Green shoots or not, building confidence is what matters

Several sectors of the industry say we may be seeing "green shoots" of recovery. Are we clutching at straws or are we seeing real signs of recovery? Or should we stop guessing and just focus on areas we can influence - sentiment and confidence? P@SSPORT reports.

From airlines to hotels to investors, every sector seems to be expressing the hope that the worst may be over and that travel may be on the recovery path, along with the global economy.

The Association of Asia Pacific Airlines (AAPA), after releasing its April results which showed a 5.8 per cent drop in international passengers that month to 11.1 million, said "there are some tentative signs that we may at least be through the worst".

Mr Andrew Herdman, AAPA Director General, said, "The April figures, although poor, are not quite as bad as the declines we experienced in the first three months of the year. 

"Despite the slump in exports, some Asian economies are holding up reasonably well, with mainland China seeing a strong rebound in domestic travel after a weak performance in 2008."

For the first four months of this year, AAPA international passenger numbers were 9.6 per cent lower than in the same period last year, while international air cargo traffic was down 24 per cent.

In a press release, TravelCLICK, a leading player in hotel ecommerce and business intelligence, asked, "Could the worst be over? … latest reports show a lower rate of decline in April, indicating the economic slowdown may be close to levelling off".

Asia – the new driver of global capital flow

At the Hotel Investment Conference Asia Pacific (HICAP) Southeast Asia Update held in Singapore in May, Chief Executive Officer of Jones Lang LaSalle Hotels, Mr Arthur Haast, shared what he said was good news.

The first quarter of 2009, although 90 per cent down in investment volume to level off at US$2 billion, was marginally more than in the fourth quarter of 2008. "Could this signal the turning point?" he asked.

He said while investments had tanked in America and Europe, Asia was the most active region, showing growth year on year, between 2008 and 2009.

What's changed is that 100 per cent of the investment volume in Asia is now from within Asia. "It's Asia investing in Asia, with no flows at all from Europe and US. That's a dramatic change," said Mr Haast, adding that Asia had become the driver of global capital flow.

Get some perspective, be optimistic

Keynote speaker Mr Philip Bowring, columnist for the International Herald Tribune, after sharing economic data which he commented could be interpreted any way we chose, asked, "Are we bumping along at the bottom or are we in a bear market that began in 1997?"

Guessing "how long, how deep and how long will it last" – the title of his keynote address – was a "mutt's game" at the best of times, he said. Now it was even worse.

What was more important was how we viewed the situation. "Optimism will seize the day. Sentiment can be a key influence, and it can be self-fulfilling."

Citing the H1N1 flu scare, for example, he said, "If we are going to lose our heads over some flu, the prospects of recovery will be deeper and longer than is necessary."

In the Hotel Leaders panel that followed, Mr KP Ho, Executive Chairman of Banyan Tree Holdings, said whatever the case, this was a good time to reposition and to examine the fundamentals of business models.

One thing does not change and that's to be "dominant in your niche, to define your little sandbox".

Influence sentiment and boost confidence

Mr Patrick Imbardelli, CEO of Pan Pacific Hotels Group, called the business meltdown "a slap in the face". "If we don't learn something from this, we never will," he said, adding it was the time to re-examine every business process.

Hotel leaders gathered for the panel discussion agreed one thing chief executives could do was to influence sentiment and boost confidence in the industry.

To Mr Michael Issenberg, Chairman & Chief Operating Officer of Accor Asia Pacific, that starts at home. "I have to manage fear within my own organisation first, give the troops confidence that they will still be getting their pay cheque and hopefully, that has ripple effects outside the company."

Mr Ho said the good thing about being his age – "I am the oldest here, I think" – is "you can tell people I've been through this and we will get through this."

He added, "The hotel industry in Asia is relatively young, the people working in it are relatively young and many of them have not been through anything like this before. We can bring our experience and wisdom to bear on this."

Mr Imbardelli said, "Now is not the time to go quiet. Now is the time to communicate."

"Now is the time to project enthusiasm and confidence," said Mr Paul Foskey, Executive Vice President-Development, Asia Pacific, for Marriott International. He related the story of Bill Marriott who met up with President Obama to personally lobby for the hotel industry when Washington came down hard on corporate meetings and incentives. "Leaders have to make a stand and fight for the industry."