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Tourism in Asia Takes a Beating; Many Economies Affected - 2003-04-01

Tourism, a pillar of many Asian economies, is slumping again. At stake for Asia are hundreds of thousands of jobs and billions of dollars in foreign exchange.

From airlines to hotels and resorts, the tourism business - vital to many economies in Asia - is struggling. Industry experts say Asia's tourism is navigating three storms: the war in Iraq, potential regional unrest, and a mysterious virus known as Severe Acute Respiratory Syndrome, which is partly spread by travelers.

Regarding the war, Bill Heinecke, chairman of Thai hotel and food corporation, The Minor Group, says the industry hopes the war will be short. "Obviously a short war is what everyone would favor. And certainly that would have the least impact on tourism. There's no question that during these periods of conflict people do cancel their travel plans (and) stay closer to home," he said.

The importance of tourism to Asia is without doubt.

In Hong Kong, tourism services account for more than six percent of the economy. In Singapore, tourism revenues brought in more than $5 billion in 2002. Thailand, one of Asia's most tourist-dependent economies, earned nearly $8 billion from tourism last year. In Thailand, nearly three million people work in tourism industry, or roughly 12 percent of national economic output.

John Koldowski, a director at the Pacific Asia Tourism Association - PATA, says cancellations across the region are running at about 15 percent. He cites SARS and regional tensions. "It's becoming increasingly worrying with this flu and how that's spreading. Some countries are peaceful at the moment (but) they do have the capacity to flare up at any point," he explained.

The World Health Organization issued travel advisories for several Asian countries this month, telling people to be aware of the symptoms of SARS.

Thai Airways International President Kanok Abhiradee said the spread of the disease is having a greater impact on passenger numbers than the war, with bookings dropping to and from the countries where the virus has been reported. "We have experienced drops in passenger bookings from various countries like Singapore, Vietnam, some destinations in China and Hong Kong," he said. Mr. Kanok said the drop in tourism would lead to cost cuts in his business. "We had thought that prior to this sad event in Iraq that… drastic cost cutting would have come to an end. But it seems this will continue. Drastic cost cuts are unavoidable," he said.

There is evidence international companies are pulling back on overseas travel. Bob James, an executive with an Asian hotel and resort group, says the meeting, incentive, exhibition and conference business, known as MICE, is slowing.

"Here in Bangkok we've definitely seen a slowdown in the corporate market. We're seeing meetings being postponed or clients not willing to confirm. But we've also seen that pattern going on before; it's just obviously more extreme at the moment," he said.

The World Tourism Organization secretary general Francesco Frangialli, in a letter to members, writes that he remains hopeful business will recover in the second half of the year.

Mr. Frangialli reminded the industry that it has weathered past downturns, and that the need to travel - whether for business or leisure - remains too deeply ingrained in most societies to be easily changed.