Tourism businesses in Thailand are continuing to count the cost of the continued political unrest in the country as consumer confidence dropped to a 12 year low.
Tourist arrival figures rose just 0.06 percent in January from a year earlier, after growing about 20 percent in all of 2013.
Against this backdrop, hotelier Erawan Group this week cut its 2014 revenue growth target to just 2 percent from 10-15 percent. It said the unrest has dragged its occupancy rates in Bangkok down to 50 percent in the first quarter from 83 percent in the same period the previous year.
"Travel warnings by countries will affect the hotel business in the first half. But we expect it to rebound quickly in the second half if the political situation eases," said Kanyarat Krisnathevin, executive vice president at Erawan.
After months of protests aimed at ousting Prime Minister Yingluck Shinawatra, Thais have become reluctant to spend and tourists are staying away, weighing on sales at hotels and other tourism-related businesses. The downward trend in spending is seen continuing in the coming months.
Lufthansa unveiled its new premium economy class on Wednesday, part of a EUR€3 billion (USD$4.12 billion) investment in seats to catch up with fast-growing rivals from the Middle East.
The airline said the new class would first be available on long-haul flights from November on its Boeing 747-8s, flying to destinations such as Washington DC, Los Angeles or Hong Kong.
Lufthansa is following around 40 other airlines that already have a premium economy class. The premium economy concept has been around for more than a decade.
Lufthansa Passenger Airlines chief commercial officer Jens Bischof said the airline had had sleepless nights about whether to introduce a premium economy class but was comfortable now the group had upgraded its business class, meaning there was enough of a difference between economy and business to justify the introduction of a premium economy.
He said he believed the product was of a high enough quality that the airline would be able to snatch customers from rivals.
A return flight in premium economy, which gives customers more space, a higher luggage allowance and larger entertainment screens among other benefits, will cost on average EUR€600 more than standard economy, but far less the average EUR€2,000 mark-up for a business class seat, Bischof said.
Bischof said around 70 percent of business travellers were travelling in economy these days.
"We believe the upsale potential for economy to premium economy is far bigger than the downsell from a full-class business with a flat seat," he told a packed crowd at the ITB travel fair in Berlin.
Bischof said the airline was investing EUR€3 billion in improving its product for customers, not counting the EUR€36 billion worth of new aircraft it has ordered.
He put the investment in premium economy at EUR€170 million, compared with EUR€1 billion for the business class refurbishment.
Davy analyst Stephen Furlong said it was important for Lufthansa to invest in its product, even as it cut costs.
"They want to be the first European five-star airline. Like a lot of German companies in other industries, they will never be the lowest on costs, so you'd better have a better product than anyone else," Furlong said.
He was referring to Lufthansa's attempts to get a five-star rating from Skytrax, which reviews and ranks airlines. Airlines with five-star ratings include Singapore and Cathay, among others.
Lufthansa said premium economy would make up around 10 percent of seat capacity on its long-haul flights, carrying around 1.5 million passengers a year in the class. It will be fitted on all 106 of its long-haul planes within a year.
Bischof added the group had no plans at present to introduce it on short- or medium-haul, or on other airlines within the Lufthansa group, such as Austrian Airlines.