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New travel agency enters the market during a bad time

StarTravel (燦星), a new online travel agency, was launched yesterday by Wu Tsann-kuen (吳燦坤), chairman of Tsann Kuen Enterprise Co (燦坤實業), despite the travel sector's recent woes.

"It takes a lot of guts to open a travel agency in this market," said Tseng Sheng-hai (曾盛海), chairman of the Taipei Association of Travel Agents (TATA, 台北旅行公會).

A war in the Middle East and the outbreak of a new deadly disease in China have prompted travelers to delay or cancel trips in the Asia-Pacific region.

Wu will personally own a 40 percent stake in the NT$100 million venture, with the remaining 60 percent held by several StarTravel executives.

StarTravel poached some of its talent from rival Eztravel.com (易遊網), the nation's first and largest online ticketing center.

"We have strong industry know-how ... we believe StarTravel won't take as long as Eztravel to break even," said William Hsu (許聖信), StarTravel CEO and former chairman of Eztravel.com.

Hsu added that the company's ties with Tsann Kuen will also boost its customer base.

"Over 1.8 million Tsann Kuen members will enjoy special discounts," he said.

Being Taiwan's largest consumer-electronic retail chain with 103 outlets, Tsann Kuen issues free membership cards to maintain customer relations. StarTravel hopes to generate NT$700 million in sales and to break even within one year, Hsu said.

Ironically, this year's goal for most travel agencies is not to make money, but to survive.

"Many companies have been forced to downsize or cut salaries because of sagging sales," Tseng said.

SARS (severe acute respiratory syndrome) scare has resulted in significant cancellations by tour groups. Association statistics show that in April about 97 percent of group tours headed to China have been cancelled, while other outbound group tours reported a 91.3 percent cancellation rate.

If travel fears escalate, nearly half of the nation's 2,400 travel agencies employing nearly 100,000 employees may be forced to shut down, Tseng said.

According to an executive at Eztravel, the travel slowdown has spurred the company to cancel its plan to hire 60 new employees and transfer half of the company's outbound China tour department staff to domestic travel.

"We will try to cover the loss with domestic travel," said Stephen Lu (呂新發), an Eztravel manager.

The big tourism dollars are in outbound so the SARS scare is big headache for most agencies, he said.

On Tuesday, the Tourism Bureau proposed lending NT$20 million to 20 travel agencies to prevent the collapse of the sector.

The government also suggests that agencies switch their focus to domestic travel, but an industry veteran said the suggestion is not practical.

"The domestic-travel market is not big enough to support most agencies," Tseng said.

Taiwan's tourism sector generated NT$600 billion in sales annually, of which about NT400 billion come form outbound travel and domestic travel only contributes NT$200 billion.
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