Low-cost flights build business

The hotel industry is also benefiting from growth in the low-cost flights market, according to a survey released by KMPG in Berlin. This showed that the number of passengers flying with low-cost carriers had increased from 13 million in 1999 to almost 40 million in 2002.

Some hotels in what were previously seasonal destinations, according to the report, are now seeing trade spread more evenly throughout the year because air travel is more affordable and frequent. More passengers on low-cost flights equates to a growing market among people who would not have travelled before.

"It's comparable to what McDonald's did to food," said Roy Murray, managing director of the Cendant Franchise Group. "Low-cost flights are not eroding other markets. More people are taking short breaks, and it's building the market."

The survey predicts a growth rate of 20-30% annually. Such growth within Europe is vital to the hotel industry, as it promises to alleviate over-reliance on income from US visitors, who are more reluctant to travel during periods of political unrest.

That said, when the war is done and dusted and the expected upturn comes, the results could be explosive. "I am sure we will see a return to spectacular growth in 2004-05," said Tom Jenkins, executive director of the European Tour Operators Association. "North America has huge potential for outbound tourism growth, as has Japan, and there is pent-up demand for travel to Europe."

For now, the biggest problem hoteliers have with the market in North America is "Iraqwarphobia", as some call it. Hoteliers hope it won't be around long enough to gain an entry in the next Oxford English Dictionary.