Abacus International optimistic on 5% travel bookings growth

Emerging markets and ancillary products sale make company upbeat despite 1% 2009 overall bookings decline.

2010 is off to a good start for Asia's travel industry as it leads in the global travel market's recovery, thanks to a strong performance in the last quarter of 2009. Abacus International, a 22-year veteran of the travel industry, revealed 23 February at an exclusive Abacus media roundtable that emerging markets and new business practices that surfaced during the economic downturn will underpin growth and set the underlying trends for the year ahead.

Abacus International President and CEO, Robert Mr Bailey, stated that along with other key industry players, Abacus had seen earlier-than-expected recovery with uptick in bookings registered since October last year: "The travel industry had seen some of the most difficult times in the past year but the green shoots we saw in the second half of the year continued to grow and closed the year with better-than-expected results." The company ended the year with a 1% decline in overall bookings and is forecasting 3-5% growth in travel bookings for the first half of 2010.

Emerging markets – one of the green shoots seen during the economic crisis – will continue to drive travel bookings up with IndoChina and Central Asia as key growth regions. Several other markets such as Nepal, Bangladesh and South Korea had also contributed to Abacus' better-than-expected business results.

The importance of the emerging markets was also highlighted in a recent report by the International Monetary Fund (IMF) as the key contributing factor for the region's better performance in 2009. Asia is expected to enjoy 5.7% GDP growth in 2010, with emerging markets leading the rest of the world out of the downturn.

New business practices that surfaced during the economic downturn are also set to continue as travel management companies and travel agencies start to see the value that these changes have brought to their business models.

In the latest Abacus Asia Travel Sentiment Survey of around 200 leading travel agents across the region, 92.3% said that the changes they have adopted during the economic downturn have strengthened their business and put them in better shape for 2010.

"The sale of ancillary products was cited as the number one strategy. We found that almost 60% of the agents indicated that the sale of ancillary products such as hotels, travel insurance and other non-air products had helped sustain their business revenues. This is an additional revenue stream for which we have been providing keen support to our travel agents through relevant solutions and partnerships," said Mr Bailey.

Meanwhile, around 40% of the agents ranked the launch of promotional deals and packages as the second most important change. Allocating more resources to online channels tied with technology investments as the next most important changes with 30% of the travel agents saying that these investments have brought improvements to their businesses.

Mr Bailey explained that the surge in online travel bookings had helped revive overall booking figures over the past year: "The huge increase in internet penetration in emerging markets as well as aggressive airline promotions have helped boost passenger numbers." The prospect for the online segment continues to look positive.

According to the Abacus Asia Travel Sentiment Survey, 71.3% of the travel agents that have no existing online business component said they are planning to develop one.

Another key contributor that will further stimulate growth in the region's travel industry this year is the low cost carrier sector. As fuel prices make an upward trend, consolidation efforts as well as network expansion will form key strategies in the year ahead.

Moreover, as competition stiffens in the industry, network carriers may well adopt ancillaries as the next revenue strategy whereby fares are unbundled and categorised according to specific airline services and flight requirements.

In the year ahead, nascent trends that the industry is currently showing sporadic interest in are expected to emerge stronger as travel players discover the relevance and benefits that they can bring to their businesses. These trends include the use of online marketing, as well as the adoption of digital applications and mobile technology.

In conclusion, Mr Bailey said: "Asia's huge potential for growth and its relatively younger travel industry mean that travel players in this region are strategically well-placed to capitalise on the new realm of opportunities as the economy steps into a recovery phase."

Market highlights
Despite the economic downturn, Abacus' booking figures revealed that a number of markets had seen their travel bookings rise in 2009. Looking ahead, growth spurts from markets including Bangladesh, Cambodia, Indonesia, Kazakhstan, Myanmar, Nepal, Pakistan, the Philippines, South Korea and Vietnam are expected to continue.

In addition, travel agents surveyed in Abacus Asia Travel Sentiment Survey have listed South-east Asia (67%), Europe (63%) and U.S. (42%) as the top three regions that their customers are currently making bookings to.

The rise of the middle class and increase in foreign business investments have largely contributed to positive booking numbers for most of the aforementioned markets. According to Euromonitor 2010’s market report, Kazakhstan registered a strong 8.1% year-on-year growth in inbound travel last year and is expected to grow by 8.6% this year. Meanwhile, Nepal showed strong figures across all sectors; with more than 10% growth registered for last year and forecasted growth this year in overall air departures as well as inbound and outbound travels.

"We are indeed fortunate to be able to leverage the high growth potential of the emerging markets but in order to capitalise on the rising business cycles of these markets, one must have strong in-market understanding of the complexities of these new markets and an innovative team dedicated to developing niche products that work best for the individual market. A one-size fits all approach is not one that works in this region," commented Abacus International Vice-President Channel Management, Mr Patrick Lai.