Eye on recovery, seize opportunities

The question that's probably on everyone's lips is when will recovery begin? Both of the economy and specifically, demand for travel?

Depending on which report you are reading, the answers vary with predictions ranging from anything between six months and two years for the global economy to recover.

Last month, spirits lifted when global bank, HSBC, announced that economic recovery for the region could kick in as early as the second quarter of this year.

The bank told a media conference on January 13 that massive policy responses and a steep plunge in commodity prices should fuel the rebound. It is tipping a v-shaped recovery in which the economy bottoms out and rallies quickly, although it would not be as fast as the recovery from previous crises.

"The cavalry is on its way in the form of the most significant policy response ever," said senior Asian economist Robert Prior-Wandesforde in a Straits Times report. "The policy easing and sharp falls in commodity prices should lead to stronger domestic demand, thus generating recovery in Asia."

While this is certainly music to the ears of the travel industry in the region, travel's fortunes are inextricably linked to that of the wider economy's.

Mr Robert Bailey, President and CEO of Abacus International, the region's largest travel facilitator, cautioned that "we need to bear in mind that a number of other major financial institutions have also released their predictions on the recovery rate of the global economy".

"There are predictions that it will take a longer period of around 18 months for the economies of key nations to pick up."

He said that following the high oil prices early last year and the financial crash last October and the resulting economy slowdown over the subsequent months, passenger traffic has slowed down in the major cities of the world. "Airlines have since taken out capacity and there will be a lag time when the economy turns around for travellers to pick up their travel activities and airlines to reinstate capacity. So even if the situation recovers now, we may not see immediate recovery.

"What we are seeing currently is leisure travellers not cutting back on their travel completely, but rather reducing the number of travelling days or opting for domestic instead of longer-haul destinations."

A gradual recovery process expected

Asked when Abacus was expecting a recovery in travel demand, he told P@SSPORT, "The industry conditions currently seem to signal at a realistic recovery in the second half of 2010."

He said this is unlikely to be an instant economic turnaround as was seen after SARS, but rather a gradual process where the various economic drivers will take turns to step up and boost major world markets and added the recovery phase would likely extend over a period of time.

"That said, there are several events that are happening in the Asia region that will add stimulus to the markets here. For instance, we have the Youth Olympics which will be held in Singapore and the World Expo in Shanghai in 2010.

"Measures have been taken across the globe, from US, Europe and Asia to curb the impact of the recession and it will take at least six months before the impact of these stimulus packages are felt. When business conditions improve in key markets, it will lead to greater confidence in consumer spending which in turn pumps back to businesses and to bringing investments once more to Asia."

On a visit to Singapore, Mr Gordon Locke, Vice President, Airline Marketing and Strategy, Sabre Airline Solutions/Sabre Travel Network, also spoke about the anticipated recovery in travel demand.

The global distribution and technology company, which has interests in Abacus, and online portal, Travelocity and Zuji, is expecting travel to start recovering first in Europe during the second half of the year, with Asia following right behind.

The US would likely be the last to recover in general travel demand, and will probably stagnate until into first quarter 2010, said Mr Locke.

More important than fixating on a recovery timeline, said Mr Bailey, is the need to "focus on the things we can change".

"For many travel agencies supported by Abacus, there's a focus on using new travel booking and management solutions to boost productivity and reduce costs. We see productivity as the catch-cry of the travel agencies for 2009."

Wanted: Unique specials and deals

Mr Timothy Hughes, Sydney-based travel trend spotter, told P@SSPORT that with consumers becoming deal hunters – "consumers will still travel, they just need deals". Suppliers need to offer "unique specials and deals" and not merely price discounts.

He also said that suppliers must focus on the product. "Expectations will be lower so now is the time to invest in your product.  Innovation in a downturn is critical, as is fixing all those bugs that have been ignored in times of growth," he said.

Lastly, he said, "Steal market share from less resilient or less prepared competitors - no explanation needed!"

Mr Stuart Wines, Vice President, Asia Pacific of global travel company, RADIUS, said that with the economic downturn, travel management companies (TMCs) need to show they have an important role in assisting clients to manage their travel spending wisely, by maximising the benefits of supplier deals, and being closely involved in aiding cost reductions and increased efficiencies.

"TMCs can demonstrate that they are expert consultants and business advisers, not just order takers," he said.

TMCs should also expand the range of value added services available to clients to reinforce their value in these difficult times, he said, citing examples such as assistance with T&E (travel and expense) reporting, VAT (value added tax) reclaim and other such services.

"This is a good opportunity for TMCs to build closer relationships with clients. ‘We are all in this together, let's make sure we as a TMC really understand you, our client's business and the priorities of your travel programme, so we can act even more as a strategic partner to you'."