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July 4, 2008

The Credit Crunch 4:DMCs encourage incentives

“When times are tough you need to motivate your sales staff so incentives are vital. Cutting marketing budget is always wrong. In certain areas companies will gain from the tenacity of continuing with incentives,” says Frederic Bardin, senior vice president, Arabian Adventures.

Arabian Adventures enjoyed has considerable business growth in the past 12 months, and played host to 297,000 visitors to Dubai over the year, up 13 percent from 2006-07. The DMC is part of the Destination & Leisure Management division of Emirates Airline, which recorded sales of US$382 million for the year ending April, up 22 percent on the previous year.

Derin Cameron, CEO of Kuwait-based Alshamel International, also believes that the Middle East will be unaffected by a global downturn in business travel.

“I don’t see the effect of the credit crunch in the region. Regional travel spend is consistently ahead of the global trend so we are still seeing growth in the region, while there is a recession in the rest of the world,” she says.

However, one area where Cameron does urge caution is in pricing strategies.

“With more competition, customers are looking for better value and ways to cut expenses,” she says.

“I believe the Middle East needs to look at its pricing as there is no pricing strategy at present. We need to give the consumer confidence that they are getting value. Price should be determined by what is being offered. Inflated prices created discomfort with clients. You can’t sell a hotel at US$160 one day and US$380 the next. There is a disparity in prices. As a travel broker how do we explain this to the client?” Cameron points out.

Price disparity is certainly a problem with regional firms, but from an international standpoint the weak US dollar and strong Euro can make the Middle East seem like a value for money proposition.

“Our main feeder markets are still the European countries and with the Euro becoming stronger by the day, travel to this region will be more valuable to them. They have more money to spend here,” says Starwood’s Baki.

Egypt is another market that has benefited from the US dollar drop and the Euro gain.

“The interest in Egypt has increased and, amongst other things, that can be attributed to the strengthening Euro. As Egypt still works within the framework of US dollars it has proved to be a value for money destination for Europeans,” says Karim El Minabawy, president, Emeco Travel, Cairo.

Currency fluctuations appear to be working in favour of the Middle East for Europe, a large source market for the region. Companies may be cutting the size of their meetings and incentives, but events are still taking place. And with an ever increasing number of intraregional meetings and incentives taking place the market looks set to ride through the current credit crunch relatively unscathed.

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