Tour Operators Expect Bumper Sales

(SINGAPORE) 2004 is turning out to be a bumper year for some of Singapore's major tour operators, which expect revenue to surge close to pre-Sept 11 levels. And if nothing goes wrong, the industry could see full recovery by next year, players said.

Across the board, tour agencies have seen revenue slide as much as 30 per cent since the peak in 1996. Sales were hit about 10-15 per cent by the Asian financial crisis, then another 10-15 per cent by the 9/11 attacks on the US and the Sars outbreak last year.

But Robert Khoo, chief executive of the National Association of Travel Agents Singapore, believes sales could return to pre-Sars levels this year, and pre-Sept 11 levels as early as next year.

Net profit margins for tour operators are still hovering at the lower end of a typical 1-2 per cent range, he said. But the industry doesn't expect further collapses like Ken-Air, which went under last year mainly because investments in non-core areas like property soured.

'There weren't any such closures even during Sars last year, which means no one was significantly affected based solely on the travel business,' Mr Khoo told BT. 'But of course, there are 20-30 small agencies, mostly with turnover of below $1 million, which close every year due simply to natural attrition.'

Chan Brothers Travel group managing director Anthony Chan said the 'one-glove-fits-all' business strategy traditionally adopted by agents doesn't work any more because trends and consumer tastes have changed. His company expects sales of about $120 million this year, compared to $140 million in 2000.

Agencies with turnover of less than $5 million are considered small, while those in the $5-20 million bracket are medium-size. Big operators are those with turnover above $20 million, while those with sales exceeding $100 million are regarded as mega-players.

Another mega operator, SA Tours, said sales this year could rival its showing of about $155 million in 2000. The agency raked in $130 million last year.

'Singaporeans are travelling more frequently and impulsively, and long weekends like the National Day and Deepavali ones are once more turning into a goldmine for us,' said the company's business development assistant general manager Alicia Seah. 'There's no real peak or low season for us now.'

SA Tours' one-day annual Mega Tour fair last month yielded sales of $9 million - the best result in more than a decade. Similarly, Chan Brothers posted record sales of $10 million at its recent fair.

Insiders attribute this partly to lower air prices from full-service carriers, whose rates have dipped about 30 per cent in the face of competition from budget airlines, enabling tour operators to offer cheaper packages.

According to a poll by regional luxury travel and lifestyle magazine DestinAsian, Thailand, Indonesia (Bali) and a combination of Australia and New Zealand are the most appealing holiday plans.

Even rising surcharges flowing from expensive oil since May haven't seemed to derail travel plans, tour operators note.

'Some airlines have already imposed fuel surcharges,' said Chan Brothers spokeswoman Eileen Oh. 'Overall, there will inevitably be an increase, but customers seem to be okay with paying a separate surcharge as opposed to a higher overall package price.'

Commonwealth Travel (CTC) managing director Wee Hee Ling agreed, saying total surcharges can exceed $100 now, including airport taxes. Her company expects $90 million in sales this year - some $20 million short of 2000 numbers.

'The first half was affected by bird flu, a Sars scare and appearance of low-cost carriers, which diverted flights to short-distance Hong Kong and Bangkok, thereby affecting the long-haul leisure trip business,' Ms Wee said.

'H2 looks more normal. Barring unforeseen circumstances, our revenues may return to 2000 levels next year. After all, the mood is back, with news such as the implementation of the five-day work week.'

CTC's recent mini-trade fair over three weekends raked in 'good' sales of $5 million, Ms Wee said.