Analysts say tourism sector unlikely to grow in months ahead
<cite class="auth">Channel NewsAsia - Wednesday, October 29
</cite>SINGAPORE : The tourism sector may be in for a hard landing next year if turbulence in the global financial markets continues.
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Industry watchers said smaller airlines and tour operators may not survive the bumpy ride. S$40 million worth of holiday packages were sold during a three—day annual travel fair in Singapore in August. The National Association of Travel Agents Singapore (NATAS) said there have not been any cancellations so far despite the economic downturn. But new bookings are expected to drop by 15 per cent in the fourth quarter of this year as people tighten their belts. Robert Khoo, CEO, National Association of Travel Agents Singapore, said: "Most of them are looking at nearer destinations instead of long haul travel. (This) probably means that they will spend a lot less in terms of family spending. I think the regional destinations will appeal to them." Observers said fewer tourists will be passing through Changi Airport, especially from markets such as the United States, Europe and Australia. And business travel could also fall by 20 per cent over six months as companies cut costs.
Peter Long, chief executive, TUI Travel PLC, said: "I don’t anticipate growth in the next 12 to 18 months, I see consolidation. I regrettably see more failures...primarily a combination of airlines and tour operators." Media reports have said that 30 airlines are on the brink of collapse. Experts said promotional efforts, like taking part in trade shows and advertising, will be increasingly important for regional tourism boards going forward. And tourism boards must find the unique selling point of their markets, and also work closely with the aviation industry. Meanwhile, carriers will also face increasing pressure in the future despite falling fuel prices. What goes up will come down, and that is certainly the case with oil prices, which fell by nearly half from a high of US$147 a barrel in July. But industry watchers said this might not necessarily be a good thing for airlines. Gordon Locke, vice president, Airline Marketing & Strategy, Sabre Travel Industry Group, said: "If an airline wants to hedge on oil or plan further out, there could be obstacles, because if you can’t get credit and less people (are) doing oil trading and less credit (is) being extended, then you are taking advantage of lower prices in the short term, but you may not be securing lower prices for the long term." Excess capacity could be another problem for airlines which have bought bigger planes, like the A380. And market watchers said airlines will have to get creative to fill the seats. — CNA/ms