Asia Pacific travel and tourism is facing serious financial challenges due to a combination of US currency depreciation, rising local costs and new fuel surcharges, according to an analysis by the Pacific Asia Travel Association (PATA).

PATA's recently released 'Asia Pacific Tourism Forecasts', however, suggest core fundamentals remain generally positive, with growth in international arrivals into Asia Pacific forecast at 7-8 percent, over the 2008-2010 period.

Since 2005, the US dollar has depreciated by between 14 and 21 per cent against six major Asia Pacific currencies, making some parts of Asia an increasingly expensive choice for US travellers. This in part at least is fuelling a shift in destination choice even within the region.

At the same time, inflationary pressures across the region have been pushing local costs skywards. For example, since 2006, average daily rates at 5-star hotels in six major Asia Pacific cities have jumped by between 10 and 39 per cent, measured in local currencies.

And as oil prices have hit record levels, fuel surcharges have increased substantially. According to media reports, at least one major airline in the region is likely to become the first carrier to charge more than US$1,000 for a fuel surcharge on its popular Sydney-London route from 1 July.

"Operators who quote in US dollars have been playing a desperate catch-up game, continually increasing rates as the dollar has fallen," says PATA Director Strategic Intelligence John Koldowski. "But at the same time they have been hit with the double whammy of increased local operating costs."

Despite these issues, PATA's latest forecasts predict generally positive growth for the region, with China (PRC) and Korea (ROK) set to generate strong outbound growth to Asia Pacific destinations.

Mr Koldowski, explains that as much as two-thirds of all international arrivals into Asia Pacific are generated from within the region.

"Due to the global nature of business, Asian markets will inevitably be impacted by a slowdown in the US economy. However, the medium-term outlook for most Asian economies is still strong with growth rates well above world averages - at least for the moment," he adds.

Mr Koldowski notes that localised issues and conflicts, including political and civil disruption in some markets, could pose a greater threat to tourism growth.