Travel Industry

I spend a lot of time in social media land, and the “hot” discussion last week among consumers last week hinged on who trusted the H1N1 flu shot, and how to avoid getting sick if you skip it. Many folks were suggesting canceling vacations, siting cruise ships in particular as inescapable traps of swine flu germs. 

That fear is the last thing the travel industry — and cruise ships in particular — need right now. 

Sure, the cruise lines have pushed the antibacterial wipes at every opportunity, parking sanitizer stations at the entrance to the buffet line and requiring folks to use it before eating. They have crew members outside the ship to spray down passengers’ hands before allowing them to reboard, and play videos on the ship’s channel explaining how to use a Kleenex and wash your hands properly. They screen passengers at embarkation for signs of illness and request medical exams if anyone appears to be under the weather.

Thermal imaging is red hot

But now MSC Cruises has taken flu safety yet another step by installing sophisticated thermal imaging cameras on every ship to monitor passengers as they embark. One of the principal indicators of influenza is body temperature, so these cameras produce infrared images or heat pictures of a person’s body and detects within seconds whether a body temperature exceeds a certain threshold temperature. Apparently, the secret lies in the eyes — the temperature around the tear ducts is consistent unless you’re fighting the flu

MSC Cruises calls the infrared camera a “very effective yet non-intrusive tool for detecting people infected with a viral disease even at a very early stage.”

It’s a measurement the US Center for Disease Control and the World Health Organization have used for years. Airports in China have used them since the SARS break-out in 2003.

The travel press is off and running with this news release, travelers began sending out Twitter messages, and even USA Today spread the news, which tells me the camera is doing its job. I personally think its effectiveness with that sliver of the population that lives in paranoia is nil. For instance, didn’t the infected person you caught in the lobby just expose the folks standing in line to also board the ship? They may not come down with the illness for days, if at all, but continue to spread the love long before their tear ducts rat them out.

But for the general population, news that the travel industry is actively working toward mitigating the situation is good enough to keep business flowing. The infrared camera may do for vacations today what the digital SLRs did at the turn of the millennium.

Photography: jurvetson

The NBTA, US  Travel Assoc.  and others are pushing the value and advantages of face-to-face meetings, and starting to pushback against teleconferencing.

Cisco Telepresence

On Sept 15, 2009, the USTA is going to announce the results of an Oxford Economics study which highlights the return on investment of all kinds of business travel. The study is funded by the Destination & Travel Foundation.

Also, during the recently concluded National Business Travel Association (NBTA) International Convention in San Diego (Aug 23-26), British Airways launched the second Phase of  its “Face-to-Face” Campaign.

As part of this campaign, BA and its partners – Regus Office Services, Courtyard by Marriott, Canon USA, Inc., and British Airways World Cargo – will award 100 small-to-medium size U.S. businesses free travel to anywhere in the world where British Airways flies plus valuable products and services to help support their businesses and maximize their travel experiences. More details here – www.ba.com/facetoface.

To help reinforce the idea that in-person meetings do really drive business, British Airways also commissioned a survey of Harvard Business Review readers. Results from the survey show that 95% believe that face-to-face meetings are key to success in building long-term relationships, and 89% agree face-to-face meetings are essential for “sealing the deal.”

At the same NBTA conference, President Bill Clinton, in his keynote address on Aug 26, stressed on the importance of in-person meetings. He said that although he used all the latest communications technology to confer with others, he never thought it didn’t matter if he or his representatives went places in-person.

But just a few months back in June, everyone was going ga-ga over the new telepresence systems being installed in 25 hotels by Marriott and in 10 hotels by Starwood. The novelty apparently has worn off, and more importantly – the shocking cutbacks in business travel budgets due to successful acceptance of the teleconferencing culture is sending shivers down the spines of travel service providers.

Those selling teleconferencing technology are demonstrating vividly how succesful it is. Cisco Systems Inc. – which has over 300 Corporate clients including Starwood Hotels & Resorts Worldwide for its Telepresence system – has slashed it’s annual travel budget from $750m to $240m.

 Hewlett-Packard Co – which hogs a big market share with Halo, with clients including AMD, Nokia and Marriott International - has reduced it’s own travel budget for 2007-08 by 30%, and expects to cutback even more in 2009 – mostly due to expanded use of video conferencing.

The recession forced businesses to cut back on travel and experiment with video conferencing. And the worst part is that once a company has instilled a virtual conference culture, it never will go back to spending as much as before on business travel. 

Face-to-face meetings may be essential as deal closers, but the wave of the future is teleconferencing. GM and Chrysler ended up in a ditch because they refused to acknowledge the green wave. If the travel industry refuses to do the same with  teleconferencing, then there’s going to be a day of reckoning soon.

Numbers show travel growing again

For some time now, we have all been awaiting stop signs for a travel industry in freefall.

Based on recent analysis we have seen from Piper Jaffray and Citibank, it can now be said that perhaps travel – and more specifically, leisure travel – may be bottoming out.

After the global economic meltdown, Silicon Valley investors had a tongue-in-cheek saying that “flat is the new up.” By that definition, and taking into consideration the trends and data discussed below, the good news is that U.S. Travel is growing again!

Yes, this is a bullish view on our sector, but even if it’s premature, who couldn’t use good news?

US Hotel Industry RevPAR

Source: Smith Travel Research

2009 is trending to be the worst year for travel since 2002, but there might be good news amidst the carnage.

The U.S. hotel industry’s occupancy and average daily rate (ADR) – and therefore revenue per available room (RevPAR) appears to have stabilized during the course of the summer, albeit at low levels.

US Hotel Industry - Key Operating Statistics

More evidence comes in the form of the steady weekend rates for leisure travel, which also points towards the existence of a stable revPAR.

US Hotel Industry - Weekend Operating Metrics

Across the Atlantic, the recovery is even more impressive, with European revPar showing signs of bouncing back already.

EU Hotel Industry - Operating Metrics

The situation with online travel remains fluid. According to Citibank and comScore data, online travel spending dropped 9% Y/Y in July, representing a deterioration compared to the 7% Y/Y decline seen in June.

This July decline can be attributed to a 15% Y/Y decline in hotel reservations, which represents 24% of the total online travel spend. Also contributing to the drop was a 16% Y/Y decline in Travel Packages (6% of spend).

The 16% drop in travel packages was partially offset by a 4% Y/Y bump in car rental spending (11% of spend). And the online spend on Air Travel declined only 8% Y/Y in July, a slight improvement compared to the 10% Y/Y decline reported in June by comScore.

These are notable changes for the month in individual categories within online travel, but we recommend a focus on the direction of aggregate spend.

From here on, the year-on-year comparisons for 2009 are going to look increasingly better every month, in part due to the weak performance in the last quarter of 2008, and in part because travel is finally on its way up.

Photo by rednuht

The Chelsea Hotel

Welcome to the new era of “we’re so desperate for money, let’s see if this works” from cities and states.

New York City, whose mayor just last summer said it wasn’t smart to raise taxes on tourists and kill the goose that lays the golden egg, just passed a new tax on travel agency service fees for hotel sales for hotels in the Big Apple.

Yep, starting September 1, the difference between amounts received for booking a hotel room and amounts paid to the hotel operator for the room are taxable, according to Travel Trade reports, which means “any service and/or booking fees that are a condition of occupancy.” Apparently, commissions are exempt (today) and no one knows how this applies to packages.

On the other hand, this tax applies to every channel and across the globe, so if you’re an online booking engine in Switzerland, you pay NYC by remitting the amount owed 20 days from the last day of February, May, August and November. Great. Still more deadlines to keep straight. Oh, and make sure you fill out the travel seller application form in the next two weeks as well.

The American Society of Travel Agents has spoken up against this idea, with the senior vice president for legal and industry affairs pointing out that this is double taxation, as the travel agents will also get hit for income taxes on this same amount. Such laws, he said, have been written by ”people who don’t know about the industry who just want more money.”

Well, their grasping while hotels are gasping could be city officials’ downfall. The procedure to file and track these pennies, nickels and dimes is so unwieldy, in the real world, the tax is an incentive to walk away from selling NYC hotel rooms. And since the tax encompasses the big boys like Expedia, Hotwire, Priceline, Travelocity and Orbitz (to name a few), that adds up to substantial cash flow coming into New York’s coffers.

The tax also sets up an adversarial relationship that travel agencies feel compelled to win, lest every city jump on the bandwagon and small businesses spend their days tracking who has their hand outstretched instead of actually selling travel products to consumers. My prediction: Look for a huge drop in room occupancy in NYC for the fourth quarter.

Photography credit: Jim Linwood

New York’s Standard Hotel is desperately backtracking now after shocked tourists and pedestrians at the High Line Park got an eyeful of naked couples having sex and porn film shoots through the Standard’s transparent floor-to-celing windows.

The Standard Hotel, New York

When Andre Balazs’ Standard Hotel opened in New York’s High Line Park, it was raved over by the media as the High Line’s crown jewel – an architectural and cultural hot-spot for both New Yorkers and tourists.

Turns out the hotel went a bit too far on the cultural front, and not only overlooked excesses of a sexual nature, but actively encouraged it through advertisements and social media postings.

It’s no big secret that trendy hotels in the Meatpacking District like the Gansevoort and the Standard actively compete for the chance to host risque fashion ad shoots in their rooms.

When the hotel was partly open and construction work was still on-going, the Standard put up an ad featuring a woman wearing nothing but a tool belt. 

Ad for Standard Hotel NY

The ad, as you can see on the right here, said ’We’ll put up with your banging if you’ll put up with ours.’ 

And in a facebook posting, the hotel asked guests to “share your intimate, and explicit photos with us - those floor to ceiling windows aren’t just for the views.”

The hotel now says it will remind guests of the transparent windows. Hopefully not with the same intent as before.

And what’s even more appalling is that this whole ’peep show on clear windows’ scandal is likely a big PR campaign designed by the Standard’s management to hog coverage.

NY Post reporters talked to one of the hotel’s bellhops who claimed that “After the hotel opened late last year, naked and semidressed staff members were encouraged to pose in front of the windows. The point, he said, was to create a buzz with the unexpected peep show.”

They’ve succeeded well beyond their wildest imagination. But it could still prove to be too hot to handle if the coverage gets even worse and the City is forced to do something.

Photo by laurenatclemson

You can tell things are dire in Las Vegas when the Las Vegas Convention and Visitors Authority starts using individual events and properties to help push Vegas as a destination, instead of the other way around.

Las Vegas

The recession has hit Sin City so bad that the LVCVA is starting to feel that Las Vegas, as a brand, is losing it’s ‘Fabulous’ sizzle, and is no longer capable of being used to lure visitors in promotional campaigns.

Instead, Vegas travel companies are being asked to focus on big-ticket events like the April Paul McCartney concert which headlined the relaunch of the new Joint - the Hard Rock Hotel’s expanded concert venue, in order to create buzz for Vegas as a destination.

Rossi Ralenkotter, CEO of the LVCVA, tells Travel Weekly that the malaise is especially bad in the business travel sector, with the meetings and conventions business nearly wiped out. In Q4 2008 and Q1 2009, Vegas has had to contend with a total of 402 cancellations worth $166m. 

Vegasmeansbusiness.com

Las Vegas has been forced to defend business travel and play down the fun aspects due to the combined impact of the AIG Effect and their phariah  status resulting from President Obama’s statement admonishing executives of bailed out banks for going to Las Vegas.

A short while back, they even set up a website – www.vegasmeansbusiness.com, and ran a huge ad campaign to drive home the message that Vegas is very serious about being a first-class business travel destination.

This has left the city’s tourism marketeers pulling and pushing in opposite directions, with the result that Vegas no longer offers the clear ‘What happens in Vegas stays in Vegas’ message it once owned.

So they’ve apparently come up with a middle way – put Vegas on the backburner to help the meetings and convention sector, and push individual events to attract the liesure crowd.

Photo by Rojer.

Greenhouse emissions draw controversy

The cap-and-trade legislation currently making its way through Congress wouldn’t improve the environment from the airlines’ standpoint, according to Delta Air Lines vice president of global sales, Steve Sear. 

In fact, the well-meaning efforts would set back this industry’s progress to date, he argues:

Between 1978 and 2007, airlines have calculated a 110-percent in fuel efficiency, which mean they produce only 2 percent of total worldwide man-made carbon emissions. Delta alone has “decreased our carbon emissions and fuel burn by more than 30 percent since 2000 through fleet renewal, more efficient operating and maintenance procedures, upgraded facilities, replacement of older ground equipment, reduced water usage and expanded recycling efforts.

“And we’re already hard at work to meet the industrywide goal set by the Air Transport Association to be 30 percent more fuel-efficient by 2025. That ambitious target can be met, in part, by the realization of the much-needed Next Generation air traffic modernization, which would result in a 12 percent to 15 percent improvement in aircraft fuel efficiency for the entire U.S. aviation industry. More progress will come from investments in new engines, airframes, avionics and alternative fuels, while increasing regulation of oil speculators,” Sear insists. 

Then along comes the House’s cap-and-trade idea (officially named the American Clean Energy and Security Act, like anyone is going to remember that snazzy title), which Delta’s guy says would limit overall carbon emissions and require fuel and energy companies to buy and sell the right to pollute. It sounds expensive, and these already financially stressed airlines would have to pass the costs on to travelers. 

Anyone who works in tourism today knows that’s not a money-making idea.

And if Delta isn’t making money, it can’t afford to pay for technology that reduces those greenhouse gases the Congress is up in arms about. Plus, there’s always that lost jobs thing that goes hand-in-hand with businesses not making money.

Environmentalists v. Travel Industry

So far, I’m understanding Sear’s position. I’m not the American Clean Energy and Security Act’s biggest fan to start with, either as a citizen or a small-business owner. But I have to part company with his solution, which is “We urge anyone who has a stake in aviation, transportation or travel to contact his or her senators and ask them to vote no on a climate change bill unless it is modified to exempt U.S. aviation fuels from the cap-and-trade scheme in favor of a more effective plan that allows aviation’s contributions to be governed by the International Civil Aviation Organization.”

In other words, go ahead and pass it but leave us out of it. Hmmph. If it’s not a sound business idea for airlines, what would make it a sound business idea for any other industry? Why would vacationers want to buy an airline ticket to a destination if they can’t afford the cost of energy at the hotel after they arrive? Delta is essentially asking us to help them off the hook even though it would leave the rest of the travel industry holding the bag. Talk about self-serving.

Protest if you dislike a bill, and certainly pass out those numbers to prove your case. But to stop at merely asking for exemption as opposed to killing the bill is a slap in the face of everyone you expect to assist with your fight.

Photography: Chas Redmond, Didby Graham

Arthur Frommer – founder of Frommer’s Travel Guides, has declared that he will boycott travel to Arizona because he’s worried about his personal safety.

Arthur Frommer

The whole kerfuffle started after Frommer saw reports about how armed people (ordinary citizens) - carrying assault rifles and pistols, were gathered outside a hall in Phoenix where President Obama was gving a speech.

In a blog post on Frommers.com, Arthur Frommer says that “I will not personally travel in a state where civilians carry loaded weapons onto the sidewalks and as a means of political protest. I not only believe such practices are a threat to the future of our democracy, but I am firmly convinced that they would also endanger my own personal safety there. And therefore I will cancel any plans to vacation or otherwise visit in Arizona until I learn more.”

But it could get considerably worse for Arizona’s tourism industry, because Frommer ends his post by asking “should we all organize a travel boycott of Arizona until this tolerance of armed intimidation is ended, probably by an act of the Arizona legislature?”

Arizona’s tourism officials must be quaking in their boots at the thought of being stuck between Arthur Frommer and the NRA. AZCentral reports that Phoenix Mayor Phil Gordon and Steve Moore, head of the Greater Phoenix Convention and Visitors Bureau, have already spoken with Frommer and invited him to visit Phoenix to prove that Phoenix is one of the safest cities in America.

This isn’t over yet, though. If it hits the national dailies, Arizona is going to need to do some major damage control.

Now Richard Branson is on the other side of the keyboard.

Many people recall the pointedly funny letter from a Virgin Atlantic traveler who didn’t like his dinner. Sir Richard offered the guy a job.

Sir Richard Branson

Today, the founder of all that is Virgin has taken to using that same tactic himself, penning a letter to President Obama asking the leader to jump into the American Airlines/British Airways anti-trust immunity request. It’s just another step in the “No Way BA-AA” campaign the man has started at his website.

“”Never before has the US government approved an anti-trust immunity application where barriers to entry are so significant that any new meaningful competitive entry is virtually impossible,” he wrote, the Telegraph over in the UK is reporting. “If their proposals were to be approved, AA-BA would have a monopoly, or near monopoly, on some of the busiest and most profitable routes from the US to Europe. AA-BA are seeking ATI authority to jointly set prices and co-ordinate capacity and schedules because it will enable them to squeeze existing US-Heathrow competitors off key routes. If AA-BA win, it will be an unprecedented loss for consumers.”

OK, it’s not near as funny as Oliver Beale’s way with words, unless you stop to realize that what he’s really saying is “Hey, Virgin needs to make sure it gets its share of the pie, too.” On the other hand, as Branson also pointed out in an op-ed this month, “It is because of fierce competition across the Atlantic that fares are at their lowest for 25 years. Indeed, the main reason that return tickets to New York have recently been as low as £250 is because several carriers are fighting to attract customers. We are in danger of destroying that now.”

The Brits’ opinion lean toward calling Branson’s game. Plenty of readers label the colorful entrepreneur as self-serving and duplicitous on this one, pointing out that his own airline code shares with Continental, which is precisely what American and British Airways are asking to do.

The reaction is very quiet on the U.S. side of the pond. Other than a few flyers saying, “Gee, I hope prices don’t go up,” the room is silent.

Perhaps we’re just expecting President Obama to now offer the billionaire a job.

Photography: tobybarnes

Delegations from 24 states (and counting) are all set to invade Washington DC for the U.S. Travel Association’s 4th Annual Travel Leadership Summit (Sept 16-17, 2009), to be held at the Hyatt Regency Washington on Capitol Hill.

Hyatt Regency Washington on Capitol Hill

The USTA is making the argument that there’s more reason than ever to attend the leadership summit this year, because the travel business is in a crisis and the industry has lost billions of dollars in cancellations.

The USTA has already spent $288,000 on lobbying Congress and other federal agencies in the second quarter (April-June) alone, but apparently that’s not been sufficient – as yet - to get federal assistance for the travel industry.

A show of strength and unity by the travel industry in Washington DC at this crucial juncture would be a big help in securing final passage of the Travel Promotion Act (TPA – S. 1023/H.R. 2935). The bill is expected to be taken up by the Senate on Sept 8 (background).

The Leadership Summit kicks off with an orientation for first-time delegates at 5 p.m. on Sept. 16. That same evening, State and regional delegations will be hosting receptions with their Congressional delegations to emphasize the economic and overall impact of travel and tourism in their locality and nationwide.

The formal program on Sept. 17 includes legislative briefings, tips on conducting successful Hill meetings and a chance to hear some of Washington DC’s top political minds. Among the speakers is NBC White House correspondent Chuck Todd, who will discuss the new Administration and Congress and his views as one of Washington’s leading observers on Sept. 17.

Here’s the schedule, hotel info and online registration links.

Photo courtesy Hyatt Hotels. Corp.