COMPETITION in Europe is driving prices in Asia.
The German Travel Agents Association DRV has warned Asia-Pacific hoteliers and tour operators to be ready for more pricing pressure ahead, thanks to intense competition and industry take-overs raging in Europe.
DRV President Gerd Hesselmann, speaking at the recent DRV convention in Bangkok, said, "Demanding consumers are squeezing us and the competition. Many countries are competing to enter the German market.
"It is up to the consumer to decide where to go, based on the information available and the price-value ratio they can get."
He said the Asia-Pacific destinations faced major challenges in coping with the horizontal and vertical concentration processes taking place among German and European tour operators, hotel chains, airlines and car rental companies.
"I can see no end of the line to the pressure," Hesselmann said.
"There is tremendous price competition in our markets. The tour operators are squeezing world-wide (not just in the Asia-Pacific) and they are also cutting costs. Airlines are also cutting commissions for travel agencies who also get hurt."
Hesselmann said that if prices go up then demand will decline.
"It's a game, competition between destinations, tour operators. It's not a question of only German source markets, but world-wide. If you have a better way of selling Thailand, please do it."
He was also asked how local suppliers could protect themselves against payment defaults by German operators in the midst of mergers and take-over. Hesselmann said that it would be easier for complaints to be lodged and processed if the Asia Pacific industry supplies were also DRV members, as associates.
However, he indicated that industry suppliers could be more firm about not providing ground services if they find the operators defaulting on pre-payments.
At the same time, he said he would convey the message of concern to DRV members and urge them to abide by the association codes of conduct under which they are required to pay suppliers properly.
Hesselmann urged suppliers to inform the DRV about such problems. "If any of our members are creating problems in one area they could be creating (it in) others," he said.