langkawi magazine
Archives SECTION
Sunshine Returns for the Travel Industry
Asian travel stocks, which trailed regional indexes during the past two years, may move ahead as the industry bounces back from the tsunami disaster.
Rising incomes in China and India and the start of discount airlines like AirAsia of Malaysia are encouraging people to take vacations abroad. Tourist arrivals in Southeast Asia may rise by as much as 10 percent this year and next, an industry group said.
"Travel is a big theme," said Teng Ngiek Lian, chief investment officer at Target Asset Management in Singapore. "There's rising affluence, younger consumers are now traveling, and low-cost carriers. All these are contributing."
The Bloomberg Asia Pacific Travel index, a measure of 27 hotel, gaming and airline stocks, has fallen less in the past month than the Morgan Stanley Capital International Asia-Pacific index. The travel index has lost 4.8 percent, compared with a 5.6 percent decline in the regional benchmark.
Governments are trying to take advantage of increased tourism. Singapore lifted a four-decade ban on casinos and has received bids for two sites. In Hong Kong, Walt Disney will open a park in September that the government helped finance.
While the Bloomberg travel index rose 15 percent last year and 21 percent the year before, both gains were smaller than those of the MSCI Asia-Pacific index. The war in Iraq, terrorism and outbreaks of diseases discouraged tourism in Asia.
The tsunami disaster in December ended a year in which tourist arrivals rebounded, climbing 29 percent to 153 million.
"The region is recovering," said Bryan Yip, a fund manager at Standard Life Investments in Hong Kong.
The Pacific Asia Travel Association, at a conference in Macao, forecast that tourist arrivals in Asia might rise at almost twice the rate projected for the Americas. For the five years ending in 2007, the group forecast that Malaysia would have the region's highest annual growth rate, 21 percent.
China will show the region's fastest growth in outbound travelers during the first half of this year, according to a 12-country survey that MasterCard International published last month. The company projected a 34 percent increase.
Yip at Standard Life, who says he favors hotel companies, holds shares of Hongkong & Shanghai Hotels, owner of the luxury Peninsula chain, along with Genting.
Profit at Hongkong & Shanghai Hotels rose 64 percent to 574 million Hong Kong dollars, or $74 million, in 2004, the hotel group said last month. The Hong Kong-based company generated about 68 percent of sales in Asia, and average room revenue rose 38 percent.
Shares of Genting, based in Kuala Lumpur, have risen 5.2 percent this month after falling 9 percent in the first quarter. The company is among 13 bidders to develop the casinos in Singapore.
The Hong Kong government has a 57 percent stake in the Hong Kong Disneyland. The company expects 5.6 million visitors in its first full year.
Discount airlines, meanwhile, have reduced the cost of reaching cities like Hong Kong.
To compete with national carriers on short-haul flights, these airlines offered promotional fares as low as 1 Singapore dollar, or 61 U.S. cents, and regular domestic fares of 9.99 ringgit, or $2.63.
AirAsia shares are among those recommended by Christopher Wood, a CLSA strategist. The Kuala Lumpur-based airline made its initial stock sale in November and has risen 37 percent amid a 0.1 percent decline in the MSCI Asia-Pacific index.
25/04/2005
