jim Murren, MGM's CFO and president, in a statement.

On Thursday, Starwood  rose $1.67, or 5.1%, to $34.25, while MGM rose $1.04, or 3.3%, to $32.56.

Results at both companies were sharply lower than a year ago, showing how deeply the industry was damaged by the Sept. 11 terrorist attacks. But the two companies also produced upside surprises on earnings and revenue and made generally sanguine pronouncements about future trends.

Starwood, owner of the Sheraton, Westin and W hotel chains, reported a loss of a penny per diluted share in the fourth quarter, down from 64 cents a share a year ago. Revenue dropped 21% from a year ago, to $878 million. Fourth-quarter revpar, or revenue per available room, an industry benchmark that factors in rates and occupancy, dropped 24% in North America and 26% internationally.

Still, those numbers easily beat estimates, and the company made mostly bullish forecasts for 2002. Starwood now expects to earn $1.30 a share for 2002, well above the $1.08 analyst consensus. While first-quarter earnings of 5 cents a share will be a penny under analyst expectations, the remaining three quarters are expected to pick up the slack as an anticipated second-half economic recovery unfolds.

"Long term, this is a name you want to own for the recovery," says Jake Fuller, an analyst with Thomas Weisel Partners who rates the stock attractive. But Fuller warns that Starwood's many high-end urban-centered hotels, while impressively profitable when times improve, court business travelers who could stay office-bound if the recession drags on. (Thomas Weisel Partners doesn't have a banking relationship with Starwood.)

For its part, Las Vegas-based MGM, owner of the MGM Grand, Bellagio and Mirage hotel-casinos, posted fourth-quarter earnings of 18 cents a diluted share before nonrecurring items, lower than the year-ago 43 cents but double the Wall Street estimate. Revenue took a hit, dropping 13% to $896.3 million and falling short of the $916 million estimate.

Unlike Starwood, MGM isn't tied to the business traveler. About three-quarters of the company's revenue comes from Las Vegas. Reflecting doubts about the gaming business in a weakening economy, credit-rating agency Moody's this month cut Mirage's long-term debt to a junk, or noninvestment grade, rating.

But "we still feel comfortable with their balance sheet," says Credit Suisse First Boston analyst Brian Egger, who has a buy rating on both MGM and Starwood. MGM itself offered no specific financial guidance Thursday, saying only, "Current trends in our resorts indicate that casino and noncasino business should continue to improve throughout 2002." (CSFB has no current banking relationships with either company.)

A trend playing out in both companies' favor is that industry growth should dip below 1% in 2002, far below its 30-year average of 2.8%, says Rod Petrik, an analyst at Legg Mason, who recently upgraded Starwood to strong buy. "Over the last 30 years, every time you have the radical deceleration of supply growth, it's followed by revpar growth," Petrik says. Of Starwood, he adds, "I think it's easily a $40 stock." (Legg Mason doesn't have a banking relationship with Starwood.)

Although the Super Bowl, Chinese New Year and the NCAA basketball tournament should be near-term catalysts for Las Vegas business, Egger expects the travel recovery to be a gradual one. "Things are getting better," he says.

GORDON IS PATA’S NEW CHAIRMAN

Philippine Tourism Secretary Richard J. Gordon is the newly-elected PATA chairman for the year April 2003 to April 2004.

PATA’s chief executive Peter de Jong informed that Gordon’s chairmanship was "unanimously approved by the Board of Directors in their meeting on January 20 in Kuching, Sarawak, Malaysia." Gordon is considered one of the most effective tourism leaders in the region today.

"My family and my country is honored that Asia’s tourism leaders trusted me to lead PATA. I hope we can all work together as one cohesive team to be able to improve and develop Asia’s tourism products that will benefit not just a few, but all sectors of our society," said Gordon who was elected in absentia.

Gordon "impressed the executive committee and the board of directors with his go-go attitude and his far-reaching advocacy for tourism vis-à-vis social advancement," says Phineas Alburo, DOT’s Tourism Attache for Singapore who represented the tourism chief in the January 20 meeting.

Gordon is the third Filipino to be elected PATA’s chairman. The previous two were Modesto Farolan in 1954 and Roquito Ablan, Jr. in 1971, who both sat as PATA presidents. In 1994, the title of elected leader changed from ‘president’ to ‘chairman’.

Gordon’s chairmanship of PATA comes at a most opportune time as his country is hosting the Visit Philippines 2003.

The Philippines will be hosting next PATA board of directors’ meeting from 20 to 22 September 2002 in Manila. "With the Philippines holding a PATA conference this year and with the upcoming PATA chairmanship next year, we would convey to the world that our country’s tourism means business. We will have another excellent venue to showcase the best of Filipino hospitality and culture," Gordon says. 

2001 ‘YEAR OF STAGNATION’ FOR WORLD TOURISM

World Tourist numbers fall by 1.3 percent

WTO -  World tourism fell by 1.3 percent last year due to the September 11 terrorist attacks and a slowdown in the world economy, according to the Madrid-based World Tourism Organization (WTO).

The Secretary General of the WTO, Francesco Frangialli, termed 2001 "a year of stagnation" because of the effect of the September 11 events on the United States and the economic weakening of the main sources of tourists.

Frangialli gave this figure to a news conference, prior to the opening of the 22nd International Tourism Exposition in Madrid.

"Although the September 11 events did heavily affect tourism throughout the world, there was already a downward trend in the number of travels abroad by German, Japanese and United States tourists," Frangialli said.

The WTO chief indicated that during the first eight months of last year tourist arrivals grew by three percent, but "it has been impossible to keep it because of the mentioned events".

SHANGRI-LA AWARDED  “BEST ASIA PACIFIC HOTEL GROUP”

Shangri-La Hotels and Resorts, the largest Asia-based luxury hotel group in
the region, has won the award for "Best Asia Pacific Hotel Group" at the
2002 Travel Weekly UK Globe Awards for the seventh consecutive year.

Celebrating their 25th anniversary in 2002, the Travel Weekly UK Globe
Awards are described as the "Oscars of the travel industry", identifying
companies which are nominated as the "best in the business". There are
seven award sectors, which cover every aspect of the travel and hospitality
industry, from hotels to tour operators, airlines and car hire. The awards
are decided by Travel Weekly's readership: voting forms are sent out to the
full circulation of 24,500 readers in the UK every week over a period of
one month.

The ceremony took place in London before an audience of 1,500 industry
professionals. Shangri-La's Travel Trade Sales Manager, Karen Skidmore,
was awarded the trophy by TV presenter Gaby Roslin and Hotel Sector
sponsor, HotelWorld.

Said Austin Frost, Shangri-La's Director of Marketing, Europe, "We are very
excited to have won this award, and particularly to have won it seven times
in a row. Travel Weekly Globe Awards are all the more valuable as they are
voted for by the readers of Travel Weekly - in other words, the UK travel
trade responsible for booking our hotels. It is a significant endorsement
of our product and service."

With almost 20,000 rooms in Asia, Shangri-La operates hotels in the Chinese
mainland, Hong Kong SAR, Fiji, Indonesia, Malaysia, Myanmar, Philippines,
Singapore, Taiwan and Thailand and has six more hotels opening in the next
few years: two in Dubai, one in Oman and three in the Chinese mainland.

INTRODUCTION TO AUSTRALIA’S GOLD COAST MARKETPLACE – A JONES LANG LASALLE SPECIAL REPORT

The Gold Coast is a well-developed tourist destination situated on the east coast of Australia, just south of Queensland's capital city, Brisbane. Home to renowned surfing beaches, subtropical rainforest, over 30 golf courses and the most concentrated area of theme parks in Australia, the Gold Coast has highly developed tourism infrastructure in place.

International and Domestic Tourism Arrivals

According to the latest available data, the Gold Coast experienced particularly strong growth from the long haul markets of UK, Europe and North America during the first six months of 2000, increasing international nights by 4.8% for 1999/2000.

The 874,000 international visitors spent an average of 6.4 nights at the Gold Coast, one of the few Australian markets where more international nights are spent in hotels and motels than any other form of accommodation.

Although the business / convention segment recorded 21.4% growth during 1999/2000, pleasure / holiday remains the most common reason for visiting the Gold Coast.

Domestic tourism in Queensland, and in particular the Gold Coast, experienced strong growth during 1999. The business / convention market posted the strongest growth of all segments, but the Gold Coast remains predominantly a pleasure holiday destination. The majority of nights are either spent in commercial accommodation or in the home of friends and relatives.

The latest statistics for Queensland indicate domestic tourism growth for the Gold Coast may have slowed, as domestic visitors to the state declined by 1.6% during 2000. However, this does not take account of day trippers from Brisbane which have jumped since the opening of a new eight lane highway to Brisbane. The highway places the attractions of the Gold Coast under an hour's drive away for Brisbane residents.

Air Passengers

Coolangatta airport, which services the Gold Coast, was the only major Australian airport to record a decline in total passenger movements during 2000/01. During the period, domestic passenger movements declined by 4.2%, while international arrivals and departures increased by 59.0% to reach 34,000.

This is likely to be a result of Gold Coast visitors taking advantage of the discount airfares to nearby Brisbane rather than flying direct to Coolangatta. Access to the Gold Coast from Brisbane Airport has been facilitated as of May 2001 by the opening of a direct rail link.

Whilst the region has been adversely impacted by the collapse of Ansett Airlines on September 14, 2001, both Qantas and Virgin Blue have stepped in to replace the majority of capacity.

Hotel Room Supply

As at June 2001, the Gold Coast tourism region had 26 hotels, 41 motels and 82 serviced apartments comprising 13,184 rooms.

The supply of tourist accommodation has been increasingly significantly between 1995 and 1999. During the period 1990-1997, room nights available (RNA) grew at 4.1% pa, but recorded 7.5% pa over the three years from 1997 to 2000. Since 1999, supply increases have eased and this looks set to continue. There is presently one project comprising 30 rooms, which will increase supply by 0.2% during 2002.

Tourist Accommodation Performance

Demand gains, measured in room nights demanded (RND) kept pace with supply increases until 1994, recording annual average growth of 5.6% pa over 1990-97. However, after peaking at 71.9% during 1994 occupancy was eroded by the unmatched supply increases, falling to a low of 63.5% during 1997.

Despite the pressure of falling occupancies, annual average daily rate (ADR) increased steadily until 1996. The first decline of 1.4% was posted during 1997, when ADR recorded A$110. Compound average annual growth in ADR recorded 3.9% pa between 1990 and 1997, which was consistent with the national average.

During 1998, supply increases continued to outpace demand growth and the difficult trading conditions (i.e. the Asian crisis) caused ADR and occupancy to fall. The market took a positive turn during 1999, as supply increases eased and demand gains led to occupancy growth for the first time since 1994. This recovery continued during 2000 and the first half of 2001. the last four quarters. and RevPAR increased by 2.4% to reach A$73 for the six months to June 2001.

A Snapshot of Hotel Performance

Demand Generators

In the wake of September 11, Tourism Queensland launched an aggressive A$3.3 million state marketing campaign to encourage Australians to holiday at home. This was in addition to their 'Where Else But Queensland' state marketing campaign, which commenced in 2000. A distinct branding campaign for the Gold Coast was also linked to the overall Queensland brand using the theme 'The Coast With The Most'.

One of the region's major leisure attractions, the Dreamworld theme park, received major publicity by providing the set for Australia's version of the reality television program Big Brother. The Gold Coast has also developed an impressive calendar of major sporting events including the Australian Hardcourt Women's Tennis Championships, the Australian Ladies Masters Golf Tournament and the Honda Indy 300 in October.

Planned infrastructure likely to increase room night demand includes:

·   the lengthening of the Coolangatta Airport runway to accommodate direct flights from Asia. Proposed for 2005.

·   the proposed A$295 million Gold Coast Convention Centre next to Jupiters Casino will provide convention capacity for up to 2,000 people. Completion is due in 2003.

Investment

The Queensland tourism market enjoyed a flurry of investment activity during 2000. During the twelve months, eight hotels were transacted for A$248.8 million. Of this total sales value, A$99.5 million, or 40.0%, involved Gold Coast properties, which together totalled 736 rooms. Buyers originated from the US and Hong Kong.

The year 2001 has seen the Gold Coast's residential real estate market boom. The recently announced A$208 million sale of Sanctuary Cove, a combined residential and golf resort, indicates there is money available for investment in integrated tourism real estate. The Malaysian based Mulpha group fought off a field of eight short listed parties to acquire the asset.

Outlook

Whilst the outlook for international visitor demand remains uncertain, many of Australia's important inbound markets, that is, Japan, Europe and Asia will be more attracted to Australian shores because of the country's 'safe haven' image. Recently, Australia was voted the second safest international destination after New Zealand.

On-going domestic marketing campaigns and government initiatives encouraging Australians to holiday at home are likely to have a positive impact on traditionally popular leisure destinations, such as the Gold Coast.

This, combined with an environment of relatively stable room supply will help the Gold Coast hotel market offset any of the negative impacts arising from September 11.

Jones Lang LaSalle Hotels (NY)
http://www.joneslanglasallehotels.com/
    

MYHOTELS PREPARES TO BE “REAL CONTENDER”

Caterer.com  - Boutique hotel group Myhotel is expanding in the UK, with four new hotels over the two years.

The first of the hotels to open will be the 45-bedroom Myhotel Chelsea, in London, which will open by the end of this year.

Following this will be an 85-bedroom hotel in Glasgow, a 60-bedroom hotel in Paddington, in London and a £10m, four-star, 85-bedroom hotel in Brighton, all are expected to be open by 2004.

Along with the expansion, Myhotel has also taken on new staff. Two former Malmaison executives have joined the team. Malcom Soden becomes finance director and Ian Oram takes over as acquisitions and development director.

Myhotels said that it now had the brand, locations and people to be a “real contender” in the marketplace.

The group currently has just one 76-bedroom hotel in Bloomsbury, London, which shot to fame when it opened in 1999 for its feng shui-inspired design.

MARRIOTT HIGHLIGHTS CHINA/TIMESHARE AS GROWTH AREAS

Marriott International has said that it will continue adding to its timeshare offer and highlighted China as the ‘hottest growth market in the world for hotels.’

In a syndicated interview from the Associated Press, J W Marriott Jr said that the hotel chain expected business to get back to Sept 11 levels by Q3 2002. Looking ahead, 2003 would be good while 2004 is tipped to be a ‘barn-burner.’

In corporate terms, Marriott said that that the hotel sector ‘had more equity invested in it’ than in 1991 when the Gulf War set the hotel industry back. His observation that the hotel industry is less leveraged now than in 1991 accounts for his assertion that there isn’t going to be much consolidation because of the capital constraints of the industry.’

Lower construction costs are identified as why China, and especially Hong Kong, are booming at the moment. Marriott’s other lodging offers include senior living, which is pretty much overbuilt, and timeshare, which is not. Orlando Florida is mentioned as a key area.

J W Marriott Jr is the son of the founder. He is chief executive officer and chairman of the board.

THOMAS W. HIGGINS APPOINTED PRESIDENT & CEO OF DAYS INN WORLDWIDE

Cendant Corporation's Hotel Division today announced the appointment of industry veteran Thomas W. Higgins as Days Inns Worldwide president & chief executive officer, replacing Joseph R. Kane Jr., who was promoted to Hotel Division group president & chief executive officer in November 2001 and had been leading the brand on an interim basis.

Higgins comes to Cendant from Sun Country Airlines of Minneapolis, where he was chief people officer. From 1996 to 2000 he was president, chief executive officer and owner of DiamondFire Food Systems in San Antonio, a restaurant and video production company.

>From 1992 to 1996 he was senior vice president of operations for
>LaQuinta
Inns Inc. in San Antonio, where he developed improved property management, pricing and marketing strategies that grew revenues by $200 million over four years. He also successfully coordinated the $300 million renovation of more than 225 LaQuinta® Inns hotels.

Tom is an accomplished business executive with nearly 30 years of operations, marketing and business development experience, which is a fantastic match for the Days Inn brand, said Kane. We are extremely excited to have Tom join the team, and we are confident the Days Inn chain will excel under his hands-on leadership.

Higgins said his background, which represents a cross section of the travel, hotel and restaurant industries, will benefit the Days Inn® brand at this pivotal time, adding: I was attracted to the Days Inn brand by its solid reputation as well as its strong marketing and operations programs. I look forward to working with the franchise community and with the corporate team to the benefit of the entire brand.

Earlier in his career, Higgins was vice president, human resources, for Motel 6 LLP in Dallas from 1988 to 1992. From 1986 to 1988 he was director of employment for General Mills Restaurants in Orlando, Fla. He served Santikos Theatres in San Antonio as general manger from 1985 to 1986 and was vice president of training for La Quinta Inns from 1978 to 1985. He began his career as director of recruiting for Steak & Ale Restaurants in Dallas from 1973 to 1978. He was a captain in the U.S. Marine Corps from 1970 to 1973.

Higgins received his bachelor's degree in English in 1969 from the University of Texas at Austin.

Days Inns Worldwide, a division of Cendant Corporation (NYSE:CD), franchises 1,946 hotels representing more than 164,000 rooms in the United States, Canada, China, Colombia, Czech Republic, Egypt, Hungary, India, Jordan, Mexico, Philippines, South Africa, United Kingdom, Uruguay and the Commonwealth of Puerto Rico. Reservations can be made over the Internet at www.daysinn.com or by calling (800) DAYS INN.

FIU HOSPITALITY MANAGEMENT STUDENTS TURN OUT FOR MARRIOTT VISIT

Florida International University’s Hospitality Management students turned out to hear J.W. Marriott, Jr. speak about the hotel chain’s 75-year anniversary.

To an audience of more than 500 hospitality students and 50 Marriott managers from South Florida, Marriott gave a detailed account of the company’s roots and touched on the reasons why Marriott has been among the most successful hotel chains.
|
 “There are five important points to remember when dealing in the hospitality industry,” said Marriott.

The first point is to never stop learning. According to Marriott, the Hospitality industry is always evolving. Understanding the operational side, especially the food and beverage end, is yet another important point. Marriott acknowledges that for many hotels “ food and beverage” are probably the hardest part of the business

When it comes to management styles, Marriott believes that management by wandering around helps the employees as well as employers.

“It is important to understand and see operations from the point of view of the employees as well as to take the time to understand and take care of their concerns,” said Marriott.

Marriott ended the lecture with what he felt was the reason for the success of Marriott and the key to success for anyone,  “Do something you like doing…enjoy your work.”

Located at FIU-Biscayne Bay in North Miami, the FIU School of Hospitality Management is widely recognized by industry leaders as one of the nation's top-rated programs.

CHINA RECORDS 16.1 PERCENT INCREASE IN HOTEL/RESTAURANT SALES REVENUE IN 2001

AFX NEWS - Sales revenue in China's hotels and restaurants rose
16.1 pct in 2001 to 400 bln yuan, the Shanghai Daily cited the China Hotel
Association as saying.

At end-2001, the country had a total of 3.5 mln hotels, restaurants and
food chain stores, employing 15 mln people, the report said.

POWER SHIFT AT ASEAN TOURISM FORUM 2002

(ASEAN, the Association of Southeast Asian Nations, includes Brunei Darussalaam, Cambodia, Indonesia, Laos, Malaysia, Myanmar, the Philippines, Singapore, Thailand and Vietnam.)

One of the most significant shifts under way in the balance of global tourism gained added momentum at the ASEAN Tourism Forum 2002 which ended in Jogjakarta on January 28. With Americans scaling back travel to Southeast Asia countries and indeed most of the Asia-Pacific due to security concerns, the Japanese in recession and European visitors stagnant, ASEAN national tourism organisations are turning to new markets like India, China, Russia, Eastern Europe and the Middle East, as well as their own rich intra-regional business.

The conversion of these secondary source-markets of the past into the primary markets of the future has profound implications for the long-term growth of regional tourism.

  The roster of 38 buyers from India, more than any number invited to the regional trade show, was a clear example of this shift. The Indians were in big demand and did business with great enthusiasm, more than happy at having their long-overdue potential recognized for what it is worth. They learned much about ASEAN, including new opportunities for religious travel to Jogjakarta and the wonders of Angkor Wat in Cambodia. 

In turn, they educated the sellers about ways to better handle the Indian market, such as the specific vegetarian needs of the lucrative Gujarati travellers. Both sides agreed that the much would need to be done to improve visa and airline accessibility for this market to grow.

The Jogjakarta  ATF was significant in many respects. Four months after the Sept 11 disaster, both buyers and sellers have emerged from the doomsday mode and come to grips with the situation. While other post-Sept 11 trade shows like the November 2001 World Travel Market in London may still have seen the industry somewhat shell-shocked, the ATF marked a period when the players had time to take a breather and come up with new ideas to convert crisis into opportunity.

Survival is the name of the game, and more intra- and inter-regional travel is clearly proving the path to survival.

Indeed, the opportunities are immense. India and China boast the world's largest populations and growing legions of millionaires, especially with China's entry into the World Trade Organisation set to open up new frontiers for trade and commerce. From the Middle East, outbound travel is shifting Asia-wards thanks to a growing perception that Muslims are less welcome than they used to be in their traditional summer holiday haunts of Europe and North America. In turn, the

Russians and East Europeans are heading for Asia to flee their freezing winters, and discovering both their charters and cold-cash payments are more than welcome in the sunny beaches of Thailand or Bali.

Indeed, these markets had been growing even before Sept 11, but the trickle is now set to become a flood. Malaysia reports that arrivals from Saudi Arabia rose 43.7% to 39,957 in 2001. Chinese visitors to Singapore were up 14.5% to 497,380 in 2001, the highest growth of all source-markets. Russian arrivals at Bangkok International Airport in 2001 were up 24.58% to 35,804. By contrast, Japanese visitors to Malaysia in 2001 were down 12.8% over 2000, US visitors to Singapore were down 10.9%, and European visitors to Cambodia grew by only 3%.

Adding to the lure is the fact that political and social problems within ASEAN do not get the same kind of media coverage as in the new source-market countries as they do in the traditional source-markets. This, primarily because most of the new source-markets already have conflicts on their own doorsteps, be it the Israeli-Palestinian conflict in the Middle East, Chechnya in Russia or Indo-Pakistan border clashes. Hence, buyers in these regions place the problems in some of the ASEAN countries within a wider context.

Matching this growth in demand from new source-markets is a much heavier focus on intra-ASEAN travel, most of which comprises border-crossers. ASEAN has long talked of promoting intra-ASEAN travel but done little of substance, mainly because of complacency over continuing growth in the traditional markets. Today, there is keen recognition of the changing scenario. Of Malaysia's total arrivals of 12.77 million in 2001, nearly 70% percent came from border-crossing nations like Thailand, Brunei, Indonesia and Singapore. Vietnam's growing economy has made that once war-torn country one of the fastest growing markets for both Thailand and Laos.

Even Cambodian tourism minister Veng Sereyvuth noted that the long border between Thailand and his country could generate thousands of visitors for the magnificent monuments of Angkor Wat, now within driving distance of Bangkok.  

Also along the Cambodian border have emerged a number of casinos, all designed to attract Thai gamblers who are unable to indulge their pastime at home, where casinos are theoretically illegal.

Indeed, the numbers can only grow. The ASEAN Free Trade Area is now in the works and designed to take effect in a few years as the ASEAN countries seek to pursue European-style economic liberalisation. Travel will be a major beneficiary of this as increasing across-the-board contacts within the region will almost invariably be followed by people hitting the road to visit friends and relatives, study, attend seminars or trade shows.

This shift is likely to see some major strategic changes in the way products are marketed and distributed. Budgets are already being scaled back. In the US, ASEAN NTOs are shifting to what Tourism Malaysia's Director General Abdulla Jonid calls "maintaining our presence," meaning effectively "wait and see" what happens. US buyers at ATF numbered only 22, lower than at previous ATFs. Instead, there were 13 buyers from Russia and 14 from Poland.

Over time, the shift in travel patterns will require the ASEAN tourism industry to address three of the most significant impediments to growth from the new markets: Air-access, visas and fiscal and non-fiscal travel barriers like exit taxes which some ASEAN countries like Indonesia and the Philippines still impose on outbound travel by their citizens.

In their joint statement issued after their meeting, ASEAN tourism ministers sought to lay the groundwork for eliminating at least one impediment. Said the statement somewhat matter-of-factly, "To facilitate intra-ASEAN travel, the Ministers urged member countries to abolish all fiscal nor non-fiscal travel barriers." A senior tourism official of Singapore, long a vocal opponent of intra-ASEAN travel barriers, said the comment was making a comeback in such joint communiqués in order to serve as a reminder that it would be followed up in the next ministerial meeting to see whether some action has resulted.

Visa policies will also need to be rejigged. Even though ASEAN's founding charter requires that ASEAN citizens should be able to travel visa-free within the region, not all ASEAN countries automatically extend a visa-free policy. Vietnam and Myanmar are two such countries. At the press conference, the Vietnamese said they would proceed with visa-waivers only on a bilateral basis.

The Myanmar minister made no commitment, insisting that visas on arrival can be given but only if the tourism ministry is notified in advance of who is coming.

ASEAN visa policies also are restrictive for citizens of China and India, the two biggest markets. Some ASEAN countries give them visas on arrival but most others require visas, mainly to prevent tourists from turning into illegal immigrants. The Middle East countries face similar restrictions; Singapore has tightened up on arrivals from Saudi Arabia due to security concerns.

Hence, tour operators in all these new markets have to sift through a myriad of different ASEAN visa requirements. Those ASEAN countries which show the most flexibility are the clear winners. To address this, the momentum is building for the creation of a Schengen visa type system for the ASEAN countries that will rationalise the application process and documentary requirements. However, given the wide disparities in the administrative structures, security considerations and financial capabilities of the ASEAN immigration authorities, this could take several years.

The other contentious issue is liberalising aviation traffic regimes in order to build better air-access with China, India, the Middle East as well as within the numerous secondary cities of ASEAN. Outdated aviation agreements and protectionist policies mean that the emerging secondary airlines are not being given the regulatory freedom to tap the huge potential for intra-ASEAN leisure and business travel, even though the major airlines are reducing their frequencies to short-haul routes within ASEAN. Indeed, the situation is worsened by the major ASEAN airlines reducing frequencies to North America and Europe.

While ASEAN has dozens of great airlines and airports and is moving ahead with development of road, rail and cruise linkages, the grouping's transport ministers are clearly lagging in making the eliminating the 'software' regulatory bottlenecks to make better use of the 'hardware.' They are working on liberalisation within the overall context of ASEAN economic growth but it's slow going. Now, it is likely that the new focus on promoting intra-ASEAN travel as well as the upcoming ASEAN Free Trade Area will put the ball more firmly in their court to speed up facilitation.

- Travel Impact Newswire