Meetings & Conventions: Go East - July 1998
Asia's economic crisis has a silver lining:
lower prices for groups
BY DAVID GHITELMANEAST ASIA
has long enjoyed a reputation as a
shopper's paradise. Now, for the first time in a great while, hotel
rates and trans-Pacific airfares are among the available bargains.
And meeting and incentive groups are starting to snap them up.
A little more than a year ago, the Asian economic miracle
appeared nearly unstoppable. Countries that had only recently
emerged from underdevelopment were building the world's tallest
buildings, not to mention some of its most modern convention
centers and efficient airports. Even the handover of Hong Kong from
British to Chinese rule on July 1, 1997, an event some were
convinced would seriously damage growth both in the former crown
colony and in the region, produced hardly a ripple. But, as the
world nervously watched a final display of post-imperial pomp at
the newly expanded Hong Kong Convention and Exhibition Centre, a
threat to regional prosperity was emerging several thousand miles
In Bangkok, the Thai government was desperately trying to prop
up the national currency, the baht. On July 2, just one day after
the handover, the Thais gave in, the baht began its free-fall on
the world's currency exchanges, and in just a few months the
fragility of the entire East Asian economy became painfully
obvious. The financial woes that started in Thailand spread quickly
to its Southeast Asian neighbors - Indonesia, Malaysia, Singapore -
and then gradually northward, battering Hong Kong along with the
mature, strong economies of Japan and Korea.
In Indonesia, the collapsing economy produced rapidly escalating
political chaos until, early this past May, the U.S. State
Department asked Americans to avoid "non-essential travel" to the
strife-torn nation. Elsewhere in the region, however, the political
systems appear to be more resilient than the economic ones. Many
observers predict that the economic situation will not worsen,
although few expect significant improvement before 2000.
For meeting and incentive planners, the result is top-notch
destinations at bargain prices. Fueled largely by currency
devaluations, the costs of hotel rooms, meeting space, food and
beverage and, of course, extracurricular shopping have plummeted 30
to 45 percent in Thailand, Malaysia, Singapore, Korea and Japan. In
Hong Kong, where the currency, pegged to the U.S. dollar, didn't
weaken, hotels, restaurants and stores have cut prices on their
And the airlines, particularly Asia-based carriers, have sought
to encourage business by cutting fares. Thai Airways International,
for example, slashed prices 30 to 40 percent across the board.
Meeting and incentive groups are already responding to the better
prices in East Asia, at a time when U.S. suppliers have been
steadily increasing prices as occupancy rates climb to record
levels. Client inquiries about East Asia are up about 20 percent
this year, says Jane Schuldt, president of Minneapolis-based World
Marketing Group, a meeting and incentive travel planning firm. The
most popular destinations, she reports, are Singapore, Malaysia and
Even Singapore, Asia's top convention destination, saw an 18
percent drop in visitor arrivals in the first quarter of 1998. The
losses are from Asian business, which represents 70 percent of all
visitors, says Yeo Khee Leng, chief executive of the Singapore
Tourism Board. Earlier this year, before civil unrest escalated in
Indonesia, business travel to Singapore actually increased by about
15 percent, he said.
Singapore, Malaysia and Thailand are also where Pan Pacific
Hotels and Resorts is seeing "the first positive signs" of
increased bookings from U.S. groups, observes Fred Leuthold, New
York City-based regional director of sales for the Japanese-owned,
Singapore-headquartered chain. "Some U.S. meeting planners are
looking to go to more value-driven destinations," he says. For
example, rates at Pan Pacific's 291-room Glenmarie Resort, 20 miles
from the Malaysian capital of Kuala Lumpur, run $75 to $85.
Bangkok and Hong Kong are the East Asian cities that U.S.
incentive groups are booking most heavily, according to Steven
Goodling, the Los Angeles-based director of North American
marketing for Shangri-La Hotels & Resorts. "You can get a
five-star hotel room for under $130 a night in Bangkok," he says.
"In Hong Kong, you can get a room with a harbor view in a five-star
property for less than $250. That's a good deal." And the deals are
being snapped up quickly. Goodling's office booked three major
Bangkok-bound incentive movements in the first three months of 1998
- about equal to the Thai business he handled in all of 1997.
In Korea, room prices are down as much as 50 percent, with the
flagship Seoul properties of such upscale local chains as the
Shilla and Hotel Lotte charging between $120 to $140 a night. To
make planners better aware of these bargains, the Korea National
Tourism Organization is sponsoring more site inspections, says Fort
Lee, N.J.-based public relations manager David Kim. Planners who
want to pay their own way - and who are immune to jet lag - can
take advantage of a package assembled by the tourism organization,
Seoul-based Asiana Airlines and Lotte that for $699 offers
roundtrip airfare and a one-night stay in Korea.
In Japan, where the economy had been stalled even before the
collapse of the Thai baht, prices have come down 50 percent in the
past three years, says Bruce Kafner, the New York City-based
director of the Japan Convention Bureau. "Hotel prices are now
comparable with hotel prices elsewhere in the world," he notes.
To make Japan still more attractive to the attendees of
international conferences, Japan Airlines and Pacific Creative
Services, a Tokyo-based ground operator, have put together a
package - including roundtrip air, four nights accommodation, full
daily breakfast and airport transfers - that starts at $1,330 from
the U.S. West Coast and $1,550 from the East Coast. U.S. convention
planners can also bargain with individual convention cities for
price reductions on convention hall fees and coordinated citywide
hotel discounts, advises Kafner. "Conventions take a long time to
nurture," he says, "but we are seeing increased interest from
association meeting planners." To heighten that interest, the Japan
Convention Bureau will pay the way for qualified planners to attend
early December's Japan Convention Mart in Tokyo.
Not that booking in an economically troubled region is without its
potential problems. The situation in Indonesia, where angry student
riots have been met with violent government suppression followed by
considerable rioting and looting, could scare aware U.S. planners.
East Asia hospitality industry insiders say that it shouldn't.
"What's happening in Indonesia is staying in Indonesia," comments
Shangri-La's Goodling. "It is a sad thing that it is occurring, but
it is not spilling over."
Another concern is that plummeting occupancy rates will force
hotels to reduce their staffs and diminish the extraordinary
service for which the region is famous. Hong Kong, for example, has
already seen dramatic staff reductions at several premier
properties. In May, the upscale, 889-room Excelsior Hotel, part of
the Dutch-owned Golden Tulip chain, dismissed 80 of its 800
employees (despite an occupancy rate of 80 percent) and became the
sixth major Hong Kong hotel to reduce its payroll.
World Marketing Group's Schuldt, however, believes most meeting
planners and their attendees won't feel ill-served. "Service may
suffer in East Asia as properties that are operating at lower
occupancies have to let staff go, but that will only bring them
down to the standard of the best hotels elsewhere in the world,"
she says. "The normal traveler won't notice any difference. Only
those of us who have been spoiled by the high level of the past
will be aware."
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