Archives for July 2009
July 31, 2009 | Permalink | m-Travel.com
“Our focus on securing great inventory for travellers continues”: Expedia
Online travel company Expedia is focusing on improving its customer value proposition and removing barriers to purchase.
“The elimination of the air booking fees and lower hotel service fees contributed to our volume growth in Q2, but really represent initial steps in what is an ongoing process. In fact, since last quarter’s call, we’ve also eliminated many changes and cancel fees, thus providing our travelers flexibility even after booking their trip,” said Dara Khosrowshahi, Expedia Inc.’s CEO and president. He shared this during Expedia’s Q2 Earnings Call (transcritp on Seeking Alpha).
“Our focus on securing great inventory for travellers continues. In June, we launched our biggest summer sale ever with over 5000 participating hotels up substantially from 1800 last year. Participating hoteliers know that the sale will increase their room volumes and as a matter of fact, participating hotels have seen their room nights grow nearly 40 percent during the promotion,” he said.
Growth in transactions
The 18 percent growth in transactions this quarter was quite broad across products and brands. Worldwide room nights grew 20 percent on an organic basis. Domestic growth was driven by growth of over 25 percent for Hotels.com, 15 percent for Expedia.com and roughly 35 percent for Hotwire.
International room nights grew 37 percent, with the Venere volumes contributing nearly half of that. The company saw impressive growth of 35 percent for Hotels.com in Europe, and APAC room night growth across both Hotels.com and Expedia brands was 80 percent.
In air, the biggest change was the elimination of air booking fees on Expedia.com, which drove overall domestic ticket growth 14 percent. The company sees continued strength in its air ticket volumes, so far in Q3.
New platforms
On new platforms at TripAdvisor, Khosrowshahi said, “Well, I think on the traffic front, Trip is doing extraordinarily well, so traffic in Europe and the Asia-Pacific regions is very, very strong. Obviously, we’re being hurt there on CPCs and foreign exchange.”
“On the meta-front, we are very, very happy with Trip Meta. I think Fly.com announced that they have done, I don’t know, 2.5 million searches. We are in excess of that. We’re not announcing how many searches that we have done, but we are in excess of that. So we think we’re doing pretty well on that front. The team is a great team, and I think we have innovated on Trip Meta, and we’ll continue to innovate on Trip Meta.”
Read more: Expedia
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July 31, 2009 | Permalink | m-Travel.com
Expedia 2Q profit dips
Expedia Inc.’s quarterly profit shrank as the company reported a profit of $40.9 million, compared with $96.1 million a year earlier.
Revenue decreased three percent to $769.8 million, but was up one percent excluding currency changes. Gross margin rose to 80.7 percent from 78.7 percent.
Revenue fell six percent in the US but increased three percent internationally, or 14 percent minus foreign exchange fluctuations.
“To deliver 26 percent worldwide room night and continued OIBA growth in this environment speaks volumes about the abilities and execution of the global Expedia team,” said Dara Khosrowshahi, Expedia Inc.’s CEO and president.
Khosrowshahi shared that on the marketing front, the company reduced its marketing spend per transaction by 23 percent in the second quarter driven by an improved customer value proposition, lower competitive spend, benefits from technology investments and strong execution across its marketing channels.
“Now, we are not counting on these levels of improvements in the coming quarters, but we are confident that we can continue to drive better efficiency on a per transaction basis,” he said.
Expedia’s stock jumped more than 12 percent, or $2.24, to $20.60 on Nasdaq, after touching a high of $21.27 early in the session.
Kaufman Brothers analyst Aaron Kessler that the earnings pop came more from promotional moves, such as cutting booking fees, which Expedia did June 27, than from major rebounds in travel.
“While we believe the travel environment is stabilising in the US and Europe, we don’t see any signs of a re-acceleration,” Kessler wrote.
“Results seem to have improved as gross bookings were only down 5 percent as opposed to 11 percent in the first quarter,” reportedly said Morningstar analyst Warren Miller. “But keep in mind pricing of both hotel rooms and airline tickets are down significantly,” he said, according to Reuters.
Read more: Expedia
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July 31, 2009 | Permalink | m-Travel.com
LCCs now account for 55pc of capacity in India
The contrasting fortunes of LCCs and full service carriers, which is playing out around the world amid the current economic downturn, is vindicating the faith investors in Indian LCCs have had for the model.
Overall capacity within India fell 3.6 percent last month, but the LCCs expanded by 4.4 percent, according to Centre for Asia Pacific Aviation (CAPA).
(Delhi-based SpiceJet, backed by US-based billionaire investor, Wilbur Ross, had a stunning turnaround in profitability in the three months ended 30-Jun-2009, reporting net earnings of USD5.5 million, helped by lower fuel costs. SpiceJet CEO, Sanjay Aggarwal, stated with justification, “in the current environment, it’s an amazing result”).
India’s LCCs control over 55 percent of the domestic market – the highest in the world. The rationalisation of capacity by the full service carriers, led by Jet Airways Group, amid spiralling losses has helped to propel the Indian LCC sector forward.
CAPA highlighted that LCCs also now control 14 percent of capacity to/from India, up from less than 1 percent just four years ago. This figure is expected to rise sharply in coming months as more carriers from Asia and the Middle East target India and domestic carriers such as SpiceJet prepare to expand abroad.
In particular, Jetstar Asia, AirAsia, nasair and flydubai are looking to rapidly expand to India from Singapore, Kuala Lumpur, Riyadh and Dubai, respectively, over the next 12 months.
It is no surprise therefore that Jet Airways, Air India and Kingfisher are expanding their short-haul international operations in an attempt to defend against the coming LCC surge in these markets.
Outlook
CAPA stated: “Everyone will “be an LCC” by the third quarter – and everyone stands to lose. As we enter the low season, domestic losses in India are expected to rise in the second quarter to 30-Sep-2009 and the earnings outlook beyond that is also questionable for full service and LCC carriers alike. The problem for the incumbents is they are entering the LCC sphere with still-higher cost structures relative to their peers, while their mainline operations remain subject to intense competition. The problem for the LCCs is that everyone is now moving to imitate them.”
“By the third quarter, with all the LCC structures in place, yields can be expected to fall even further. Industry over-capacity remains an issue, despite some recent positive steps. Add in rising oil prices, and the Indian airline earnings outlook looks increasingly challenged. The cost reduction battle must intensify.”
Travel Distribution Summit India 2009
Centre for Asia Pacific Aviation’s CEO South Asia, Kapil Kaul, is scheduled to speak at EyeforTravel’s Travel Distribution Summit India 2009 to be held in Mumbai (October 6 -7) this year.
For more information, click here:
http://events.eyefortravel.com/tdindia/agenda.asp
or contact:
Reece Gladstone
Regional Director, Asia-Pacific & Middle East
Email: reece@eyefortravel.com
Telephone: +61 (0)3 9938 1201
July 31, 2009 | Permalink | m-Travel.com
Six reasons your revenue management system isn’t working
By Jean Francois Mourier, CEO & Founder of RevPar Guru
Revenue management is the new “IT” for hotels across the globe.
As the worldwide economy continues its doldrums, maximising revPAR and occupancy without resorting to drastic rate-slashing tactics remains the ultimate goal for owners, operators, GMs and revenue managers everywhere. And so it is this goal that should be prompting a thorough analysis of existing revenue management strategies, techniques and, most importantly, revenue management systems.
My System Is Better Than Yours!
A good revenue management system will help your property survive the downturn (and thrive in the recovery) by wringing every dollar of revenue from an increasingly fast and volatile booking process. An effective revenue management system is well integrated both with systems throughout your property and with online sale channels. It is responsive, dynamic, and fast.
What, your revenue management system doesn’t do all that? Then here are six reasons why your existing revenue management system isn’t working for you:
1. It’s Based On Historical Data and a Divining Rod
For many hotels, revenue management is still a distinctly ‘low-tech’ endeavour. Some revenue managers, drawing on their experience, historical rates, seasonality, and current occupancy levels, divine the right rates for a period of time and set them out, hoping to attract guests. While this combination of factors will achieve reasonable rates and generate revenue, an effective revenue management system will apply a much more detailed, logarithmic approach to pricing designed to squeeze every last bit of revenue out of the pricing scheme and booking period. Yes, it should consider historical data but your revenue management system also must forecast ahead.
2. It Doesn’t Update In Real Time
The key to this revenue squeezing ability is real time updates. With more and more bookings taking place online, whether through your property’s website or through an OTA, projected occupancy rates can fluctuate dramatically in minutes. What’s more, OTA allotments can be reached and breached at any time, without warning and often during hours when revenue personnel aren’t available to reopen bookings. An automated RMS will prevent your property from leaving those lucrative booking dollars on the table for your competitors.
3. It Relies on Mere Mortals
Most hotels (and revenue management systems) rely on the revenue manager to analyse and implement complex and rapidly changing pricing structures. But relying on humans is, unfortunately, a significant contributor to lost revenues. By implementing a system that eliminates the human error element will ensure rates are optimized for the best booking rates with the highest RevPAR available – at all times. As your 24/7 revenue robot, a good RMS system keeps an unblinking, unsleeping eye on reservation limits, OTA allotments, rates-to-bookings ratios, and even subtler changes in the intricate, 24-hour supply and demand cycle.
An added bonus of automated RMS? Having such a system eliminates the day-to-day menial, tedious data-crunching tasks, so that revenue managers can use their online sales knowledge and internet expertise to focus on the big picture - to actually manage revenues and grow business.
4. It’s not dynamically integrated with online travel agencies
Hotel bookings are increasingly dominated by a few major players – Expedia, Hotels.com, Orbitz, Travelocity, Bookings.com and Priceline, among others. Your hotel simply cannot afford not to be doing business with them. There are 200+ travel search engines and hotel booking channels serving many different niches, so revenue managers need to be on the constant lookout and ensure they have a solid presence on the most number of sites possible. Of course, more sites to manage means more headaches and rate parity issues, so automating the process with a robust RMS system makes absolute business sense – and cents!
5. It doesn’t help differentiate your property from your competitors
Competition in the hotel industry has been exploding for more than a decade. Not only is there more room capacity in almost every major market, the increasingly prevalence of Internet bookings has facilitated widespread comparison shopping and bargain-seeking. Online is now a lifeline for the hospitality industry, and by increasing your hotel’s online visibility, managing complicated internet opaque channels, and having the perfect competitive rate always listed on your website while keeping rate parity and best rate guarantees will lead to a substantial increase in sales. Pricing competitively at all times – which a strategy a robust RMS can help you achieve -- will keep your hotel in front of your online competitors, and will re-direct guests to your hotel, keeping your rooms full and profits ticking over nicely.
6. It doesn’t work and play well with others
Integration is vital to improving efficiencies across all hotel operations, and this is particularly applicable to systems. Even the best revenue management system is ineffective if it can’t interact with your property operation and management system. So rather than running multiple systems or tools that do not communicate with each other, you must look for a consolidated RMS system with a user-friendly interface to provide maximum pricing optimization flexibility, online rate distribution, competitive webpage positioning and inventory control.
Today’s operating environment demands a comprehensive, flexible RMS system. If your revenue management system isn’t working for your property, then you need to take immediate action. This is a tough climate and it will only get tougher.
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July 30, 2009 | Permalink | m-Travel.com
The Get Funded Show Podcast Library – now launched
The podcast library covering topics ranging from innovation to investment, entrepreneurialism to emerging markets has now been launched. Containing interviews with top entrepreneurs as well as major investors it offers precious insight and advice for up and coming travel companies.
The first instalment of The Get Funded Show podcast series include talks from Paul Evans, Founder of Low Cost Holiday Group; Glenn Fogel, SVP Corporate Development at Priceline and Nic Brisbourne of Venture Capital firm, DFJ Esprit.
Industry change and new innovations of the future - hear the Travel Gurus, Glenn Fogel and Paul Evans, discussing the industry of the future. Paul shares some of his experiences setting up a travel company and the difficulties he faced. Glenn talks us through some of his favourite deals in travel as well as his essential ‘match the market’ advice.
After a year of decreasing investment, deals are still being done - Nic Brisbourne dispels some of the rumours about VCs and explains why the outlook is looking brighter. He also offers some advice to companies looking for funding.
Glenn, Nic and Paul are all taking part in The Get Funded Show@World Travel Market. The event, organised by EyeforTravel, will take place on 11-12th November at London’s ExCeL. As well as judging, they will be offering one-to-one mentoring to the 24 innovative travel companies taking part.
For all the podcasts, further information about the event and to see a full list of the Travel Gurus and Investors taking part, please go to www.getfundedshow.com or contact Tom Ellum at tom@getfundedshow.com.
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July 30, 2009 | Permalink | m-Travel.com
“Distribution costs must be built into the fare structure”
In-Depth: TAAI’s point of view on commission structure in India
Over the past few months, some of the established long-haul airlines in the Asia Pacific region have faced strong resistance from travel agencies regarding their move to reduce commissions or even establish zero commission practice in a phased manner.
A market like India, too, has witnessed quite a few acrimonious situations.
For instance, in February this year, Travel Agents Association of India (TAAI) had warned that it might stop sales of tickets of all the 11 major international airlines if they do not resume paying commission.
“Pay commission (in) India where you are getting revenues, or quit India,” Rajji Rai, president of TAAI, had reportedly said.
Recently, it emerged that the TAAI might severe links with foreign airlines and promote only national air carriers, following its ongoing skirmish with Singapore Airlines over payment of commission.
While airlines in India are paying three percent commission on basic fare plus fuel surcharge, the relationship between airlines and agents can change considering the current business environment and the pressure on airlines to reduce their operating costs.
In order to know more, EyeforTravel.com’s Ritesh Gupta recently spoke to TAAI’s president Rajji Rai, who is scheduled to speak at EyeforTravel’s Travel Distribution Summit India 2009 to be held in Mumbai (October 6 -7) this year.
Excerpts:
Last year in December, post agents’ decision to stop selling tickets of Jet Airways, Jet Airways agreed to pay three percent commission on gross fare (defined as basic fare plus fuel surcharge) of domestic and international tickets sold in India. The commission scheme replaced the transaction fee model. Can you provide an insight into the current commission structure for both domestic and international flights?
Currently, the agents are getting three percent commission on basic fare plus fuel surcharge on domestic and three percent on international also.
How do you assess the economic scenario in India as far as the travel and tourism sector is concerned?
Once again in June 2009, airline traffic has fallen hinting perhaps that most carriers are likely to report large financial losses for the second quarter. Of course, a downturn in business travel has robbed the airlines of customers. So they try to reduce the fares to attract travellers but this doesn't always work.
There is weaker demand for business travel because of the global economic recession, setting off a particular trend - for example- according to some analysts traffic declined slowly in April (in comparison with March), which raised hopes that a travel recovery was under way. Those hopes were dashed in May and June.
In fact, the International Air Transport Association (IATA) announced recently in Geneva that we need a revised outlook for the global air transport industry because of losses to the tune of US$4.7 billion in 2009. This is significantly worse than IATA’s December forecast for a US$2.5 billion loss in 2009, reflecting the rapid deterioration of the global economic conditions.
Definitely, the state of the airline industry today is grim. Demand has deteriorated much more rapidly with the economic slowdown. On the other hand, falling fuel prices are helping to curb even larger losses. But the relief of lower fuel prices is overshadowed by falling demand and plummeting revenues. On the whole it will be a grim 2009 for all in the trade. Some analysts say that prospects may improve towards the end of the year, but it would be beneficial to all concerned to keep expectations low.
What we need is more access to global capital, the desire to consolidate resources and find effective solutions to enable our industry to regain some resemblance of normalcy and make it more profitable.
Considering the pressure on airlines to keep their costs down, to what extent would you justify the ongoing discussions to reduce commissions?
The distribution costs must be built into the fare structure. The reason being the travel agents act on behalf of the airlines and therefore the customer comes to a travel agent to transact a business. And under the IATA regulation 8101, the travel agent is authorised by airlines to act on their behalf.
It recently emerged that airlines in India are gearing up to launch a portal to “save on agent commission and service charge”. These airlines are making this move under the banner of Federation of Indian Airlines (FIA). How do you assess such moves where traditional partners aren't going to play any role?
There already exists portals with many private operators. And if airlines start a similar portal it is not going to change as the customer goes to an agent because he gets value-added services.
Even in markets like Indonesia and Hong Kong, international carriers like Air France have been in news for reducing commissions from five to three percent later this year and then moving on to zero by April next year. But agencies says there is no room for them to negotiate. How do you assess the readiness of such moves in India?
The market scenario in India is different from the countries mentioned. Because Indian market is larger and bigger in volumes and (handles) has a high percentage of corporate and individual customers. Therefore, to make a comparison between the two is a fallacy. Although airlines justify paying 3% commission on gross fares, showing agents would now earn more, they should take into view the current scenario in the Indian market and also give due weightage to requirements and sentiments of the Indian consumers and the Indian travel agent, and not base their decisions on international trends.
Is there an argument to follow the lead of Emirates and continue with the 5% commissions, or will their loyalty be short lived? How do you expect this market to shape in the next couple of years or so?
Commission will remain at 5% in the next two years or so because airlines have instituted a system of issuing productivity linked bonus on volume based sales.
Travel Distribution Summit India 2009
TAAI president Rajji Rai is scheduled to speak at EyeforTravel’s Travel Distribution Summit India 2009 to be held in Mumbai (October 6 -7) this year.
For more information, click here:
http://events.eyefortravel.com/tdindia/agenda.asp
or contact:
Reece Gladstone
Regional Director, Asia-Pacific & Middle East
Email: reece@eyefortravel.com
Telephone: +61 (0)3 9938 1201
July 30, 2009 | Permalink | m-Travel.com
Aabar Investments to invest $280 million in Virgin Galactic
Abu Dhabi’s Aabar Investments PJSC will pay $280 million for a 32 percent stake in Virgin Group’s commercial spaceline, Virgin Galactic.
Aabar is controlled by the International Petroleum Investment Company, which is wholly owned by the government of Abu Dhabi and chaired by Sheikh Mansour.
Virgin Galactic expects Aabar’s capital injection to fully fund the company as it begins commercial operations.
“It completely funds the project through to commerciality,” Will Whitehorn, Virgin Galactic’s president said. “It gives us a kick start to get the satellite capability going and I think they will be a great partner. They [Aabar] have got a very strong ambition to invest in transportation and technology, and Abu Dhabi has strong ambitions in developing science within the emirate. This project seemed to fit both criteria for them.”
Aabar has also committed $100 million to fund a small satellite launch capability. The Abu Dhabi-based company will also “gain exclusive regional rights, subject to regulatory clearances, to host Virgin Galactic tourism and scientific research space flights,” the companies’ statement said.
Test flights have already begun on Virgin Galactic’s mothership, while the spaceship will begin test flights in four months, Whitehorn said.
The first commercial passengers could fly within the next 18 to 24 months, he added, although Virgin still requires a licence from the Federal Aviation Administration.
Tickets to space are priced at $200,000 each. About 300 people have paid almost $40m in deposits in the hope of travelling into space, according to Virgin.
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July 30, 2009 | Permalink | m-Travel.com
Holidaybreak booked at 94 percent of its target sales, CEO to leave
Holidaybreak is on track to meet management expectations for the full year. The education, leisure and activity travel group is now booked at 94 percent of its target sales, with year to date sales up two percent on last year.
In its interim management statement for the period from 31 March 2009 to 28 July 2009, two months before the end of its current financial year, the group also shared that Carl Michel, group chief executive, has decided to stand down from the role for personal reasons unconnected with the business.
John Coleman has taken on the role of executive chairman with immediate effect and will remain so until a new chief executive is appointed. A recruitment process is commencing immediately. Michel will step down from the Board officially on 30 September 2009.
Sales
Providing an update on sales, Holidaybreak stated:
- Education Division sales for 2008/9 are up 11 percent (7 percent on a like-for-like basis), in line with expectations. For 2009/10, the division is 50 percent booked. PGL outdoor education centres are 74 percent booked and are showing revenue growth of 6 percent year on year.
- Hotel Breaks sales for 2008/9 are down 4 percent, a marginal improvement from the trend previously announced. Sales are encouraging as trading improves and the division is now moving into a period of less challenging comparatives. The group continues to benefit from improved supplier offers (lower room rates and train fares) and better availability.
- The adventure travel market remains difficult. 2008/09 sales for the Adventure Travel Division are up 3 percent but 4 percent down at constant exchange rates.
- Camping Division sales for 2008/9 are up 1 percent but 4 percent down at constant exchange rates, on 4 percent lower capacity than last year, with later booking patterns in line with expectations.
July 30, 2009 | Permalink | m-Travel.com
Hubert Joly to lead Carlson Hotels Worldwide
Carlson has chosen its president and CEO, Hubert Joly, to also personally lead Carlson’s hotel business, supported by a global hotel management team.
Joly has been president and CEO of Carlson since March 2008. Prior to that, he was president and CEO of Carlson Wagonlit Travel, Carlson’s business travel management company.
Carlson also announced that Jay Witzel, who for 22 years has served in senior management positions, including president and CEO at Carlson Hotels Worldwide, will be leaving that position to serve in a consulting role within the hotel company.
Carlson also announced the appointment of Thorsten Kirschke as the Chief Operating Officer of Carlson Hotels – Americas. Kirschke will assume his new role on Sept. 1 and report to Joly. Kirschke comes to Carlson from The Rezidor Hotel Group based in Brussels, Belgium, where he was the executive vice president and chief operating officer.
The changes support Carlson’s strategy to revitalise the Radisson brand in the Americas, and continue to grow its global portfolio of hotel brands as “vibrant and contemporary leaders in the industry”.
Carlson recently announced that it has added 49 properties to its portfolio in the first six months of 2009, bringing its total number of properties to 1,048.
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July 30, 2009 | Permalink | m-Travel.com
BA stops short-haul meals
British Airway PLC will no longer offer meals to economy travellers on short-haul routes.
In a move expected to save the airline £22m (€26m), BA said passengers on flights lasting less than two-and-a-half hours would not receive a meal after 10am while the bottles of water that used to be handed out will now be limited to “water cuplets”. Passengers will be offered a free bar, with teas, coffees and snacks, instead of the lunch and dinner they previously enjoyed. Meals will still be provided to those in premium business class.
A spokesman for BA said: “We are in the worst trading conditions. We have been looking at what customers value and where we should be spending our money.”
He added: “It is not unusual to make small changes to avoid waste and save money where is makes sense and it meets customers' changing tastes. We are still a full-service airline and will continue to offer complimentary food and drink.”
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