Low-cost carriers could win from recession

Low-cost travel operators could be the big winners from the global economic downturn even as tourism faces a tough year in 2009, a report said Monday.

The World Travel Market 2008 report — conducted by Euromonitor International — said travel markets within the Middle East and Asia remain a bright spot for the industry, although tourism operators in Europe and the United States face an uphill struggle to turn a profit.

“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 report was released to mark the start of the four-day World Travel Market in London, which is due to be attended by over 50,000 people despite the backdrop of a global financial crisis.

The report said 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 tourism 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.”

Irish low-cost carrier Ryanair has said it is looking at the possibility of trans-Atlantic services if the airline can buy long-haul aircraft at deeply discounted rates from other airlines looking to offload costs.

The event, 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 left many delegates stranded on a rainy London morning.

At the travel market, 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 expatriates.

Traditionally a luxury travel region, Bremner said that there was strong potential for growth in the budget market in the Middle East.

Conference organizers are also pushing a theme of “responsible tourism,” which they argue could give travel operators a competitive advantage in the tough climate.