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Business Tourism: Weathering the Storm

By Ian Neubauer

As the financial crisis continues to erode spending in business travel, low-cost service providers — and a number of premium players with long-term vision — are averting the pinch and, in some cases, capitalising on the storm.

Vroomvroomvroom — a car hire company with offices in the US, UK and Australia — has not seen any deterioration in receipts despite a recent customer survey in which 38 per cent of respondents said their travel will be affected by the financial crisis.

“Vroomvroomvroom appeals to the bargain hunter market. In a financial crisis this market increases, so we are continuing to promote the Vroom message to this market through marketing and public relations,” said Vroomvroomvroom international director, Richard Eastes.

Garuda Indonesia is likewise looking forward to solid results into the new year and beyond by reinforcing its services to Bali — renowned as a low-cost, high value destination for the ex-Australia market.

“What we have found in the past with the Asian currency crisis and other financial crises [is that] the value of closer destinations are enforced, particularly when you have a very good value destination such as Bali,” said Garuda sales manager, Kerry Timms.

Timms said Garuda was also optimistic about the MICE market, having seen early signs for the return of business tourism with consistent quotes being requested.

“It’s business at usual. We will continue to be proactive in promoting Indonesia and working with the tourism bodies to promote travel beyond Bali,” he said. 

Targeted expansion has long been the mainstay of Langham Hotels International (LHI), a luxury accommodation group with 10 properties across the Pacific, Asia, Europe and the US, and seven new Asia-Pacific properties in the pipeline.

“LHI is strengthening. In terms of strategies, this can be attributed to the foresight of investing in the rising new markets of China, India and the Middle East — a region we have termed ‘the new Silk Road’,” said a spokesperson for the company.

“They have prepared themselves accordingly — actively seeking new sites in this region to secure their position ahead of the competition when the financial slowdown struck.” 

The revelation flies in the face of a recent announcement by Starwood Hotels & Resorts — one of the world’s leading hotel groups — that its third-quarter earnings have dropped 12 per cent and that it’s expecting further deterioration in 2009.

Qantas is bogged in a similar quagmire, with forward bookings hit hard by falling consumer confidence and exchange rate fluctuations.  

“We have certainly seen a deterioration in booking intakes, particularly in international markets, for travel over coming months,” The Australian reported outgoing Qantas CEO, Geoff Dixon, saying.

“Consumer confidence has been dented.  Exchange rate fluctuations also appear to be reducing demand and overseas holidays have become relatively more expensive for Australians but, at this early stage, we have not seen an offsetting lift in inbound demand.”

But the national carrier is by no means up the creek without a paddle, with Dixon attributing its survival to years of cost cutting, new investments in fleets and the introduction of low-cost carrier JetStar as a means of segmenting its market. 

“We reacted quickly to the change in operating conditions earlier this year by suspending recruitment and by reducing capacity and, as a consequence, jobs,” Dixon said.

He said the crisis was accelerating a new aviation world order, with 26 carriers already gone bust and more casualties expected in the future.

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