ITB TRAVEL FAIR TO START AS HOLIDAY SALES HIT STANDSTILL

THE ITB Berlin international travel fair starts this week with the outlook for the German travel industry gloommier than last year with the proposed war in Iraq and the recession crippling summer holiday bookings. Germany's DVR travel industry association said on Monday that bookings for the key summer holiday season were currently six percent below the previous year's levels, with sales in the winter season roughly stable.

STANDSTILL
DVR president Klaus Laepple told a news conference that bookings for March and April were at a virtual standstill due to fears about a possible war in Iraq but he said a slight rise in overall bookings in 2003 was still possible. “There's a big backlog,” he said. “I am optimistic. If there is a timely solution to the Iraq conflict, the backlog will become effective and people will travel extensively again.” Laepple said some optimism could be drawn from what happened in 1991.
The Gulf War brought holiday travel to a virtual standstill at the start of that year, but by year-end package tour operators' revenues had risen significantly, he said. Laepple said that 2002 had been a tough year for the industry. “For the first time, our sector has had to face a decrease,” he said, adding that revenues from package tours fell by 6.4 percent in 2002 to 16.3 billion euros. Only 25 percent of travel agencies were able to increase profits compared to the year before, according to a survey of 531 offices, he said. About 33 percent of those polled put this down to falling demand, and 19 percent also mentioned the economic and political situation, Laepple said, without giving further detail. Europe's largest economy only grew by 0.2 percent last year, and data showed last week that consumer sentiment could stay weak in March as higher tax and social contributions combined with fears of a war in Iraq add to a gloomy outlook. Laepple was speaking at the opening press conference for the International Tourism Exchange (ITB) in Berlin later this week. The ITB expects 9'970 exhibitors from 181 regions and states to attend the fair, 300 more than last year. In separate press interviews yesterday, Europe's biggest travel group TUI AG, which owns Thomson Holidays and German national carrier Lufthansa AG both said demand remained fragile in the face of gathering war fears. TUI AG said it would extend its planned 111 million euro savings programme in the current year but it was still unclear how far the savings would reach. “The present 111 million euros cost cutting programme will be extended whatever happens,” spokesman Kay Baden said. “The economic situation has forced us to do this."

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