On Asia's Long Road To Recovery, Is Relief In Sight?

<B> On Asia's Long Road To Recovery, Is Relief In Sight?</B>

By Frank Rosci

While still menacing, the recent financial crisis that struck the Asia/Pacific region with the ferocity of a surging typhoon and convulsed the area's once bustling economy into crippling knots, is beginning to ease.

Observers report indicators of better times ahead, including rising business travel from the United States, and more development capital for industries and new hotels.

Hoping to overcome last year's drastically low occupancy rates, which fell below 50 percent in many cities, Asian hotels are offering bargain rates, including a free night's stay. The Kowloon Hotel in Hong Kong, for example, now through August costs $168 per night, instead of the typical $310. And airlines too are getting into the bargaining act.

"The financial crisis that hit Asia/Pacific about 18 months ago has left companies much more financially aware and much more careful about variable costs, such as business travel," said Geoffrey Marshall, Ft. Lauderdale, Fla.-based president of Asia/Pacific for Carlson Wagonlit Travel. "Asia is still very much price driven and a bargain today," he said.

One U.S. carrier that has long had a principal stake in Asian markets is Minneapolis, Minn.-based Northwest Airlines. "After shifting some routes around and canceling others, we are starting to see some signs of renewed life," said a spokesman. "We are generally optimistic that we will see growth that will translate into greater numbers of business travelers to the region," he said. Among the airline's current low-cost packages is a Bangkok bargain (airfare and five hotel nights for $717) from Boston, Chicago, Detroit, Memphis, Minneapolis/St. Paul and New York until June 30, and $845 through Aug. 31.

According to the Pacific Area Travel Association, economic upheaval in the Asia/Pacific region has spawned increased research by members bent on ascertaining "how visitor arrivals are shifting and tapping the emergence of new country markets and new customer segments in existing markets."

With signs of recovery in the air, there are several places where conditions are significantly better than in others, including in Hong Kong, Japan, Seoul and Taipei. Conversely, certain markets, notably Indonesia, are still in grave trouble. A sign of the hard times there shows weekly air seat capacity tumbling from 273,294 seats on 711 flights a week in 1997 to 162,762 on 540 flights a week in 1998, and total visitor arrivals down from 5.18 million in 1997 to 4.60 million last year.

In Singapore, inbound visitors declined 13.3 percent to 6.24 million in 1998, but there are signs of improvement. Ted Teng, president of Asia/Pacific for Starwood Hotels & Resorts, said he is seeing increased numbers of U.S. business travelers, especially in Bangkok, Hong Kong, Seoul and Tokyo, which really has never wavered.

"Recovery has been continuing here and elsewhere this year, and by year's end we expect to be up more than 10 percent in Hong Kong and Beijing," Teng said. Part of the growth is related to more meetings. "Hotels are excellent barometers of economic conditions since companies meet more during down times," he said.

Another sign of the slow times in Asia is the hundreds of hotels for sale in the region. Quoted in the April 1999 issue of Issues & Trends, Pacific Asia Travel, a monthly PATA publication, Westin CEO Juergen Bartels said the hotels will be offloaded in a rush when the banks begin "pushing them into bankruptcy" and then selling them. "The banks have not taken the initiative. They are foregoing their interest rates and don't want to own them. When they are willing to own them, there will be a flurry of hotel sales," added Bartels.

Some U.S. companies said they haven't witnessed a decline in the number of business travelers they send to Asia. "Year after year we see consistent numbers of business travelers to the region, but like other companies, we are closely monitoring the economic situation and maximizing our travel spend through deals, and suggesting alternatives such as videoconferencing when possible," said a Xerox spokesperson.

Of particular concern for business travelers, she added, is the state of affairs in China, which was tense following the accidental NATO bombing of the Chinese Embassy in Belgrade. "We are suggesting that travel to China be postponed, or that perhaps a meeting be rearranged for some other location farther from the mainland, Hong Kong, for instance, unless the trip is absolutely essential at this time." Despite the warnings, Xerox has had no problems with either its manufacturing plants or sales offices in China.

Hyatt International operates more than 35 hotels in the region, a spokesperson said, and has plans to add more properties. "Over the next three years, Hyatt will open 14 new hotels in the Asia/Pacific region, including properties in Australia, China, Japan, Malaysia, Taiwan, Thailand and Vietnam. In March, we launched the company's first Grand Hyatt hotel in the People's Republic of China. The Grand Hyatt Shanghai has been positioned to take on the role as Hyatt International's flagship hotel in China," she said. (See story, page 35).

Hilton International's new openings for 1999 include the 296-room Hilton Otaru in Japan and the 380-room (150 serviced apartments) Hilton Dalian in China. The company's other planned development projects include four more properties in China and one in Australia.