China trade bill may cause travel boom

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NEW YORK -- The expected passage of the China trade bill -- in tandem with a gradual economic recovery of the Asia region's economy -- may signal the start of a travel boom and the end of a period of the most affordable travel to Asia in memory, according to Asia specialists.

When the Asian economic crisis of three years ago forced prices down, tour operators warned that bargain prices would not last long.

Now Asia tour operators are predicting that the approval of the China trade bill will boost business travel to China, forcing prices to rise.

"Hotels and airlines will prefer to accept business clients rather than the leisure market," said Benny Kokia, managing director of New York-based Orient Flexi Pax Tours. "Definitely, prices will pick up. This is the end of an era of three years of very affordable travel to China."

Kokia said the fact that China may soon enter the World Trade Organization is one of the reasons to expect a good season for business travel to China.

"China is in the news, things are positive," he said. "Last year we had the accidental bombing [by the U.S.] of the Chinese embassy [in Belgrade, Yugoslavia]. This year, touch wood, the indications from hotels and airlines are that they all expect small increases [in business]."

Most operators agree that increased demand will force up prices.

"Free trade is driving up business trade to China and driving up occupancy, making hotels more expensive," said Bob Drumm, president of Keene, N.H.-based TBI Tours. "It's a signal that the recession is over in the Orient, and over the next couple of years we are going to see an increase in prices to Asia."

The increase in business travel may push up leisure travel as well. Bill Hastings, the Pacific Asia Travel Association's director-Americas, said growth in leisure travel in Asia is often a direct result of increased business travel.

"When the destinations receive business travel, discretionary travel often follows. Travelers realize Asia is not as expensive as they might have thought, and they find they love it and want to see more."

According to PATA figures, travel to Japan, the most popular destination for U.S. travelers in Asia, declined in the past decade, while the Philippines, Singapore, China and Taiwan have been the fastest-growing destinations with Americans.

Much of the traffic, however, to the Philippines and Taiwan are U.S. residents visiting friends and relatives.

But although it may not be good news for budget travelers, business overall looks good for the industry.

"When the commercial business comes in, that's where the profit is," said Bob Whitley, president of the U.S. Tour Operators Association. "Prices may go up, but the positive exposure of China to more Americans will make them want to go."

Travel to China from the U.S. was up 11.35% during the first quarter of 2000, compared with the same period in 1999. Some 254,000 Americans visiting mainland China from January through April, said Yaying Li, deputy director of the China National Tourist Office in Glendale, Calif.

At this rate, Chinese tourism officials expect 2000 to beat 1999's total arrivals of 736,000 American visitors.

Li said the strong U.S. economy, combined with more effective marketing from the Chinese tourism agency and the strengthening business climate, has contributed to the increase in arrivals.

The CNTO does not have a breakdown of business vs. leisure travelers, but Li said she believes the biggest increase is in the business sector -- and suspects it will be boosted even further with the passage of the trade bill.

On the leisure side, increased capacity on U.S.-China routes by United and Northwest has led to more competition and lower package prices, making China more attractive, particularly by increasing the number of Americans who are interested in seeing the country on FIT programs, she said.

The upward pressure on prices to China has not yet begun to show in the marketplace, according to Hima Singh, president of Asian Pacific Adventures of Los Angeles.

"Our prices are the same as last year," said Singh. He said prices in China and India have held, and demand has picked up.

Along with other operators, Singh is experiencing especially strong demand for China, India and Vietnam.

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