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Market Focus : Asian Travel, Stifled by War Jitters, Climbs Out of Costly Slump : Business travelers are back on the road and vacation bookings are up. But a slow summer is still expected by countries that count on tourist dollars.

March 19, 1991|CHARLES P. WALLACE | TIMES STAFF WRITER

BANGKOK, Thailand — Asia's tourism industry is finally beginning to see a glimmer of hope after two of the worst months in history.

The slump has been so bad that Bangkok's luxury, 25-story Shangri-La Hotel closed 10 of its floors, and it was by no means alone. From Bali in Indonesia to New Delhi and Hong Kong, occupancy rates have plummeted since the start of the Gulf War prompted tourists to stay home and business travelers to postpone all but the most pressing trips.

Since the Gulf War ended, however, business travel has slowly begun to pick up and travel agents report that tourists are booking Asian vacations for the second half of the year. Still missing is any sign of recovery in the profitable group tour business.

"I don't think its going to be an immediate recovery back to pre-August levels," said John Mulcahy, who monitors the travel industry at Peregrine Securities in Hong Kong. "Even before the war, there was a cyclical slowdown in travel due to economic downturns in the United States and Europe. It will be a very poor summer because most long-distance travelers will have already made their plans to go elsewhere."

A U.S. State Department warning of a "credible threat of terrorism" caused a wave of cancellations in Thailand and the Philippines. The terrorist warning has since been rescinded in Thailand but remains in effect in the Philippines.

There is still an advisory affecting two remote provinces of Indonesia, but earlier blanket terrorism advisories for both Malaysia and Indonesia have been canceled.

Not surprisingly, visits by Americans to the four countries have plunged since the first of the year.

In Bangkok, David Wiig, vice president of the Thai Hotel Assn., said room occupancy in January and February was down 45% compared to the first two months of 1990, but he added, "We think it's turning the corner."

Wiig said that for the first time since the war, reservations are outnumbering cancellations and business travel is resuming, though "it will be some time before the leisure market gets into gear."

Tourism earns $4 billion a year for Thailand, making it the country's largest source of foreign exchange, and an extended slump could affect overall economic growth. The government is also worried about the impact of last month's military coup on tourism. Although there was no violence, the U.S. government issued another travel warning to Americans that could keep tourists away for the remainder of the year.

"We can't understand it--there hasn't been any recent credible threat," said Wiig. "If anything, the imposition of martial law has made Thailand one of the safest places around."

Another major victim of the Gulf War was the Philippines, where tourist arrivals declined 20% to 30% compared to last year, according to Remedios Raymundo, head of the Tourism Council of the Philippines.

Tourism in the country last year was already suffering from a drawn-out military coup in December, 1989, followed by an earthquake and a devastating typhoon. Like Thailand, the Philippines has a high season of November to March, meaning that this year's top tourist season is already a washout.

But Raymundo said that occupancy rates at Manila hotels have inched up from 30% in January to 60% to 70%, indicating that business travelers, at least, have returned in substantial numbers to the capital.

One pattern that appears to be emerging is that long-haul business from the United States and Europe is being replaced largely by businessmen and tourists from within Asia--mainly Japan, Taiwan and South Korea.

In Malaysia, for example, resorts such as Penang were hardest hit by the drop-off in arrivals while city hotels that cater to Asian businessmen were scarcely touched.

"Hotels which rely on long-haul travelers were affected quite badly," said Rosemary Wee of the Hotel Assn. of Malaysia.

Indonesia had designated 1991 as "Visit Indonesia Year" but has had to scramble to find tourists to even approach last year's arrivals. Udin Saifuddin, marketing director at the Ministry of Tourism, said in a telephone interview that the government is sending delegations to Taiwan, South Korea and Hong Kong to drum up business for the country's traditional high season in July and August.

Winter occupancy rates in Bali, the country's most glamorous tourist destination, hovered between a disastrous 20% and 60%, Saifuddin said, while Jakarta hotel rooms were a more respectable 70% full, again reflecting business travel.

Overall, arrivals in January were off nearly 9% compared to 1990, he said. But two travel fairs are going ahead in April, with only one participant cancellation so far.

Hong Kong, which weathered China's Tian An Men Square massacre and the resulting tourism bust in 1989, saw tourist arrivals decline 15% to 20% since mid-January. But officials in the British colony blame recessions in the United States and particularly Australia for the shortfall, saying the Gulf War just compounded an already weak situation.

Singapore likewise saw a 10% to 12% visitor decline in February, compared to a year ago, but it is picking up business from western Australia that might otherwise have gone to Europe or the United States.

"We feel the worst is over," said Peter C. Hardstone of Singapore's Tourist Promotion Board. "We're optimistic tourism will pick up in the second or third quarter."

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