EGYPT’S tourism authority is now considering subsidising charter flights to a larger number of destinations within the country as part of a concerted push to win back tourists—one that also has private operators embarking on their own promotional offers.

Egyptian Tourist Authority (ETA) chairman Amr Elezabi said discussions were underway for a “double-touch initiative”, which would see charter incentives extended to include a second airport.

Under the current scheme, Egypt subsidises anywhere between 65 to 85 per cent of empty seats globally, but only for one stop per flight.

Elezabi added that ETA was also now “ready to discuss with serious tour operators in Asia” the possibility of subsidising charters due to the growing importance of the region. There are currently no charters from Asia to Egypt.

In order to speed overall recovery, Egyptian Tourism Federation director general Ayman Altaranissi said there were also plans to reintroduce charter subsidies for the Red Sea destinations of Sharm el-Sheikh and Hurghada, where demand in recent years had been strong enough to not need such incentives anymore.

“All these strategies will require a new budget for charter flights, which is now over 100 million Egyptian pounds (US$16.9 million) a year. We are now calculating how much this will add up to and this will probably be finalised very soon after ITB,” said Altaranissi.

At press time, Elezabi said the ETA was still “building on the actual strategy”, and the overall budget had not been finalised yet. TTG Asia ITB Berlin Daily, however, understands that on the cards are increasing cooperation with agents by dishing out brochure subsidies among others, stepping up marketing efforts using online and social media platforms, and attending all international travel fairs this year.

These would hopefully offer some respite to hotels and tour operators who have noted that demand had dropped by as much as half for this winter season and the upcoming summer season.

Sunrise Resorts & Cruises regional director of sales and marketing Ramy Darwish said prices had dropped by 25 to 35 per cent, and there were even talks that tour operators from the UK and Russia – top markets for Egypt – were planning to slash capacity for charters by half for summer. “We’re trying to persuade them to just reduce it by 10 to 20 per cent.”

Domina Coral Bay Sharm el-Sheikh regional director of revenue and reservation Abdel Atty Ragab said instead of dropping rates, the hotel was trying to dangle deals such as “pay six, get seven nights”.

African Express Travel president Nasr El Din Fadl said: “We cannot destroy the market price, but we’re offering promotions such as free dinners on night cruises.” He added he was planning to make personal visits to France and Russia to convince partners that Egypt was safe.

Egypt’s new tourism minister Mounir Fakhry Abdel Nour makes his first international appearance at the country’s press conference today.

EGYPT is expected to bounce back quickly with the UK market, even causing a small percentage of clients to switch from Asia, but there still is opportunity for Asia to position itself as an alternative destination to the restive Middle East in the coming months, say tour operators.

“Sri Lanka is taking some good share from Egypt, still coming in that bit less expensive than Thailand,” observed Tamara Diethelm, Kuoni UK vice president market management & pricing, who said this could be the perfect opportunity for hoteliers in Asia with empty beds to field strong tacticals, with key partners who could promote them as good alternatives to Egypt.

“We have seen the UK traveller getting more and more resilient to destination challenges around the world. However, if alternatives are available within budget, many will choose what they perceive a ‘safer’ option and any real bounce back for Egypt is unlikely to occur in full force for some months.”

Operators said they were already seeing strong offers from hotels in Egypt and charter companies being forced to cut prices to fill their planes, which are perking the interest of bargain hunters to book. This, coupled with rising flight costs as a result of increased APD and fuel costs, will be a challenge for Asia to match in due course.

Said Diethelm: “Asia does have a genuinely unique offering, but I think it is essential to bear in mind that clients are not as loyal to destinations anymore, so it really must consider its competition on a global scale if it wants to position itself correctly for the UK market. Good tour operator partners can guide their friends in Asia on flight costs, taxes, hotel offerings in other parts of the world to help them make these comparisons.”

Chic Locations UK director David Kevan said the UK market had become “a nation of opportunist vultures” descending on troubled spots to pick on a carcass of bargains.

“Those looking for a cheap two-week beach holiday are more likely to find it in Egypt than Thailand, but for us it is a totally different client. However, where I do see an impact for us is availability issues on direct flights to the Far East. Many budget-conscious travellers to the Far East choose a carrier like Qatar Airways or Gulf Air because they’re cheaper than direct flights. These clients are now scared of even a transit in the region, so that is causing sudden availability issues on direct flights. If this continues, it will have an impact on sales.”

THE SHIFT of business into dynamic sales and sourcing will not stop and will change the way traditional tour operators source and distribute in the future, according to Hotelplan CEO, Thomas Stirnimann.

Interviewed yesterday on the impact of Kuoni’s GTA acquisition on Hotelplan, Stirnimann foresees that traditional tour operators in the future will not work with as many suppliers and retail agents as they do today. Rather, it will be about building up tighter relationships and true partnerships to win loyalty.

“Twenty years ago, you’d work with everybody, now you downsize the sheer volume of agents you work with, but you try and establish true relationships with the remaining ones by, for example, educating, training and outsourcing services to these agents. The same would apply to the relationship with suppliers.”

He said there was space for relatively smaller companies such as Hotelplan, which can build on strengths such as nimbleness and leanness—“the fast boat among the big oil tankers that are building up these days”.

However he also does not rule out going into B:B e-business by buying “probably some other candidates”.

KUONI Travel Holding has made the market sit up with its announcement last Monday that it was buying Gullivers Travel Associates (GTA) for US$705 million (TTG Asia e-Daily, March 7, 2011), with industry players interviewed at ITB – Kuoni competitors included – admiring it as a smart move by a company generally seen as conservative.

Hotelplan Suisse CEO, Thomas Stirnimann, said: “It’s not a done deal yet, they have to raise the capital and it looks a bit expensive to me, but from a strategic point of view, it’s a smart move and will give Kuoni a more balanced portfolio, with less dependency on the traditional tour operating business, which is under pressure these days. With all due respect, it is a good move.”

With the deal being subject to Travelport lenders’ consent and Kuoni shareholders approval at the AGM April 20, Rolf Schafroth, the man who will take over the responsibility of GTA once the deal goes through (Ken Esterow is understood to be going back to Travelport), in an interview with TTG Asia ITB Daily declined to discuss future expectations and earnings.

However, Schafroth stressed that this was not a story about a competitor buying another to consolidate the business and cut jobs, but about bringing two successful businesses, GTA and Kuoni Destination Management (KDM), which are still growing, to new heights.

GTA, which has been in the market for sale, “has found a good home in Kuoni because it is a business we know and have been doing ourselves, and we believe in the growth of this business and intend to further develop it”, said the CEO Destination Management and EVP Procurement & Production.

“It’s not just a change of ownership. We buy and integrate, but we don’t Kuoni-nise companies—look at the companies we bought like Asian Trails or Desert Adventures. They have their culture and values and we want to preserve them.”

He said GTA added content and skilled people. The immediate synergies would be buying power and creating a stronger value proposition to suppliers with a bigger client base and distribution.

He said the GTA brand and the Kuoni brand would remain but it was too premature to say how other brands of GTA and Kuoni, such as Kuoni Connect, would fall in line following the integration.

SIX tour operators have banded together to offer the European market Magical Islands Philippines programmes, highlighting new destinations in the country.

Annset Holidays, Baron Travel, Blue Horizons Travel & Tours, Intas Destinations, Marsman Drysdale Travel and TRIPS Travel are selling five six-day/five-night packages from US$693.

The components of the packages can be mixed and matched with other itineraries. Three of the packages feature new destinations, namely Bicol, Puerto Princesa and Apulit Island, and the Northern Coast—Laoag, Vigan, Hundred Islands and Bolinao, Pangasinan.

Serafina Joven, president and general manager of Annset Holidays, said the last time Philippine tour operators formed a consortium for the European market was 11 years ago—Islands Magic Philippines, which offered two 10-night packages.

“We decided not to use the same name because the membership had changed. Last time, we had Rajah Tours Philippines. This time around, we have Blue Horizons Travel & Tours in its place,” said Joven.

By Ollie Quiniquini

IT MAY be early days yet but European operators expect steady demand for Asia this year, on the back of tacticals and interest in emerging destinations.

Germany’s green tax and growing fuel surcharges have not deterred its citizens from heading east, particularly to Thailand and Indochina, say tour operators.

Sri Siam Holidays sales manager Germany, Eberhard Zimmer, saw a three per cent hike in demand for Thailand and Indochina this winter season. But many clients are downgrading hotel class and flying EVA Air from Vienna and Amsterdam to Bangkok to keep costs low.

Sevgi Reisen grew its business to Thailand and Vietnam by 10 per cent last year, said managing director Klaus Pankalla. “People are crying over the taxes but they’re still paying to go to these destinations because ground prices are still value for money and shopping is good.”

Scandinavian demand for Bali skyrocketed last year, said Norway-based Noble Tours sales manager John Oddvar Stromseng, who attributed this to word-of-mouth from Bali-based Scandinavians, high hotel standards and reasonable rates for packages.

For Denmark-based FDM Travel, it was FIT demand for Thailand, Cambodia and Vietnam that ballooned last year. Product manager Jens Lossow said: “We don’t expect demand to fall despite the rising fuel surcharges as these are offset by airline tactical promotions.”

– Full story in TTG Asia March 11