Despite concerns over swine flu, travel and leisure sectors doing fine


  • Business
  • Thursday, 30 Apr 2009

PETALING JAYA: While travel and leisure-related stocks have been punished by investors on concerns over the impact of the current global alert on swine flu, businesses in these areas have yet to see slowing demand.

Stocks of healthcare and related services companies, in contrast, have seen buying interest as demand for their products and services is expected to increase as consumers and governments step up prevention efforts. Some Malaysian glove makers were reported to have seen a surge in orders, particularly from US customers.

The epicentre of the swine flu outbreak is Mexico, which so far has seen more than 100 deaths, while infected cases have been found in the United States, Canada and Spain, and suspected cases in Israel and New Zealand.

Malaysian Association of Hotels vice-president Ivo Nekvapil said hoteliers had yet to see any cancellation in bookings or slowdown in demand in the wake of the swine flu spread.

“There has been no panic and no indication of a negative impact on business. We’re definitely concerned about the situation and are working closely with government agencies to ensure steps are taken to protect our guests,” he told StarBiz.

Malaysian Association of Tour and Travel Agents president Ngiam Foon said its members also had not seen any cancellation of tours or declining travel demand.

“But I’m sure everyone is keeping a close watch on the alert status,” he said. The World Health Organisation has upgraded the swine flu alert to level 4, which indicates person-to-person transmission in a limited geographical area.

According to Tan Sin Chong, managing director (travel division) of Reliance Pacific Bhd, the current swine flu outbreak is unlikely to be “impactful” as the company’s business strategy has shifted to Asia due to the global economic crisis.

“The cases of swine flu infection are mainly in North America. Due to our focus on Asia, we don’t see a significant impact,” he said.

Furthermore, Asian governments were more experienced in managing such outbreaks, given the Severe Acute Respiratory Syndrome (SARS) crisis in 2003, and had taken many pre-emptive measures to prevent the spread, he added.

Both Malaysia Airlines (MAS) and AirAsia Bhd have indicated that travel demand was unaffected so far.

MAS, which operates thrice-weekly flights on the return routes of Kuala Lumpur-Los Angeles and Kuala Lumpur-New York, has offered passengers on these routes to make flight changes for free from now until end-May.

In a statement yesterday, MAS said the airline would help expedite screening process of its passengers arriving from the United States and other affected countries, especially those with connecting flights.

In Europe, British travel firms like Thomas Cook and Thomson, and TUI of Germany have suspended flights to Mexico and are starting to repatriate travellers while a number of flights from Manchester airport to Mexico were cancelled.

An aviation analyst at a local brokerage noted that during the SARS crisis, airlines’ load factor was severely affected due to negative travel sentiment but recovered in three to six months.

“We still do not know how widespread the disease will become but the initial numbers do indicate that it is not as severe as SARS, so the impact shouldn’t be as great,” he said.

Pharmaniaga Bhd managing director Mohamad Abdullah said demand was still stable, although the pharmaceutical company had initiated some internal processes to be ready for any order surge.

OSK Investment Bank, in a recent report, said that depending on the severity of the outbreak, arrivals to Genting Highlands were unlikely to be dampened.

“Resorts World’s earnings are dependent on casino patronage, which is more resilient as 85% of it comprises the captive domestic day trippers market,” it said, adding that the leisure company had stayed profitable during the SARS period.

OSK said glove makers, meanwhile, might experience a “one-off” jump in sales orders due to high potential of stock replenishment given that customers had been holding a minimal stock level and latex prices had fallen almost 10% since February. For latest Bursa Malaysia indices, charts and other information click here Latest business news from AP-Wire

For latest Bursa Malaysia indices, charts and other information click here

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