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Kuoni upbeat despite threat of war

Kuoni is back on the right path after recording a big loss in 2001 Keystone Archive

The head of Switzerland's largest travel group, Kuoni, has said that tourism will survive the repercussions of a war in the Middle East.

This content was published on March 18, 2003 - 16:57

CEO Hans Lerch told swissinfo that the current situation in the tourism industry was "difficult" but not "hopeless".

Lerch was speaking on Tuesday after Kuoni reported a return to the black last year with a net profit of SFr26.2 million ($19 million). The company posted a loss of almost SFr282 million in 2001.

"After 30 years in the industry, I'm not that negative. The war is going to take place but it depends very much on how long it will last," he said.

"I can assure you that tourism, once the war is over and the people think it's safe again, will be back and rolling. It has always been like that," he added.

Lerch commented that going on holiday rarely seemed to be a matter of economic considerations.

"Money always seems to be there. But if people are afraid of travelling for whatever reason, you can give holidays away and nobody goes," he said.

High interest

Lerch told a news conference in Zurich that retail outlets were full of potential clients with a high level of interest.

However, he said there had been a decline in actual bookings over the past five to six weeks.

"Many of our customers would love to travel, despite the current economic recession and the fears this brings. It's a classic case of pent-up demand," he said.

"They also have the money to do so but they don't dare to book yet. They are waiting in the hope of some imminent resolution of the present uncertainties over Iraq," he added.

Global slump

The results exceeded analysts' expectations of a SFr20.3 million profit. The return to profit came despite lower sales in 2002.

But Europe's fifth-largest travel company felt the effects of the global slump in the travel market, with turnover down eight per cent at SFr3.7 billion.

"The geopolitical situation in Iraq and the generally unfavourable development of the global economy did, however, have an adverse impact on booking behaviour," Kuoni said in a statement.

The travel industry has suffered a downturn since the September 11 attacks on the United States, and recent fears of a war in Iraq and general economic uncertainty have also suppressed demand for holidays.

Destinations

Kuoni said travel to and from the United States and to destinations in the Middle East, such as Egypt and the UAE, had been worst hit by the fall in demand.

Bali and Kenya had also lost popularity as holiday destinations following attacks in recent years.

Kuoni said it expected demand to remain repressed in the current year.

"With current market trends far from transparent, the present outlook is necessarily hazy, making it hard to offer any reliable prognosis of future business developments," the company said.

swissinfo, Robert Brookes in Zurich

Kuoni summary

Kuoni recorded a profit of SFr26.2 million in 2002.
The return to profit followed a loss of SFr281.7 million in 2001.
But 2002 sales were down eight per cent at SFr3.7 billion.
Kuoni says demand is not expected to increase substantially in 2003.
The travel group said it would be focusing its strategic thrust on the premium market.

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