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Low-cost carriers could win from recession
17/01/2009 - Jane Wardell
LONDON (AP) — The international tourism industry faces a tough year in 2009 but the Middle East is providing a bright spot for the sector, according to two reports released Monday to coincide with one of the biggest events on the international tourism industry calendar.

The World Travel Market 2008 report, conducted by Euromonitor International, also picks out low-cost travel operators as possible winners from the global economic downturn, while the UNWTO World Tourism Barometer predicts business travel to be harder hit than the leisure sector.

Both reports were released on the first day of the four-day World Travel Market. The annual event, due to be attended by more than 50,000 people, is this year being held against the backdrop of the evolving financial crisis.

"The industry is facing quite a bleak 2009 as the impact of the global financial crisis trickles down into the real economy and it impacts on consumer spending," said Caroline Bremner, head of travel and tourism at Euromonitor International. "That's when the full extent of the crisis will be seen."

The UNWTO report said that after a sound start to the year — international tourist arrivals worldwide averaged 5.7 percent from January-April — growth fell below 2 percent in June, July and August as the high price of oil and rising inflation combined with recession fears to squeeze travel budgets.

Growth for the full year is now pegged at 2 percent globally.

The report added that given the current stress on many companies' balance sheets, business travel is also expected to be more adversely impacted than the leisure segment.

The World Travel Market, where more than 200 countries are due to be represented by tourism officials, government delegations and tour operators, got off to a slow start as delays on the capital's Docklands Light Railway, or DLR, left many delegates stranded on a rainy London morning. While tourism operators in Europe and the United States face an uphill struggle to turn a profit, the growing strength of the Middle East was highlighted by the fact that this year's event is being hosted by the tourism authority of the United Arab Emirates' capital Abu Dhabi.

Bremner said that growth in the region has been driven by a flourishing hotel sector and increased promotion from national tourism associations.
The high number of expatriates living in the Middle East — growing 5 percent annually, according to the Arab Advisors Group — has also boosted tourism as many start to explore the region further. In the UAE alone, more than 80 percent of the 3 million residents are made of expatriates.

The Euromonitor report said that budget carriers and hotels could expand their share of the business travel market as companies look to tighten their belts as many countries head into recession.

Bremner said that businesses will have to adapt to the coming tougher times, by offering package deals and cheaper vacations and business travel.
"There are signs of people downgrading travel choices to reduce the cost of traveling, a shift from premium," she said. "It may be for businesses in particular, they'll be looking to low cost airlines for lower travel costs."

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