Royal Intel - Tourism Intelligence Consultants

The China Tourism Academy reports that total revenue in the country’s tourism industry is expected to grow 13% to hit a high of USD 205 billion in 2010 as the country rolls out favorable policies to back the industry.

In this regard, the forecast point towards 2.1 billion Chinese tourists taking domestic trips this year, up 12% from 2009 while the number of inbound trips by overseas tourists would reach 136 million, up 8% from a year earlier. On the other hand, the forecast for outbound trips is expected to advance 15% to 54 million. The Chinese government has indeed posted guidelines last December to promote the development of the tourism industry, vowing to lower market threshold and simplify approval procedures for tourism enterprises, and encourage local authorities to attract overseas investment, opening the domestic tourism market to foreign companies.

Preliminary figures released by the Association of Asia Pacific Airlines (AAPA) provide further evidence of a modest recovery in air traffic demand. A total of 11.1 million international passengers were carried by AAPA member airlines in November, 4.5% more than in the same month last year.

International passenger traffic, measured in revenue passenger kilometre (RPK) terms, grew 3.5%. With available seat capacity having been cut by 3.1%, the average AAPA international passenger load factor for the month reached 76.3%, 4.9 percentage points up on the same month last year. AAPA international air cargo demand, measured in freight tonne kilometre terms (FTK), registered growth of 12% compared to the depressed levels of a year ago, and marking a continuation of the slow but steady recovery witnessed in 2009. The AAPA average international air cargo load factor was 8.2 percentage points higher at 71.1% for the month.

Commenting on the results, AAPA Director General Mr. Andrew Herdman, notes that’s given the difficult year in which AAPA international passenger traffic fell 8%, and international air cargo traffic registering a 14% decline, the November traffic figures are mildly encouraging, in line with the broader economic recovery underway being led by the Asia Pacific region. In absolute terms however, demand remains well below pre-recession levels. In addition, the aviation industry is still wrestling with the problem of low yields and continuing oil price volatility, so a recovery in airline profitability is still some way off making the overall, market conditions remain extremely challenging.

Japan Airlines carried a total of 402,587 international passengers during the Japanese New Year vacation period from 25 December 2009 to 5 January 2010. Load factors on flights to most international regions showed considerable improvement due to substantial reductions in capacity.

Measured in available seat kilometers, total capacity on international routes was 21.1% less than the holiday period last year. The overall seat load factor at 83.6% is 8.9 percentage points higher than the previous period despite a decline of 11.8% in international passenger numbers. On their part, the troubled JAL Group operated 76 additional flights, both scheduled and charter, to such destinations as Guam, Honolulu, Cairns, Fairbanks, Siem Reap, Bali and more while on domestic routes, JAL decreased seat supply by 6.9% against the same period last year, transporting 1,327,578 domestic passengers, 7% down versus the number of passengers carried during the festive period a year before.

Overall load factor on domestic Japan flights was recorded at 2.1% points lower to stand at 63.3%. During this holiday period, JAL Group operated an additional 128 domestic flights to meet demand on popular routes in Japan, such as Tokyo – Miyazaki, and Tokyo – Kagoshima.

According to recent surveys conducted at Amadeus the key concerns faced by travel agents across Asia Pacific are notably competition from online travel agents, the general travel downturn, and ways to generate more revenue in 2010.

The majority of respondents from Hong Kong and the Philippines felt that the competition from online travel agents was the most pressing issue, while respondents from Japan see the general downturn in travel as their key challenge. Travel agents from Hong Kong and the Philippines had different views from Japanese travel agents on the strategies that would be most effective to overcome these challenges in their respective markets. The majority of respondents from Hong Kong and the Philippines indicated that widening their target groups to generate business and adopting new technology would be critical in revenue and profit generation. Whereas most travel agents in Japan are exploring ways to implement cost cutting measures such as streamlining resources, work processes and operational expenses to best maximize profits.

The two tactics cited by travel agents in Japan in comparison scored lowly amongst agents in Hong Kong and the Philippines. According to the Vice President of the Business Solutions Group, Amadeus Asia Pacific, Peter Smith, the survey highlights how different markets have their own unique challenges for their customers and equally so their responses and strategies to counter such challenges. The survey in addition identified customer loyalty as a critical factor in reviving business in the travel industry. In this regard, the industry players have been advised to harness the power of technology to differentiate themselves from competitors and keep a high level of customer satisfaction and loyalty given the challenges confronting the travel industry.

The Association of Asia Pacific Airlines (AAPA) has questioned the effectiveness of the latest airport security measures introduced following the Christmas Day attempt to blow up an aircraft in the United States.

The AAPA has in effect said that treating each of the six million passengers who fly daily as potential terrorists and subjecting them to virtual strip searches and pat-downs, borders on the absurd particularly when compared to the approach the Association has adopted to ensure public security in other aspects of people’s daily lives. The regional association acknowledges that whilst new screening technologies are constantly under evaluation, including full body scanners and automatic explosive detection systems, there is however insufficient evidence regarding their effectiveness to justify their immediate deployment, not to mention unresolved health and privacy issues.

This limitation in the use of technology further exacerbated by ongoing debate on the merits or otherwise of passenger profiling raises a number of other important issues of fairness and preservation of human dignity, given the fact that 99.99% of passengers, even from supposedly higher risk categories, are entirely innocent. The AAPA on its part contends that rather than laying much focus on more intrusive passenger screening, the key lesson from the recent and all previous terrorist threats and or incidents, is the critical importance of effective intelligence gathering and analysis suggesting for reinforcement of both inter-agency and inter-governmental cooperation.

Commenting on the current state of affairs, the Director General of the AAPA, Andrew Herdman, asserts that despite recent events over terrorist threats in the air, public confidence in the safety of air travel remains high. The Director however cautioned over the undermining of traveler confidence by ill-judged reactionary measures being taken by those entrusted with maintaining public safety noting that the sudden introduction by national governments of uncoordinated new security requirements, without prior consultation, makes practical implementation difficult. Far from reassuring passengers, such unprecedented counter measures are likely to result in further confusion and unnecessary inconvenience.

Figures released by the Pacific Asia Travel Association (PATA) show that the numbers of international visitors to the Asia Pacific region grew by 2.2% year-on-year in October 2009, improving the overall position for the year (over 10 months), just 4% down when compared with the same period in 2008.

Within Asia, Southeast Asia recorded a strong gain, standing at 7% growth in international visitor arrivals, boosted by another impressive month for Malaysia (+14%) coupled by better outcomes from Indonesia (+3%) and for Thailand (+11%). In Northeast Asia, arrivals to Chinese Taipei (+13%) and Korea (ROK) (+13%) maintained stable growth momentum, while arrivals to Hong Kong SAR (+9%) and Macau SAR (+5%) continued to improve. However, weak arrivals were reported for China (PRC) (+1%) and sharp declines experienced by Japan (–11%); factors that limited the overall growth rate for the sub-region to 3%. In South Asia, Maldives (+11%), Nepal (+11%) and Sri Lanka (+7%) reported robust growth in visitor numbers for the month of October but where India’s tourist numbers were down by 1%.

As a result, the overall growth for the sub-region was reportedly a modest 2%, reflecting the dominance of the India’s inbound travel market in the region. The Pacific, on their part, recorded a 3% growth, with Australia (+6%) and New Zealand (+8%) leading the rebound. However, trends in visitor arrivals remained depressed for Guam (–9%) and Hawaii (–0.3%). According to the Associate Director of PATA’s Strategic Intelligence Centre (SIC), Kris Lim, the month of October marked the third straight month of above the line gains for international visitor arrivals to the Asia Pacific region. The growth rate of 2.2% achieved in October was acknowledged as being by far the best year-on-year improvement in a very depressed year.

Despite these intermittent growth recorded for the region, the first 10 months of the year was however 4% off the pace in terms of arrivals growth compared to 2008 levels, and about 3% off vis-à-vis 2007 levels. PATA however expressed its confidence for stronger gains expected for the remaining two months of the year, given that preliminary estimates for November from a number of destinations support those expectations given that growth in arrivals is in the double-digit range for Chinese Taipei, Korea (ROK), Malaysia, Thailand and Vietnam in November.

India is acclaimed for its huge medical tourism potential with states like Kerala, Andhra Pradesh and Karnataka, specifically identified in offering a lot of scope for medical tourism. In recognition of India’s potential as a choice destination for medical tourism, the Travel Agents Association of India (TAAI) has taken upon its stride to help in promoting medical tourism and have in effect showcased the key features of India’s medical tourism at an annual conference held in Dubai in last October.

According to the President of TAAI, Mr. Rajinder Rai, optimism is indeed high for India’s medical tourism especially for clients from the Middle East where the Dubai showcase will seek to change the scenario. The annual conference held from September 29 to October 2, saw over 2,000 delegates taking part. Experts from both India, as well from the Middle East nation, took part in this conference and exchanged their views, prospects and experiences. The President further categorically noted that the annual conference of the Travel Agents Association of India will contribute to a very large degree to promote and to market Dubai in India, which has been showing positive and strong signs of growth for quite a few years now.

The medical tourism market in India has been growing rapidly since the last decade and private as well as Government corporations are taking initiatives to sustain and continue the growth. The country’s potential as a choice destination for medical tourism has equally seen the Indian Medical Travel Association (IMTA) in partnership with a leading business federation, the FICCI, to promote Medical Value Travel to India from the African Continent. Dubbed ‘Namaskar Africa’, FICCI will lead an Indian business expedition from 14-16 January 2010 to Lagos, Nigeria with due support from Ministry of Commerce, Government of India and ECOWAS Commission where in effect the Indian delegation will be lead by India’s Minister of Commerce and Industry, Shri Anand Sharma.

Targeting Africa for clients is based on the steady growth in the volume of international patients coming to India for medical treatment, especially from West Africa and particularly from Nigeria. Indeed more than ten thousand visas were issued by Indian High Commission in Nigeria alone during 2009 to patients who wanted to travel to various Indian hospitals for medical treatment. According to the Executive Director, Indian Medical Travel Association, Pradeep Thukral, Africa is a prime market for promoting medical value travel to India and where ‘Namaskar Africa’ will seek to provide opportunities for the Association’s members to promote their services and also explore business opportunities for setting up Diagnostic and Clinical facilities in the African region.

The event endeavors to provide excellent networking opportunities between Indian African healthcare professionals and will help to further boost the flow of international patients referrals from Africa to Indian hospitals.

Predictions point towards a return to normalcy in the Australian tourism industry. This forecast, made early into the year, is based on the country recording its strongest growth in overseas arrivals since 2005.

Indeed last year saw the Australian tourism industry suffer its sharpest decline in total tourist consumption since the 2003 SARS outbreak. A turnaround in 2010 is therefore expected in that the value of the tourism industry to the economy is set to increase by 3% to AUD 92 billion. Overseas arrivals to Australia has been fuelled significantly by strong growth from the U.S and Chinese markets, and where this growth is expected to rise 4.3% after performing above expectations during the GFC. Domestic tourism, which was hit by a 5.4% decline in 2009, is on the other hand, expected to pull out of its slump this year and grow in value by 2.9%. According to the chair of the Tourism Forecasting Committee, Bernard Salt, a solid recovery of 4.3% is a good figure for the new year, given the strong growth out of the US and China for 2010.

Given the trend, international travel to Australia is expected to rise 4.9% in 2011 and 4.7% in 2012, thanks to the global economic recovery and a release of pent-up demand. Outbound tourism will still, on the flip side, continue to outstrip inbound arrivals due to factors associated with cheap airfares and the rising value of the Australian dollar, a trend that began in 2008 and is expected to remain as such for at least a decade.

A new study reveals preference among majority of business travel managers in seeking out alternatives to travel provided by technology in 2010 amidst signs suggesting stabilization in the economy and in anticipation of the end of the current global recession. The study entitled “2010 Corporate-Travel Spend Plans & Tactics”, was conducted by Kotler Marketing Group, in conjunction with the Association of Corporate Travel Executives (ACTE).

The key findings of the study indicate that majority of business travelers will rely on electronic alternatives more in the future than they have previously, in order to meet their travel spend reduction goals. Further, the study notes how companies who had widely deployed conferencing technologies saw, on average, greater reduction on travel spending in 2009, with conferencing having the biggest impact on internal travel. Another key finding was a continued increase and high expectation in the use of electronic alternatives for purposes ranging from team meetings to large events, to meetings with suppliers and partners. More than 40% of companies indicated the need to have their organizations replacing more sales-related travel with conferencing over the next few years.

Despite these plans to rely more on conferencing technologies, doubts and confusion persist about the effectiveness of these technologies as travel replacements. Indeed web-conferencing was “usually” an effective replacement, while video-conferencing was not rated as “usually effective” by a majority of respondents. The study was based on a survey of more than 200 corporate travel managers from across the globe, and provides an in-depth analysis of the current and expected usage of travel alternatives (e.g., web- and video-conferencing) broken down by region, industry sector, and company size. The research also investigated travel spend patterns, including T&E-to-sales ratios, and tactics travel managers plan to employ to control travel spend in 2010.

Speculation continues to grow about the fate of Japan Airlines (JAL) after its shares plunged to record lows amidst effort by Japan’s national carrier to restructure itself in order to get itself back on solid footing. In this regard, a government-backed corporate turnaround body, which is responsible for restructuring JAL, has proposed to the airline’s creditor banks that the struggling carrier be placed in court-backed bankruptcy proceedings.

This proposal has however seen banks rejecting the liquidation proposal because of fears of widening losses and concern that bankruptcy could disrupt the airline’s operations. The latest news reports that the Development Bank of Japan has nonetheless agreed to increase the amount of its unsecured loans to the airline. This is the fourth time the troubled carrier has been bailed out by the state-run Development Bank of Japan since 2001. According to the Centre for Asia Pacific Aviation (CAPA), the renewed uncertainty over JAL’s future creates ever-widening ripples. Indeed the new bankruptcy concerns appear certain to force a downgrading of the carrier’s credit rating, and already the premium it must pay to insure its loans has increased significantly.

A further issue noted by CAPA was that in the event of JAL’s bankruptcy and any sharp reduction in airline size, the government would be anxious not to allow a scramble for any airport slots consequently released at Tokyo’s capacity constrained airports. Delta Air Lines, the world’s biggest airline operator, and its rival American Airlines, have been vying for a stake in JAL in a bid to expand their Asian networks, with Delta offering a US$1 billion offer to lure JAL from American. The latest news is that Japanese airline, All Nippon Airways, is considering taking over the international routes of its struggling rival. All Nippon is reportedly looking to increase its overseas flights by targeting profitable routes to Europe and the United States and has allegedly informed the Japanese government of its interest. All Nippon competes with JAL on more than 30 of All Nippon’s 40 international routes.

Several cabinet ministers are reported to have asked JAL to completely withdraw from overseas flights and hand the business over to All Nippon. JAL has of late been making temporary adjustments to its international flight frequency and fleet plan. This has seen frequency flights on two international routes, namely that from Tokyo (Narita) to Sao Paulo via New York, and Tokyo (Narita) to Shanghai, reduced for a period of two to three months between January and March 2010, strongly attributed to weak passenger demand on these routes. Capacity is also expected to be lowered with the downsizing of aircrafts used on three other international routes between Tokyo and Beijing as well as Hong Kong for a similar length of time.