IN the face of rising competition and tighter margins, SriLankan Airlines has embarked on a restructuring strategy that will see the carrier retaining its services to Europe while giving greater emphasis to Asia and growing Colombo as a regional hub.

“Our new board of directors inherited a bad situation,” said Ajith Dias, chairman of SriLankan Airlines, who was appointed in early 2015. “Our restructuring process will cut non-profitable routes, concentrate on the Far East and India, and maintain our position in Europe.”

Although SriLankan Airlines has been seeing “good” load factors on its European routes, services to low-yield Rome will be phased out from May 1 in order for the carrier to increase capacity on more commercially viable routes.

The airline will add a fifth weekly frequency to Frankfurt from July and retain its twice-daily London and four-times weekly Paris services. It will retain its slots in Rome for a re-assessment likely in two years’ time.

While the historic low global fuel prices have helped to stem losses, the current shaky economic and political outlook in Europe is posing “uncertain times” for the largely unprofitable airline. “The off season starting from May will be critical for us, but so far it’s still looking good,” said Dias.

“We are still losing money now but we have made big progress in cutting losses last year. I expect we will take another two years to overcome (the losses).”

“Serious competition” from the Middle Eastern airlines has weighed heavily on the carrier’s performance on routes out of Europe, admitted Dias, but the company is nevertheless keen to expand its codesharing partnerships with the Gulf carriers as it seeks to build Colombo as a regional air hub, particularly for traffic from the Middle East to South India and the Maldives.

The carrier is also undergoing a fleet development programme to replace its ageing A340 fleet with eight A350s on order. These will likely be deployed on operations to Europe and China when it takes delivery of them in 2016 and 2017.

With an estimated 40 per cent share of the country’s total seat capacity, Dias is confident that the “all-time high buoyancy for Sri Lanka” in terms of business and investment will work favourably for the country’s tourism sector.

The Sri Lanka Tourism Development Authority has set a target of four million arrivals by 2020, up from 1.8 million in 2015.

Read more stories from our ITB Berlin TTG Asia Show Daily here.

TOURISM Malaysia will be increasing destination promotion efforts in Germany following the loss of direct air connectivity between Malaysia and Germany on March 1.

Lufthansa’s suspension of its Frankfurt-Kuala Lumpur service, which had been in operation since 2004, translated to a loss of over 100,000 direct seats per year to Malaysia, said Mohamed Amin Yahya, director of Tourism Malaysia Frankfurt.

To ensure that Malaysia is not forgotten, he said the NTO would be developing “tactical campaigns and collaborations” with other airlines that provide connectivity from the German market to Malaysia.

For example, Tourism Malaysia and Singapore Airlines will be signing a marketing collaboration agreement during ITB Berlin to bring in more German tourists to destinations such as Penang, Langkawi, Sabah and Sarawak, he said.

Mohamed Amin said the destination’s brand awareness would also be raised through advertising. “We will place advertisements in the relevant German newspapers, and in the tourism trade and consumer magazines,” he said.

A new taxi and tram advertising campaign, which involves 100 taxis, is running the entire month of March and features Malaysia’s most popular tourism products, such as the Gawai festival. This is complemented by big banner advertisements at the Berlin Hauptbahnhof train station, which runs to end-April.

Apart from fam trips, Mohamed Amin said the NTO was also conducting an e-learning programme for travel agents to keep them up-to-date on the latest offerings in Malaysia.

Elizabeth Wong, executive councillor of Selangor State Government and chairperson of the standing committee for tourism, consumer affairs and environment, said there were still connecting flights that would bring Europeans to Malaysia and the destination was becoming more affordable for them especially with the weakened Malaysia currency. Thirty per cent of Selangor’s tourism traffic is from Europe.

Malaysia’s inbound travel agents also remain sanguine despite the loss of direct air connectivity. Manfred Kurz, managing director, Diethelm Malaysia, said: “We did a check and found that only 18 per cent of our guests travelled on Lufthansa. The rest came through a Middle Eastern airline. Thus, we don’t expect this (suspension) to have a big impact (on business).

“Our partners have indicated that they will continue to sell Malaysia.”

Alex Lee, CEO of Ping Anchorage Travel & Tours, foresees a slight drop in the high-end segment from Germany, but expects volume to be maintained among middle-class travellers and backpackers who are likely to fly with a Middle Eastern airline to Malaysia.

Read more stories from our ITB Berlin TTG Asia Show Daily here.

WITH every destination in the world courting the huge China outbound market, Messe Berlin marks 50 years of ITB Berlin this year with a new offshoot, ITB China, which will debut next year in Shanghai from May 10-12.

The show will be organised by a new subsidiary of Messe Berlin, MB Exhibitions (Shanghai), and will focus exclusively on Chinese buyers meeting global destinations and service providers, ITB China general manager David Axiotis told TTG Asia.

Its local partner is TravelDaily China, which will also jointly organise an ITB China Convention in parallel with the show.

According to Messe Berlin’s division head Martin Buck, the big names of China’s travel industry such as Ctrip, Alitrip, Tuniu, Utour and Caissa have committed to sending buyers to ITB China next year.

“We will be able to guarantee our international exhibitors around 500 buyers from leading companies representing the Chinese travel industry,” said Buck.

ITB China will be pitting itself against existing travel tradeshows such as the World Travel Fair in Shanghai, China Outbound Travel & Tourism Market (COTTM) in Beijing and China International Travel Mart, which is a national show rotated between Shanghai and Kunming.

Industry members interviewed said doing business in China was different and it would be interesting to see how successful ITB China would be in the years ahead.

“Although there is no guarantee, I believe ITB China can be successful because it has the expertise, financial wherewithals and reputation. Asians still go for ‘Western’ brand names and ‘ITB’ is one such brand.

“For many sellers not just in Asia but worldwide, there is no way of getting through to the Chinese agency community. This gives them the chance to. And if the sellers are there, the buyers will come,” said Ken Chang, vice president, Associated Tours Hong Kong.

But Chang doubted if Hong Kong sellers would join ITB China as many of them already understood the market well.

He expects ITB China to be bigger than ITB Asia in Singapore, now into its ninth year, saying that ASEAN outbound combined was the equivalent of just one province in China.

Adam Wu, CEO of Beijing-based World Travel Online and CBN Travel & MICE, said there was still space for more tradeshows in China. “Eight out of 10 Chinese buyers probably don’t know ITB…ITB Berlin doesn’t (have many) Chinese buyers,” he said, adding if ITB China builds the show, the delegates would come.

But some industry members have reservations about tilting the balance towards China outbound. German tour operator Marco Polo Reisen, for instance, was experiencing difficulties in getting good rates and allotments in the Far East because of strong regional markets such as China, said managing director Holger Baldus.

CYTS International Travel, international department II deputy general manager, Zhou Zhanfeng, believed a major travel tradeshow specialising in the inbound market was needed to improve China’s image on the international world tourism stage.

“Inbound tourism to China has been dropping in recent years due to negative coverage of the country on issues like pollution and higher tour prices. An inbound show will help to overcome the negative coverage of China in the Western world.

“Most of the existing shows like COTTM already focus on China outbound tourism, we have no need for that. We’ve heard of so much news on Chinese tourists shopping and travelling overseas, so why not get international tourists to visit China, spend their money in the country and help the Chinese economy instead?”

Zhou also urged China National Tourism Administration to step up its destination marketing efforts as well as tackling barriers like visa for foreign visitors. “China has vast geography, attractions and human resources, so why aren’t we attracting more repeat visitors? Thailand, despite its smaller size, attracts about three to four times more tourists from Germany than China.”

He also said China outbound tourism was a “losing business” for outbound companies due to intense competition over prices.

Meanwhile, asked about any likely impact of ITB China on ITB Asia,  Andrew Phua, director, Exhibitions & Conferences, Singapore Tourism Board, said: “ITB Asia has been the leading travel tradeshow in the region since its debut in Singapore in 2008. As an annual event anchored in Singapore, ITB Asia provides a conducive platform for international tourism businesses to explore new opportunities in the region.”

Additional reporting from Xinyi Liang-Pholsena

Read more stories from our ITB Berlin TTG Asia Show Daily here.

Al Meroz Hotel Bangkok

RECOGNISING the immense potential of a market of 1.6 billion Muslims worldwide, the new 242-room Al Meroz Hotel, which soft-opened in Bangkok’s predominantly Muslim enclave of Ramkhamhaeng last November, has initiated efforts to establish its presence at this year’s ITB Berlin to get travel agents in Europe acquainted with Thailand’s first halal property.

“Our target markets are Muslims living in France, Germany and Scandinavia – European countries with significant Muslim communities – as well as Austria and Eastern European countries like Serbia,” said Sanya Saengboon, managing director & general manager of Al Meroz Hotel.

He said that despite the impressive growth figures involved with the lucrative Muslim travel market, European travel agents had yet to show an eagerness for this niche sector. “I expect Europe’s Muslim outbound market to grow, especially to South-east Asia, as the region is still perceived as an exotic destination,” he added.

The attention on Europe’s Islamic population is also part of the four-star property’s strategy to diversify its current Muslim market sources of Indonesia, Malaysia, Brunei and domestic travellers from Southern Thailand, Sanya told TTG Asia. Muslim guests currently make up 50 per cent of the hotel’s clientele.

Apart from ITB Berlin, Al Meroz Hotel will also be attending global travel trade shows such as the Arabian Travel Market and World Travel Market this year. Plans to conduct roadshows to the Central Asian nations of Kazakhstan, Uzbekistan and Azerbaijan are in the pipeline as well.

The hotel is certified as a Muslim-friendly hospitality provider by the UAE’s Gulf Halal Center. It offers halal restaurants, a women-only floor, separate prayer rooms and a rooftop swimming pool open at different timings for male and female guests. A copy of the Quran, qibla (direction to Mecca), prayer times and mat are also available in the rooms and suites.

Owned by the Thai-Muslim TS Family Group, the halal-friendly environment is part of Al Meroz Hotel’s values and not simply a business decision, said Sanya. A dry hotel is as lively as any other, he insisted, when questioned on the hotel’s alcohol-free policy.

And despite its halal-friendly label, Al Meroz Hotel is able to cater to non-Muslims as well. “We have a good mix of corporate and leisure tourists from Thailand and overseas. Our first few guests are from the non-Muslim Western world and we had many non-Muslim groups from China during the (recent) Lunar New Year period (in February),” commented Sanya.

A grand opening for Al Meroz Hotel has been scheduled for July 2016.

Read more stories from our ITB Berlin TTG Asia Show Daily here.