Travel Industry

Elliott wrote a great summary of the Travel Innovation Summit and I wrote a summary of the rest of the PhoCusWright Conference. Here’s a lighter view of the best and worst  of the PhoCusWright 2009 Conference.

Best Sound bites – tied

• Robert Flynn from Frommers on why professional content is the best way to go, referring to why TripAdvisor is flawed said,  “We (Frommers and other professional publishers),  don’t need to put the word ‘trust’ in our tagline.”
• Tom “Mr. Walking Sound Bite” Romary, president of Yapta in response to Bob Offutt’s question “if you had a magazine title, what would it be”. Tom’s answer “Playboy: The naked truth (on prices)”

Best guerilla marketing

• The Yapta Cabana. Yes, by the pool. Yes, open to 3am (to the chagrin of the Omni security). And yes, stocked with Oban single malt scotch and ice. Bravo!

Oban Single Malt Scotch

Hardest comment to agree – or argue – with

Jeff Boyd,  “Online media in travel is slowing and it’s hard to break through against Kayak and TripAdvisor”.

• Yes, it’s hard to compete with those two 800 and the 8000 pound (Google) gorillas respectively. But they do $100M, $300M+ and $2B in annual online media revenue respectively and the online media sector in travel is north of $3B annually, so it’s likely worth trying. On the other hand, Priceline grew 47% YoY, they dominate European hotels, they have typically zigged when everyone else zagged, and their market cap is currently bigger then Expedia’s – so who’s going to argue with their strategy, execution or anything their CEO says?

Worst personal moments – tied

• Realizing there was no  coffee at 8:45am on Wednesday morning. Coming from the West Coast, that was cruelly early and unusually harsh.

No coffee was a low point

• Realizing it was 3:00 am and I was in the Yapta Cabana with a glass full of scotch

Best “I’m too cool to be flustered” routines – tied

• Jason Shulman from x+1 who had to do improv for 15 minutes while they tried to figure out why his presentation wasn’t working.
• Philip Wolfe and (most of the PhoCusWright team during the fire alarm. It was remarkable how they got the show back on schedule.

PhoCusWright execs were cool under pressure

Worst example of charismatic leadership (good leadership channeled in all the wrong ways)

• An unnamed OTA executive (almost) convincing conference attendees to go swimming at 3am (yes, this is related to the Yapta whiskey)

Best microcosm of the value of twitter and whether it’s connected to mainstream anything

• (Elliott, please don’t stone me) – Realizing there was no correlation between the twitter/blogger sentiment of who the top innovators were (e.g. excellent summary posts by Tim Hughes, Stephen Joyce, Kevin May, and Elliott Ng) and who the Conference attendees & Judges voted as the winners

Best teams no one is talking about

• Travis has done a remarkable job rebuilding the Travelport team. Scuttlebutt is they have hired bankers are going public in 2010
• Paolo has quietly built a very talented and hungry team at VFM Leonardo. Plus they have the corner on high quality photos and video.

VFM Leonardo corners the market on high quality photos and video

Worst team that people were talking about

• {Pat made me take this out}

Best stuff left for us to read between the lines & Best company to follow in 2010

• Bob Denier on why he and Dave Litman returned to launch Getaroom and how it’s similar to Hotels.com,  “We stick to our principles (that in a down market we can get hotels to give us huge discounts AND pay over 30% for us to sell rooms for them), stay disciplined to numbers and making money (we made over a billion dollars last time around, so we think we know a little bit about this), and move fast (amazing to Dave & I that 10 years later, Travelocity and Orbitz still don’t have hotels businesses.)”. Especially if you believe the Cornell and Jake Fuller data that the hotel sector is 3-4 years from recovery…

Worst post-conference moment

• Seeing poor Bruce Rosard wear a Yankees cap because he lost a bet when the Phillies lost the World Series.

Best Lazarus act

• Barney Harford, Mike Nelson, Frank Petito, Ramesh Bulusu and the rest of the Orbitz team. From death’s door with the fee cuts to surviving, thriving and now with a fresh $100M in cash.

Best persistence in continuing to flog the same product even though we aren’t buying (yet?)

• Rob Torres and video in a blog interview with Tim Hughes. Hard to feel sorry for anything or anyone at the 8000 pound gorilla called Google, but selling video and brand in this travel economy can’t be easy.

Best after-conference events – tied

• AC/DC concert – unnamed OTA executives clever nuff to sneak off

The Little Duck at AC/DC

• Alligator night tour of the Everglades with the Travel Insights 100 and UpTake Blog Network bloggers

Travel Insights 100 and UpTake Blog Network tour of the Everglades

Best real data and substance

• Hands down – the Bill Carroll, Chris Anderson, Jake Fuller presentation on why the lodging industry will be in the tank until 2012.

Lodging Recovery Scenario

What were your favorite and worst moments? Let me know! (you are most welcome to make fun of my best/worst moments, but please submit yours too!)

Photos courtesy of:

• Oban Single Malt Whiskey
• Coffee cup by m4tik
• Fire Alarm by selva
• Alligator from AllAnimalWebGuide

Elliott Ng, co-founder of UpTake, wrote a great summary of PhoCusWright’s  Travel Innovation Summit. Here’s my uptake on Wednesday and Thursday’s Center Stage presentations, hallway conversations, and miscellaneous (usually unsubstantiated scuttlebutt.

Conflict and Opportunities Abound in Lodging Sector

If you believe Bill Carroll, Chris Anderson and Jake Fuller – and they have the data to support their hypothesis – the lodging industry’s recovery is 4 years away. There are number of reasons for this:

Lodging industry supply is increasing

Supply is still increasing. There are structural limitations (ownership and political) on why lodging rooms aren’t going to be taken out, discount expectations are hard to reverse, fragmented ownership inhibits price leadership and chain brand value and controls have been diluted. An excellent analysis that has implications for online travel ecosystem – the OTAs’ resurgence will continue, conflict between chains and franchisees will grow, and there will be interesting opportunities for businesses that can deliver enough opacity to disable best guaranteed pricing. The dynamics were similar in 2001-2003 when Expedia and Hotels.com dominated online hotel sales to propel into number one position.

OTA's reach a tipping point

What do you think of the Cornell (and Jake Fuller) analysis and conclusion that the lodging sector will be below the magical 60% occupancy line for another 4 years? And what new businesses will emerge and what other implications do you think there will be?

The Next 6-12 Months will Signal a LOT about the Health of Online Travel

The big event we were looking forward to at the start of 2009 happened – booking fees got cut. And the OTAs survived – and thrived (primarily by taking share from suppliers). Jeff Boyd, Priceline’s President and CEO has  Priceline and Booking.com dominating European hotels and growing almost 50% Y/Y. Dara Khosrowshahi, Expedia’s CEO  has the company growing almost 30% and well positioned given the ongoing hotel occupancy struggles. Barney Harford, CEO of Orbitz took the firm off death watch, cleaned up the balance sheet, raised $100M in cash and is driving Orbitz to finally build a hotel business. Fair to say the publicly-traded OTAs are doing well!

So why do the next 6-12 months matter? Because a number of later stage, private travel companies are primed to go public – Amadeus, Travelport have filed their S-1 and hired bankers respectively. Potentially four more have the size – but perhaps not the size AND growth – to go public: HomeAway, ITA Software, Kayak and Sabre. Will they try? Can they get public?

If they do, it certainly will help the earlier stage private travel companies. Most need to raise additional capital in the next 6-12 months, but if there aren’t some exits and some liquidity to enable acquisitions, it is inevitable that there will be a slew of travel start-ups going under. And even if there is more investment capital available or there are acquisitions as a result of some IPOs, as Brad Gerstner, founder & CEO of Altimeter Capital said, there will be a need to reset valuation expectations. E.g. Priceline and Expedia are growing at 47 and 28% and trading at 8-9X multiples. {Disclosure: UpTake is one of those earlier stage travel companies, and although we don’t need to raise additional capital until 2012, we are very aware that we will benefit from more travel companies going public and an improvement in valuation multiples}

Obviously HomeAway, ITA and Kayak don’t have control over the public markets, but they all have major initiatives underway that will materially impact their growth trajectory and perception from investors. HomeAway will start building awareness of the vacation rental category with an ad campaign – including super bowl ads! ITA is moving ahead with its new GDS and has additional search innovations (e.g. Needle) teed up. Kayak is building brand with their offline campaigns, building their hotel business to offset the cuts in booking fees, and investing to go deeper into the transaction process. Interesting times, big bets, big potential upside!

Who do you think will try and succeed in going public? What do you think will happen to the several dozen private travel start-ups that need capital in the next year?

Either Search & Discovery still needs improvement – or a lot of us don’t get it

There is plenty of  ongoing investment in new search and discovery:

• Amadeus’ Affinity Shopper, the winner of the Innovation Award with their dynamic packaging search-;
• Goby with long tail search, , my personal favorite – ;
• Voyij, my favorite runner-up is filtering the Twitter stream, compiling them into emails to slow down the real time feed and enabling me to find what I need when I have time to look;
• TripAdvisor, the investment closest to my heart,  Steve Kaufer discussed how TripAdvisor is investing in semantic search to deliver the gestalt of a product and save consumers the need to read 3,300 reviews on the Bellagio;
• Car Trawler on car rental comparison shopping;
• 10Best (VinePulse) on enabling hotels to search reviews from across the web about their hotel etc.

Disclosure – no surprise on this  (gasp!) UpTake is a search engine! We have aggregated content from over 5,000 local, travel and professional sites and done the ontology-driven attribute – e.g. ‘6 year old’ indicates a family related fact – and sentiment analysis – e.g. ‘loved the pool’ indicates a positive feeling so we can recommend products that best fit consumers trip preferences. For example, we return different hotels if you are looking for family hotels versus romantic hotels}

Are Goby, Voyij, Car Trawler, TripAdvisor, UpTake all search ‘hammers’ looking for search ‘nails’, or is there a real problem for the search & discovery companies to solve? What do you think they need to do to succeed?

TripAdvisor and Google are the 800 and 8,000 pound Gorillas (respectively)

Expedia has to battle Priceline, Orbitz and Travelocity and vice versa.

But up the travel funnel, there is less competition.

Google has crushed Yahoo Search. Bing is battling valiantly, but Bing’s pick- up 200 basis points of search (from Yahoo) to get to 9% market share hardly shifts the market dynamics (when Google has north of 60% market share). The three most successful online travel CEOs – Dara, Jeff and Steve (Kaufer – sorry Steve Hafner all mentioned their concern about Google (or Troogle – Google + Travel) and their dependency on Google (given 73% of travelers search and search an average of 10-12 times before they book). Even though Google has publicly said they aren’t entering ‘vertical search’ like travel, Google continues to extend their lead in related categories – e.g. maps, photos, video, the ‘local modules’ – and therefore increasingly influences online travel. A benign 8,000 pound gorilla (generating over $2B a year in lead generation revenue from travel), but growing larger as each PhoCusWright comes and goes.

TripAdvisor is as dominant as the ‘second click’ for travel research as Google is as the starting point for travel research. Already dominant domestically, they have quietly launched localized versions globally over the last two years and are estimated to generate over $300M in 2009 revenue and $200M in operating income. And they too, are extending their lead. In the last year, the TripAdvisor Media Group has expanded into China further with the Kuxun acquisition (already owning DaoDao), launching flight metasearch, getting into deals (via SmarterTravel), and driving into the vacation rentals sector. Fortunately, TripAdvisor continues to be collaborative with the rest of online travel, but like Google, they continue to extend their lead.

In an industry where size (of market share) matters, Google and TripAdvisor are dominant. What does that mean for the long term health and balance of the online travel ecosystem?

The great travel trade wall of China is opening up a bit for foreign companies looking at a slice of international Chinese travelers. China has announced plans to gradually open up its overseas tour sector to foreign firms, according to a statement published on the Central Goverment website on Thursday.

Chinese travelers at Beijing Airport

Currently, only Chinese companies are allowed to offer overseas tourism services to residents. The statement does not include a time frame or details, but the move is reportedly a part of China’s strategy of putting more emphasis on the services sector.

The US received around 500,000 Chinese visitors last year with each tourist spending on average 23 nights and about $7,200 per trip – the highest of any international group.

The growing interest in Chinese tourists is personified by the increasing number of delegations and agreements signed between tourism companies on both sides.

U.S. and Chinese tourism officials met in Orlando in October for a two-day summit, where tourism officials from 30 Chinese provinces and 23 U.S. states were in attendance , including Chairman of the China National Tourism Administration Shao Qiwei and U.S. Travel Association President and CEO Roger Dow.

Sino US Tourism Summit, Orlando

On the state level, the California Travel & Tourism Commission is very much engaged with their tourism counterparts in China. The CTTC opened offices in China earlier this year, and signed MOU agreements with the tourism organizations of Beijing, Shanghai and Guangzhou.

They headed a delegation to China on Nov 20 for the China International Travel Mart in Kunming, where they met with over 200 travel trade and media professionals, updating them on new products for the Chinese market and the latest destination developments.

Caroline Beteta, CTTC president, said that “Although we saw a record 273,000 visitors from China in 2008 with $398 million in visitor expenditures, this lucrative market has enormous potential for California.”

They also unveiled new California tour packages, called California Travel Meals – multi-theme, menu-style travel itineraries developed in cooperation with China’s leading tour operators and airlines.

Hawaii and Las Vegas are said to be interested in working in tandem to work out an arrangement where incoming tourists staying for multiple weeks could stopover in Hawaii on the way to Las Vegas.

Currently, there are no direct flights from China to Hawaii. But that could be remedied as early as next year, and the Hawaii Tourism Authority has budgeted nearly $2.7m this year for marketing in China and South Korea. They’re also arranging for travel industry employees to take classes in basic Chinese phrases and customs.

Even China’s neighbors are gearing up to increase their share of the rising number of Chinese travelers. Yoshiaki Hompo, the head of the Japan Tourism Agency, said in an interview that Japan is planning to ease the visa regulations for Chinese travelers, and they’re looking at getting 9 million Chinese visitors by 2019. Chinese arrivals in Japan for October jumped 25%.

With the increasing access and resources for international leisure travel and tours available to Chinese travelers, coupled with the opening up of the sector to international competition, the Chinese overseas tourism market looks all set to heat up even faster.

Air China photo by gruntzooki; Sino-US Summit photo courtesy U.S. Travel Association

Celebrity Cruises has taken the ultimate step to close the gap between cruises and all-inclusive resorts: It is now selling unlimited alcohol packages. Cruisers can pay one price and start ordering without fear of that gut-wrenching bill on the final morning.

All-you-can-drink new cruise option

According to TravelMole, Celebrity’s unlimited beer package starts at $34.50 per night, the classic liquor package at $51.50 per night (serves middle-shelf liquors such as Johnnie Walker Red and Absolut Vodka, and the premium liquor package starts at  $76 per night for top-shelf spirits like Johnnie Walker Black Label and Grey Goose vodka. Finally, a frozen drink package — think piña coladas, daiquiris, and margaritas — starts from $22 per night.

Until Celebrity begins implementing this option at the end of December, it’s difficult to judge the effect an open bar option will have on passenger behaviors. After all, to this point, soda and wine packages have been the only unlimited drink packages on the table. However, one of the unintended consequences could be a drop in customer service.

When Carnival held the naming ceremony party for its Dream ship on November 11, the overnight gala for travel agents, investors and other VIPs involved an unlimited alcohol policy. No, we didn’t see gangs of drunken friends in the dance clubs or folks crawling to their rooms, most likely because they couldn’t get that much alcohol in the first place. For example, my guest and I took a seat in the theater more than 30 minutes before the show intending to relax and order a couple of Cokes before the curtain rose. The waitress took orders in the first row, disappeared for 15 minutes, and returned with her tray loaded down with daiquiris, margarities, whiskey sours, rum and Coke, etc. She tried to repeat the trip for row 2, and barely made it back before the show started.

Obviously, our Row 10 was toast.

So we headed to a bar area after, only to find a huge swarm of folks waiting to place their orders with the bartender (which explains why the cocktail waitress in the theater couldn’t return in a timely manner — she couldn’t get the tray filled with any speed). I personally wasn’t jonesing for caffeine that badly, but my friend decided to stick it out. After she made it to the front of the bar line, 20 minutes went by before someone finally grabbed the hose and squirted some Diet Coke in her glass.

And this after she lost her temper and asked, “Am I invisible here?” All told, it was nearly an hour’s investment for that “premium” drink.

Certainly Carnival was not slacking off on its service standards, but the sheer volume of passengers packed onto a cruise ship presents traffic and work flow challenges in an all-you-can-drink scenario. Let’s hope Celebrity’s pricing structure is high enough to prevent this newest offering from becoming a detriment to this vacation choice.

Photography: brosner (Flickr)

The International Air Transport Association (IATA) is pulling out all the stops to make sure the airline industry doesn’t get hit with a global agreement over airline emissions reductions at the United Nations Climate Change Conference (COP15) in Copenhagen, which kicks off on Dec 7.

UN Climate Change Conference

In 1997, the airline industry got itself an exemption from the Kyoto Protocol, mostly because of disagreements amongst member nations over how airline emissions would be allocated along the flight path.

But now, everyone seems to be on the same page, and with both President Obama and Chinese Premier Wen Jiabao headed for Copenhagen with a pledge to cut emissions, there’s no doubt that the airline industry is going to have to face the music.

In fact, the IATA is now calling for global accounting of emissions to be done by the UN’s International Civil Aviation Organization (ICAO). In a bid to pre-empt tougher measures, the IATA has also been pitching it’s own targets and strategy to cut airline emissions on a global scale.

Their targets – (1) 25% improvement in fuel efficiency by 2020 compared to 2005, with all grown to be carbon neutral by 2020 (2) to use 10% alternative fuels by 2017, and (3) 50% absolute reduction in emissions by 2050, with a 1.5% reduction in emissions every year over the next decade. 

Their strategy – 1. Green Initiatives – Giovanni Bisignani, IATA’s Director General and CEO, says that IATA is working with airlines around the world to implement best practices. This work is now saving around 30 million tonnes of CO2 each year.

Giovanni Bisignani, IATA

2. Fuel efficiency improvement -  Fuel efficiency improved 70% over the past forty years, and 23% in the last decade, mostly due to better aircraft and engines.

3. Logistics: IATA’s work to shorten routes is saving at least a further 30 million tonnes of CO2.

4. Offset Programs: The IATA is working with airlines and pushing them to broaden the scope and availability of carbon offset programs to travelers, with more than 30 airlines already offering offsets for flights.

Fair enough, but IATA’s desperation becomes plain, when you consider some of the baseless facts and arguments they’re using, like the 8% reduction in emissions this year. 6% of it was due to the recession.

Another angle they’re playing is with fuel efficiency improvements and logistics, which is dependent largely on the modernisation of the airlines’ fleets and the ATC technology. IATA’s argument is that they can’t do much unless programs like NEXTGEN are implemented by governments. What they don’t add is that they – or their brethen, are the ones who have been putting off the implementation because of the costs involved.

And lastly, IATA still refuses to own up to the reality of global warming and the airline industry’s role in it. Their website says “Aviation’s Climate Change Impact is Small… scientists disagree over the amount, probability and nature of these changes.. etc. “  The 2% they’re taking responsibilty for is incorrect and outdated.

All this puts the IATA in the rather ridiculous position of denying aviation related climate change while voluntarily taking steps to reduce emissions, and calling for airline technology improvements while trying to stall it themselves.

Conference photo courtesy of IISD/ ENB-Leila Mead

Earlier this year, when Italian tourist Luca Marchio landed up in the lobby of the Coral Palace Hotel in Baghdad after a grueling trip all the way from Italy, he was crowned as Iraq’s first post-war tourist.

Ministry of Tourism, Kurdistan

Since then, Iraq has improved considerably, and there’s no shortage of customers for the local tour guides. Hinterland Travel, a UK based travel company, is offering Iraq tours. 

The Head of Iraq’s Tourism Board was in London last month during the World Travel Market, promoting Iraq as a tourist destination. Kurdistan’s tourism ministry even has a website (mot-krg.org), and it looks quite frequently updated.

What remains unsaid is that most of the tourists will be there for Conflictourism – a desire for adventure fulfilled by the very act of traveling to a war-zone, and further quenched by visits to the bombed out and battle scarred remnants of important local institutions and attractions, like the infamous Abu Ghraib prison. 

Conflictourism is a growing phenomenon, especially in places where the memories of war are still fresh, but the danger level next to negligible. TIME profiled the case of El Salvador, where former guerrillas now give guided tours of their former hideouts in the mountains of Perkin, El Salvador.

Christian Science Monitor correspondent Donald Kirk reports from Chorwon, on the edges of the border between the two Koreas, where tourists are now flocking for nature tours, enjoy the natural beauty along with the rusting tanks littered across the landscape. Attractions include an infiltration tunnel dug by the North Koreans, and glimpses of soldiers on the South Korean side of the border across the demilitarized zone.

In Aceh, Indonesia, a company called Aceh Explorer has a team of 15 trekking guides, mostly ex-fighters, to offer guerilla tours. A report by Sophie Boudre from United Nations Radio says each guide gets 15 to 20 dollars for a day of trek plus shoes, backpacks and a uniform.

In Afghanistan, even though the conflict still rages and President Obama just authorized sending another 30,000 troops into battle, this doesn’t seem to be stopping Afghanistan’s Tourism Ministry from preparing for a huge influx of tourists.

Band-e-Amir, Afghanistan

The Band-e-Amir lakes and the colossal Bamiyan Buddha statues blown up by the Taliban in 2001 are historic attractions, and Afghanistan is planning to build hotels, restaurants and other tourism facilities in Bamyan, where Afghanistan’s first National Park was established in April, funded with $1 million from USAID.

New Zealand has teamed up with a non-profit, the Aga Khan Foundation, for a $1.2 million eco-tourism project in the Band-e-Amir park, and they’re hiring locals as tour guides.

Please note that you shouldn’t travel to any place – conflict or otherwise, if the travel advisories say no. The point here is to highlight how tourism is helping build infrastructure and giving a boost to the local economies.

Also to be noted is that by giving former guerrillas a chance to integrate themselves back into society, conflictourism is speeding up the healing process.

There’s a new player in town, and there’s no doubt many travel services will welcome it with open arms.

Taiwan hospitals the new Taj Mahal?

OK, medical tourism wasn’t born yesterday — insiders estimate there are thousands of companies doing this around the globe, many of them mom-and-pop operations — but pretty darn close. More importantly, it’s growing up quickly, with Formosa Medical Travel predicting a 14 percent growth in Asian markets alone from 2009 – 2012. In a year when any growth at all elicits applause, that’s a dazzling future. What’s more, Formosa says high-cost surgeries like orthopedic, cardiac, and cosmetic top the list of drivers for medical tourism.

So American-owned Formosa has quietly built a travel niche from this trend, signing agreements with leading hospitals in Taiwan, and recently earning the backing of the Taiwan External Trade Development Council. Taiwan’s health care system is currently considered  one of the most efficient in the world, with administrative costs below 2 percent.

“While the debate over health care reform in the United States continues, the costs of medical care in Taiwan remain among the lowest in the world,” said Don Gilliland, Formosa’s chief operating officer, in a November 30 press release.  For example, the price of total knee replacement surgery at a JCI-accredited hospital in Taiwan, including all surgical costs, VIP accommodations, concierge service, transportation, and round-trip airfare, is generally less than $15,000, while the price in the United States is often upwards of $60,000.

At the moment, Formosa specializes only in arrangements for knee and hip replacement surgeries. And, sticking to the traditional travel agency format, it does not charge a fee for its role in the planning.

Meanwhile, the Medical Tourism Association is busy certifying members with similar services  — think Healthbase, Surgical Trip and WorldMed Assist — in an effort to shed light on the quality services such businesses can provide.

The real question for the travel industry is how to get in on this compatible profession before insurance agents seize the bigger slice of the economic pie. My suggestion: the larger travel agencies need to quickly open a division and recruit former medical employees to join as their staff. They already have the skills to book airlines, hotels and transportation. But it will take a different expertise to jump into choosing hospitals and surgeons.

Photography: Kazuaki.h (courtesy of Flickr)

In a surprise announcement on Wednesday, 25th Nov, 2009, Dubai made it public that it was seeking a 6-month delay from creditors on about $60 billion worth of debt – mostly held by Dubai World and its real estate division  – Nakheel Builders.

In the US, their hospitality investments include the Mandarin Oriental and W hotels in New York, and a $375 million investment in the Fontainebleau Miami. Their biggest investment in the US hospitality sector is with MGM Mirage, where they plowed in nearly $6 billion in 2007 for a 50% stake in the City Center project and a 9.5% stake in MGM Mirage. 

City Center, Las Vegas

The 67 acre, $8.6 billion project is too big to fail, with the fortunes of tens of thousands of people in Las Vegas riding on it, not to mention the future of MGM Mirage, Las Vegas tourism and the political future of Sen. Harry Reid (D-NV).

For the record, MGM Mirage has put out a statement asserting that Dubai World’s decision to delay debt repayment does not change anything, including the phased opening schedule and operations which begin on Tuesday. The last thing that City Center needs now is talk about uneasy lenders.

To make matters worse, Dubai World has already tried once before to back out of its funding committments for the project. Dubai World’s subsidiary Infinity World, which is the on-paper partner with MGM Mirage, filed a lawsuit earlier this year in March, asking to be freed of its obligations.

Their reason for backing out was an SEC filing made by MGM Mirage on March 17  which stated that they “cannot provide assurance” that City Center would generate sufficient cash flow from operations to meet future payment obligations and other liquidity needs. Dubai World wanted out because they apparently believed MGM and City Center was heading in a -quote “unsustainable direction”.

Or they already knew Dubai had a big debt crisis about to blow, and the City Center lawsuit was one way of starting disengagement. Either way, MGM Mirage was in a soup.

Sen. Reid's City Center ad

Sen. Harry Reid and investor Kirk Kerkorian (who has a 37% stake in MGM Mirage) stepped in, and made calls to the banks and lenders, cobbling together a $1.2 billion financing package, which helped stave off a crisis at that point in March.

Sen. Reid has been running a campaign commercial touting how he saved City Center from being shut down by the banks and saved 20,000 jobs.

But now, as Dubai’s debt crisis hits Las Vegas, and Kerkorian – one of Sen. Reid’s close friends, says that he might reduce his stake, MGM Mirage is officially on it’s own now, with a massive project being unveiled one week after it’s partner country goes broke.

City Center photo by snowpeak

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According to a new survey from AirPlus International, a global provider of corporate travel payment solutions, more than 60 percent of the travel management professionals it surveyed are not aware of the U.S. Travel Promotion Act. There’s no good news to follow that: 29 percent of those who have heard of it are unsure of the details, 53 percent were unsure how the money collected would be used and another 73 percent believe other countries will be glad to reciprocate on fees for U.S. travelers.

Ouch.

The breakdown

For the record, the TPA will create a non-profit corporation and a new Office of Travel Promotion within the Department of Commerce. The funding comes from charging $10 per visa waiver and the private sector will match the money dollar for dollar (20 percent cash, 80 percent goods and services).

“This Act will certainly have an impact on the travel industry overall, not just business travel … Clearly, the results indicate that there is not enough awareness of the Act,” says Richard Crum, AirPlus’ president.

But don’t mistake ignorance for rejection. Acceptance among those who do know the score is running high:

• “I think it’s very much what everyone envisioned,” Joe McInerney, president of the American Hotel & Lodging Association told his trade press. “It’s a no-brainer. It’s a win-win situation; doesn’t cost the government anything. It attracts more people and creates more jobs.”

Graph of responses

• Oxford Economics estimates anywhere from $1.8 billion to $4 billion of new revenue will be brought to the U.S. These estimates are based on the revenue that was generated in comparable campaigns in other countries. Studies in the U.S. show that previous one-off travel campaigns have pulled in $117 for every $1 invested.

Perhaps the folks answering AirPlus’ survey have tapped into Europe’s reaction to the looming law. According to VIPs in the European Union, “The key is these procedures are irksome, and making them more irksome is generally risky. Travelers don’t care if it’s $10 or $20, the whole business is just an additional procedure.”

The bill is now in the Senate for approval.

Photography: AirPlus Community

Hosting the Olympics isn’t exactly all that its made out to be, in terms of visitors and tourism. Turns out that Vancouver and Whistler are suffering from something known as the ‘Olympic Avoidance Effect.’

The Westin Resort & Spa in Whistler

Hotel occupancy rates have tanked in Whistler and Vancouver in advance of the games, with year on year rates down by as much as 9.5%. The Westin Resort & Spa in Whistler is struggling to overcome a measly 10% occupancy rate, as of last week.

The drop in visitors is mostly attributed to American travelers hesitant to cross the border for fear of getting caught up in the bedlam and construction of the preparations for the Vancouver 2010 Winter Olympics.

With a woeful occupancy rate months ahead of the games, and the virtual certainity of an even bigger drop after the games, the only way the hotels in Vancouver and Whistler could have made up for the loss would have been high prices and occupancy during the Olympics. The occupancy they have, the prices not so much.

VANOC – the Olympic organizing committee, has a pact in place with most hotels under which they have all agreed to limit rates for Olympic visitors. To make matters worse, some of the hotels in Vancouver, who didn’t sign on to the pact, have gone rogue and are now fleecing travelers for as much as possible.

One of these hotels is The Robsonstrasse in downtown Vancouver. This hotel, which usually calls itself a discount hotel, is charging as much as $1200 for a suite which normally goes for $280, according to an article in the Globe & Mail. Media reports about how hard it is to get hotel rooms and the steep prices mentioned ($450 to $700) have turned off non-Olympic visitors well in advance of the games.

To clarify – these rates are only for the duration of the games (Feb 12-28, 2010), and mostly because all the cheap rooms have already been booked for these dates. But the stories add to the perception of chaos and price gouging, which non-Olympic travelers don’t want to get mixed up in.

End game – Other the high occupancy for the duration, the Olympic Games have created more problems than revenue for area hotels.

Westin Photo courtesy Starwood Hotels & Resorts

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