Value For Asian Programs Continues To Soar

With East Asia's economic crisis continuing in full force, meeting planners are seeing significant savings across East Asia, thanks to extremely favorable monetary exchange rates and sharp declines in regional travel demand.

In many cases airfares to Asia and hotel rates around the continent have fallen to levels not seen since the early 1980s. Low costs for food and beverage, ground transportation, entertainment and destination management services also are providing great value for U.S. based groups.

"The economic turmoil is offering incredible buying opportunities for American companies in Asia," said Gerry Stevens, account executive for the Chicago-based Creative Group, who escorted two incentive groups to Seoul, Shanghai, Bangkok, Jakarta and Kuala Lumpur this summer.

"We thought we'd be staying in three- and four-star properties, but we ended up in five-star houses for the entire itinerary. We expected to be paying $200 a night, but ended up closer to $75 and $80. We could afford entertainment with every meal if we wanted it."

"Many of our clients simply aren't aware of the value that is out there in the Asian marketplace," said Barney Lusina, president of Expanding Horizons, an incentive and convention-planning house in Santa Ana, Calif.

Lusina created a five-night incentive to Bangkok for August, including roundtrip air from Reno, all porterage and ground transfers, rooms in the riverside Shangri-La Hotel Bangkok with daily American breakfast, and a daily hospitality desk. Total price: $1,380 per person, which was less than posted prices for either hotel or air alone.

Hotels that quote rates in local currencies have been hit especially hard by devaluation, noted Erin MacArthur, director of events for the Pacific Asia Travel Association. But even those that quote rates in U.S. dollars have been hurt badly by falling demand as Asian business travelers stay home in droves, and are lowering rates in a bid to win U.S. business.

As examples of the depressed environment, occupancy at the Mandarin Oriental Hong Kong fell from 83 percent for the first half of 1997 to 58 percent for the same period this year. At the Grand Hyatt Bali, the decline was from 68 percent to 40 percent.

Expressed in terms of rates, rooms at the ultra-plush Ritz-Carlton Kuala Lumpur can be had for less than $100. Rooms in the luxurious Hotel Majupahit in Surabaya, Indonesia's number-two business city, have dropped from $225 to $40.

Planners should note that room rates that appear almost too good to be true just might be, with reports beginning to surface of severe staff cutbacks at some properties.

As for air travel, Korean Air, for example, has been passing out 50-percent-off coupons and negotiating further discounts from there. Cathay Pacific has been selling seats from the U.S. to Hong Kong for as little as $400.

How long these buying opportunities will continue is anyone's guess, but most analysts are predicting depressed demand and rates through 2000.

Planners who count on continuing currency weakness to save money on events way into the future are in for a rude shock if exchange rates reverse between the time a contract is signed and the event is held. For meetings held within the next year it probably is safe to contract in local currencies, but for events further out it would be best to lock in U.S. dollar rates, observers said.

Another strategy is to contract with a hotel or DMC in local currency, then buy a "forward currency" contract, which provides the buyer with a specific amount of foreign currency on a specific future date at today's exchange rates.

"Conference planners eliminate the risk associated with currency volatility and ensure that they don't lose any money in the process," said Kim Boden at Reusch International, a currency broker in Washington, D.C. "This frees up their time to concentrate on organizing the event."

Reusch requires a minimum forward purchase of $10,000, with a 15 percent deposit, which earns 4.5 percent interest until used. On the appointed date, the group transfers the balance due to Reusch, which converts the total into foreign currency at the rate in effect when the contract was purchased. Reusch either cuts a foreign currency check for the purchase or, more commonly, wires the funds to the supplier's foreign bank account.