Abacus picks growth markets

Abacus has released its Travel Sentiment for the second half of 2009. Here are some highlights.

• Despite the fear of a decrease in travel, Abacus’ air booking data showed that there are some green shoots in terms of a selection of positive market performances. Vietnam, Thailand, Myanmar, Sri Lanka, Philippines, China, Pakistan, Nepal and Kazakhstan all registered growth for January to June 2009 compared to the same period last year.

• The increase in air bookings for Vietnam could be partly due to rising income levels of Vietnamese and reduced costs of outbound travel due to the rising number of low cost carriers and promotional campaigns from tour operators - all creating favourable conditions for overseas travel. According to Vietnamese news web portal VietNamNet Bridge, agencies reported a rise of between 10 to 15 per cent for sales of their international tours over the four-day May Day/South Vietnam Liberation Day (April 30) break, where packages were discounted by as much as 20 to 25 per cent.

• Attractive promotions and discounts by airlines could have stimulated travel from several of the growth markets. Philippines Airlines’ appealing promotional fares to selected cities on its international network could have motivated Filipinos to take to the skies earlier this year. Similarly in Thailand, Thai Airways offered attractively-priced fares to Singapore, Shanghai, Beijing, Tokyo, Korea and other regional destinations. A number of other services were also being offered at no extra charge to add value to passengers’ travelling experience during this time. These included lounge access for all class of travel and 40-kilogramme luggage allowance per passenger.

• Kazakhstan’s outbound travel has been on the rise, seeing an increase of almost 4 per cent in 2008. This has continued into the first half of this year, fuelled mostly by the growing level of disposable incomes. A Euromonitor report indicated the country has seen the emergence of an affluent middle class who are keen to travel out of the country, especially during the winter season.

• Looking forward to the next half of the year, air bookings from markets in Asia with significant numbers of Muslim residents could drop as fears over the possibility of contracting the H1N1 virus might prompt them to defer their November pilgrimage to Mecca. At a meeting on 23 July, Arab health ministers decided to ban children, the elderly and those with chronic medical conditions from performing the religious Haj annual pilgrimage to Saudi Arabia this year in an effort to slow the spread of swine flu. At the time of writing, governments in Asia have not announced similar restrictions.

Delays hit Phuket hotel projects

Up to 48% of all new hotel developments in Phuket are experiencing major construction delays triggered by the global economic downturn and concerns over Thailand's political stability, says an industry report.

According to the Phuket Hotel Market Update Mid-Year Report released by respected hospitality consulting firm C9 Hotelworks, the slowdown on hotel construction sites has however not dented developer's enthusiasm for entering the accommodation market on the island.

C9's Managing Director Bill Barnett said despite the delays, new developments continue to enter the stream with 38 properties offering 6,231 rooms at various stages of advancement in the construction cycle.

"Non-traditional product such as hotel managed villas and condos now represent 34% of the upcoming inventory," Barnett said.

According to the research, first half trading for 2009 indicated tourist arrivals declined by 14% but a combined luxury/upscale/mid-scale occupancy rate of 60.4% produced an average room rate of USD141.

The report also noted that branded hotels outperformed non-branded properties rate wise by 33.7%, although the non-brand sector outperformed the brands on occupancy by 12.4%.

"Looking forward, short-term trading will focus on occupancy at the expense of long-term rate strategies," Barnett added.

"Cash flow is a key underlying consideration in this market with most hospitality assets largely carrying low debt ratios. Defying the trends are the luxury high-end tier properties which operate in a favourable supply and demand segment and budget tier hotels who have captured changing demographics, are experiencing business from price conscious travellers."

The report concluded that Phuket's long-term outlook remained positive with brand concentration, growing airlift and infrastructure improvements, though recovery in 2009 has effectively been written off with prospects pushed into 2010.