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Last Updated:  Friday, 4 April, 2003, 08:21 GMT 09:21 UK
War and deadly virus spread holiday gloom

By Mary Gahan
BBC News Online business reporter

Tourist in a pool in Turkey
"If you want to go to Turkey I think you can state your price."

So says Patricia Yates, Editor of Holiday Which?, as the war with Iraq forces travel companies to slash the number of holidays on offer and make heavy price cuts.

The conflict is putting many people off flying, prompting others to delay placing a booking and making countries close to Iraq seem rather unattractive as holiday destinations.

And the headache for tour operators is compounded by the outbreak of the virus Sars (Severe Acute Respiratory Syndrome) which is frightening travellers away from parts of Asia.

The World Health Organisation and the British Foreign Office are advising people against travelling to Hong Kong and the Guangdong region of China, where the problem is worst.

That means that the number of cancellations is likely to increase and, if people are travelling the in next week or so, holiday companies will have to offer alternative destinations or refund money.

British Airways says Sars has already affected its bookings, particularly in Asia.

The problem with the virus is that no-one knows how long will take to contain.

The same is true of the war in Iraq. The longer the conflict goes on, the bigger the problem for tour operators, hotels and the tourist industry in general.

Bargain prices

"It's been quite bad," says Francis Tuke from the Association of British Travel Agents (ABTA).

"We always thought it would be bad because we went through 1991 when bookings through the Gulf war plummeted by 50-60%.

Tourist at the Tower of London
There's nervousness about flying in the short term into Britain, particularly from the US and Japan
Elliott Frisby, Visit Britain

"At the moment I think all of the big tour operators have slashed capacity from May to June."

But cutting the number of holidays is not enough to solve the problem.

"There are still huge amounts of bargains, particularly for May and June because booking has really collapsed," says Ms Yates.

"Turkey has been one of the worst hit because it has been a real growth area, Cyprus to a lesser extent."

She says that although companies are trying not to discount they have no alternative because so many holidays are being left unsold.

An internet search came up with prices for accommodation in Majorca from just 3 a night.

And an old cut-price favourite from the travel industry - the 149 one week long package holiday - is back.

Staying at home

It is not just the sunshine destinations that are suffering.

The war will cost the UK's tourist industry between 1.5bn-2bn, according to the Tourism Industry Emergency Response Group - a body set up during the foot and mouth disease crisis.

It's a tough time, we won't get away from that, but it's certainly recoverable from and the industry is resilient
Frances Tuke, ABTA
"There's nervousness about flying in the short term into Britain, particularly from the US and Japan," says Elliott Frisby from Visit Britain.

"Bookings are looking strong from July to September but less travel is being booked for April and May.

"People are taking very much a wait-and-see attitude.

"We hear that the consumer travel fairs and trade fairs are still very busy.

"A lot of people are searching online and enquiring but just not booking."

Visit Britain is trying to fill the gap left by overseas tourists with visitors from home.

It is launching a big campaign in England on St George's day, later this month, to encourage people to take their holidays in Britain.

But there will still be a gap. Apart from anything else, American tourists spend more per head that any others.

And, wherever tourist numbers fall, the effects will be felt from the airline, travel and hotel industries through to bed and breakfasts and tea shops.

High-profile casualty

The best hope for tourism is that the fighting in Iraq ends quickly.

"It's a tough time, we won't get away from that, but it's certainly recoverable from and the industry is resilient," says Ms Tuke.

She points out that, after the last Gulf war, bookings recovered very quickly to end the year down by only about 4% compared with the previous year.

Last time, though, there was one very high-profile casualty - International Leisure Group (ILG), owner of Intasun. It collapsed a week after the war ended.

This time one of the most vulnerable-looking companies is MyTravel - formerly Airtours - which benefited from the gap left by ILG in the early nineties.

Accounting problems and a fall in bookings have left MyTravel struggling. It made a loss of 73m last year and has been talking to its banks about extending its credit.

On Thursday the company announced that it would be cutting a total of 2,000 jobs over 18 months to try to restore the business to financial health.

Travel warning over deadly bug
02 Apr 03  |  Health
Iraq threat hits tourist trade
18 Mar 03  |  Business
War hits Indian tourism
28 Mar 03  |  South Asia
MyTravel to cut 2,000 jobs
03 Apr 03  |  Business

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