Travel Industry

Avis now tries harder to get a commitment

Rental car company Avis Budget Group has found a way to make money off deadbeats in North America, South America, Australia and New Zealand.

By December 15, 2009, it should be all systems go to begin charging a fee when customers reserve a vehicle but fail to show up for the car keys. The concept is similar to hotels assessing one night’s room rate to the credit card on record should the guest not appear — but it’s a first for the car rental niche. “It’s a long overdue change,” officials are saying.

Currently, the company is working to make sure its GDS partners are equipped to take credit cards in advance for that purpose. Amadeus, Sabre and Travelport spokespersons are saying they’ll have their end ready by the December deadline.

So far, the travel industry hasn’t raised an eyebrow, even though booking a rental car the traveler has no intention of claiming as part of a package to bring other element prices down is a fairly common strategy among agents and DIY online consumers. Perhaps that’s because Abrams Consulting Group is saying no-show rates for rental cars have reached 30 percent. “You’re planning your fleet around peak periods,” says Neil Abrams. “You run the risk of not renting all the cars you should have or you overbook and leave customers stranded at a cost to the company. It’s a tactical issue,” he told The Beat business newsletter.

Budget says no more to no shows

Add that to the fact Avis Budget Group saw a 14 percent decrease in third quarter revenue in 2009 compared to the same period a year ago. On the other hand, it’s third quarter EBITDA (that’s a faster way to say earnings before interest, taxes, depreciation and amortization) increased 17 percent. “We remained intensely focused on controlling expenses  throughout our operations and have increased our forecast of realized cost savings for 2009 to $350-400 million,” says Ronald L. Nelson, Avis Budget Group Chairman and CEO.

The real test, however, is how well travelers accept the new rules. The risk, of course, is that other rental car companies will fail to follow and customers will give those competitors their business instead, as they like the idea of a no-commitment reservation should they find a lower price elsewhere at the last second. (Enterprise Rent-A-Car  has already said this isn’t part of its business model going forward; Hertz and Dollar Thrifty haven’t committed.) Still, the rules are as friendly as possible under the circumstances: Renters can cancel the reservation up to 24 hours in advance without paying a penny. If a delayed flight is behind the failure to appear, the customer is good as long as he or she gave Avis Budget Group their flight number in advance.

Heck, according to early communications with the GDS firms, Avis and Budget may even choose not to slap a no-show fee at every location.

No word yet on whether the no-show fee will be a flat rate or the average daily rate including applicable taxes and surcharges.

Photography: Avis Budget Group

Elliott Ng will represent UpTake during the PhocusWright 2009 Conference, Blogger Summit Town Hall on Wednesday, November 18th at 9:00 a.m. Ten topics were suggested by the panelists for discussion during a planning meeting a few weeks ago. We decided to collect the best posts and  examples about each subject and showcase them. We hope this series lends itself to more insightful discussion during the Town Hall presentation.–Patricia Jenkins, Editor

It’s hard to overstate the importance of being able to game the media and keep your company in the news. But at the end of the day, this is a losing proposition - there’s a limit to the number of press releases, interviews and travel columns you can  squeeze out of the media before they get tired of your PR pitches.

To get past the traditional media barriers, some travel companies are straddling the divide between making the news and breaking it – by becoming a part of the media. The travel companies listed below are the ones who are stealing the media’s mojo and beating them at their own game.

Cheapflights

CheapFlights (www.cheapflights.com/) – CheapFlights has a news section where you’ll find plenty of breaking news. It’s not just about air travel - they write about all things travel – hotels, vacations, legislation, destinations, etc. Even more important – the news really is breaking news, and they consistently publish it before everyone starts weighing in.

Bing

Bing (www.bing.com/) – Microsoft’s Bing Travel hosts a community travel blog with some big-name contributors, including Pauline Frommer, Peter Greenberg, Joel Grus and Rick Steves.

  Entries from this blog are getting a lot of exposure in discussions of hot topics in the news, and it’s quite safe to say that this is one of the things that Bing is doing right. 

Uptake

UpTake (www.uptake.com/) – The sum of it is that the traditional media approach was found lacking, so UpTake took a large part of its PR budget, and launched a blog network with 7 blogs and 50 bloggers, as part of a plan to inflict lethal generosity on the travel industry.

UpTake co-founder Elliott Ng explains it in this Businessweek piece – “Now we’re breaking industry stories… covering other companies’ launches… getting invited to cover conferences as bloggers. We’ve built real relationships with people in the media rather than just pitching stories.”

CarRentals, UK

CarRentals, UK (www.carrentals.co.uk/) – Has a news section, entries from which have started turning up in breaking news alerts of late. The news section features stories from a wide range of subjects, most of which have something to do with either travel or the UK or both.

Rogersmith

Roger Smith Hotel (rogersmith.com/) – Take a look at Roger Smith Life and Roger Smith News and you’ll find that everything – the news, the art and all the people – leads you right back to the hotel in New York. And the connections are a lot deeper than just plain talk.

Earlier this year, they ran an ‘experiment’ where a couple from the UK was put up in a storefront recreation of one of the hotel’s suites. Basically, the couple was living in a see-through glass room on the street in New York City, and it was an art experiment by Roger Smith Life covered by Roger Smith News which brought in huge publicity for the Roger Smith hotel. 

Hilton

Hilton (www1.hilton.com/) - Hilton’s Homewood Suites recently launched a family travel blog and community site named SuiteTrip.com. In their own words, “SuiteTrip.com is your go-to guide for everything family travel-inspired.” 

Another Hilton outreach is into Travelskoot’s Videos (www.travelskoot.com/hilton) - Hilton provides destination videos featuring concierges working at Hilton hotels in these destinations.

Starwood

Starwood (www.starwoodhotels.com/) - Starwood runs a blog for its SPG members, called The Lobby, which is more of a traditional travel blog talking about destinations and attractions from all over the world, rather than just a Starwood blog talking about Starwood hotels and resorts.

Richard Fain, chairman and CEO, Royal Caribbean Cruises Ltd. officially takes ownership of Oasis of the Seas .

The hype has been enormous — seminars touting the retractable roofs, interior balconies, ziplining, aqua theater, an elevator bar and a promenade that features real grass the employees have to mow. Heck, they’ve even signed Rihanna to provide entertainment in December. But despite the webinars, CLIA classes, brochures and emails telling the travel industry between the lines that Royal Caribbean’s Oasis of the Seas will invigorate profits, it’s now looking like … well, hype.

Even the world’s largest ship can’t overcome the plummet in discretionary income to persuade folks to book sooner than a few weeks out in this fourth quarter. Travel agents are telling Cruise Week that at the end of October, there’s still plenty of vacancy on Oasis for Christmas and New Years sailings, even though the $1.5 billion vessel is the most talked about new cruise ship to come along in years, the publication points out. This includes everything from the inside Category Q spaces to balcony categories, although the suites at the top of the pricing chain are sold out.

It’s the same story for the first quarter of 2010, too: suites sell, while agents paddle to get vacationers to commit to the rest of the ship. That 40 percent additional space to entertain as many as 6,360 passengers per sailing may turn into 40 percent more booking headaches as the recession continues.

And since Oasis also carries another accolade — world’s most expensive cruise ship — slow bookings can’t be too welcome within the accounting department at Royal Caribbean, particularly with sister ship Allure of the Seas hot on its heels in the shipyards.  Oasis is scheduled from December 2009 to April 2010 to offer 7-night trips from Ft. Lauderdale to St. Thomas, St. Maarten and the Bahamas. Beginning in May, the itinerary changes to Haiti, Jamaica and Mexico out of Port Everglades, one of the few large enough at the moment to allow Oasis to dock.

“It’s in the DNA of our company, about every 10 years, to take more or less a fresh sheet of paper and create the greatest cruise ship in the world,” CEO Adam Goldstein has said. He’d better hope he also reinvents American travel habits in the next 12 days as well.

Photography: Royal Caribbean Cruises Ltd.

The Institution of Civil Engineers (ICE) has put out a report called Aviation 2040, which postulates four scenarios showing how UK air transport and airport infrastructure could look in 2040. Needless to say, the scenarios paint a bleak picture.

Aviation 2040

Society has become acutely aware of the effects of advancing climate change and air travel has suffered as a result. Those who need to travel by air do so discreetly for fear of vilification. Environmental lobbyists and civil society groups denounce air travel despite technology gains. Video-conferencing has drastically reduced business and personal travel. Oil prices reach a historical post-Peak high… many regional airports close and international airports are nationalised.

They even helpfully provided a timeline:-

2013 – The World reaches official Peak Oil
2016 – “Stay British” media campaign to promote domestic tourism
2018 – Boeing launches aircraft with radically reduced carbon emissions
2019 – UK government introduces personal carbon accounting
2023 – BAA sets up rail franchise
2025 – British Airways re-nationalized
2026 – Boeing and Airbus merge
2028 – Pope uses Easter address to tell the faithful to stop flying
2037 – Boris Island damaged in North Sea surge
2039 – Heathrow, Birmingham, Manchester and Glasgow only international airports in operation within the UK

Peak Oil in 2013 - a bit hasty, perhaps? And why drag the Pope into a discussion about the airline industry? Even more sacriligious – a merger of Boeing and Airbus?

Marcus Morrell, of ARUP Foresight Innovation and Incubation – which participated in the development of the report along with ICE, made it clear that that these were not predictions. He said that instead they “represent a range of possible outcomes that may play out over the coming decades. Although fictitious, they are drawn from the expert opinions of key industry stakeholders…”

You can download the full report here – www.ice.org.uk/aviation2040

The Travel Promotion Act (S. 1023 & H.R. 2935), having been passed by both the US Senate and the House, is on the verge of being enacted into law, awaiting the formalities of one more vote and the President’s signature. So now would be a good time to look into the nuts and bolts of how it is going to work.

US Capitol

Most of you already know what it is going to do – “establish a non-profit corporation to communicate United States entry policies and otherwise promote leisure, business, and scholarly travel to the United States.”  The corporation’s activities will be funded by a matching program featuring up to $100 million in private sector contributions.

Makes you wonder whether the travel industry – which is just getting up off the mat after having taken a thrashing from the recession, is capable and motivated enough to raise $100 million.

The second question arises from the language in the bill which says that the private sector cannot contribute more than 80% of it’s share of the matching funds in the form of goods and services.

This means that for every $1 raised in cash, the travel industry needs to contribute upto $4 in kind – this could be in the form of free travel services offered to the executives and officials of the Travel Promotion Corporation, and free promotion/advertising for the corporation and its website, among other things.   

The success of the enterprise now depends on how well the corporation’s officials carry out their duties. If they raise, say, only $20 million from the private sector, then they’ll get another $20m from the matching fund, the total comes to $40m – which would be a damp squid, to say the least, considering the hype and the amount of money the corporation will be spending on itself.

The contributions are voluntary, to start with. But if it doesn’t work, the corporation has the power - after a referendum – to “impose an annual assessment on members of the US travel and tourism industry represented on the Board in proportion to their share of the aggregate international travel and tourism revenue of the industry.”

And this is where it gets really interesting. While members explicitly represented on the board include hotels, restaurants, travel distribution, passenger rail , the shocker is that the airline industry – even though it is represented on the board, has been specifically granted an exemption from an assessment. 

U.S. Travel Assoc. Senior VP Geoff Freeman told Travel Weekly that the airlines lobbied Congress separately without consultation with U.S. Travel and got themselves exempted form having to pay anything into the Travel Promotion Fund.

It should be no surprise, therefore, if the airlines also refuse to volunteer to pay cash or make contributions in kind.

Car rentals and tour companies are not specifically mentioned in the bill, so they could, in theory – opt out of having to pay their share. To make things worse, it is the Corporation which gets to decide who owes how much of the share. This is all a recipe for tearing the travel industry apart – if it comes to a situation where members are forced to pay.

Bottomline is that the travel industry needs to pony up the dough and make it easy for the Travel Corporation to fund its activities. If that doesn’t happen, there’s a whole can of worms down the road which will make things really difficult for any future efforts to promote the US as a tourist destination.

Photo by cliff1066

Related posts:-
Travel Promotion Act Clears U.S. Senate

The Association of Corporate Travel Executives (ACTE) recently surveyed the travel managers of 109 international companies, and the results of this survey indicate that the business travel plans of a majority of these companies have not been impacted by the H1N1 flu (swine flu) virus.

Swine flu

In the survey, 91% of those surveyed said that H1N1 is not stopping them from scheduling meetings and conferences. And and even more impressive 96% said that their business travelers were not asking to postpone or cancel scheduled trips during the flu season.

The study was released by ACTE at a conference in Prague. The change in attitude towards swine flu by business travelers is remarkable, given that back in May 2009, a similar ACTE survey had found that 37% of companies worldwide were either canceling meetings or restricting travelers from attending them.

While the new data from the latest ACTE survey suggests that business travel is now immune to the swine flu, don’t shake on it yet. ACTE Executive Director Susan Gurley said that a random polling of ACTE members has revealed it would be easier to drop the traditional handshake, for the duration of the health crisis — should one develop — as opposed to sneezing or coughing into a sleeve.

But travel as a whole hasn’t yet reached a point where swine flu isn’t a factor.  The October 2009 travelhorizons survey – a joint effort by Ypartnership and the U.S. Travel Association, suggests that major outbreaks could have a big impact on a destination’s leisure travel. 

One third of the respondents planning to travel in the next 6 months said they would most likely change travel plans if their destination reported an outbreak of swine flu in the interim. Of those who said they would alter travel plans, 45% said they would postpone the trip and 31% said they would cancel it altogether.

To top it off, President Obama last week declared the H1N1 swine flu a national emergency, which – while considered a prudent safety measure, nevertheless has had the effect of focusing national and international attention on the fact that 46 out of 50 states now have widespread cases of the swine flu virus.

More details about the ACTE surveys related to swine flu can be found on their website – www.acte.org/

And here’s a few tips from the U.S. Travel Assoc. you might want to go through, if you’re a travel company or organization dealing with issues related to H1N1.

Photo by The Artifex

A seemingly harmless franchise fight between the owners of the Quality Inn Vancouver Hotel and Quality Inn (the brand) has spiralled out of control into a giant consumer mess for travelers who booked rooms for the Vancouver 2010 Olympics and got left high and dry.

Vancouver 2010 Olympics

On October 16, the 100 room airport hotel – formerly known as the Blue Boy Motor Hotel – lost the right to be a part of the Quality Inn brand. 

Consumers who made reservations at the hotel months ago through Choice Hotels International – the parent company which owns the Quality Inn brand – were informed that their reservations were no longer valid.

A consumer who booked a room for $79 now faces the prospect of booking similar rooms at shockingly high prices. The hotel owner is offering to rebook the same room for $500. Choice is offering to rebook at one of its other Vancouver hotels for $395 a night.

In short, anyone who booked a room at the hotel through Choice now has to fork over an additional $300 over, if they want a room for the Olympics.

A Choice Hotels spokesman told the Vancouver Sun that “Choice Hotels cannot force a hotel that no longer holds a franchise to honour the room rates guaranteed by its booking agents.”

That may be true, but the question now is, can these consumers force Choice to honor the room rates? There’s already talk of a class-action lawsuit. And it doesn’t make Vancouver look so good either. If this escalates into a full-fledged media uproar, then Choice will have to give in quickly to contain the damage.

Photo by Andy Miah

On Oct 21, 2009, the Clean Cruise Ship Act of 2009 (S. 1820) – which would ban the release of raw, untreated sewage in U.S. waters, including the Great Lakes – was introduced in the US Senate by Senator Dick Durbin (D-IL). Nearly identical legislation was introduced in the House by Representative Sam Farr (D-CA).

Cruise Ship

Currently, cruise ships are allowed to discharge waste three nautical miles from shore. The Clean Cruise Ship Act would establish a no-dumping zone in waters within 12 nautical miles of U.S. shores and strengthen standards for treatment of waste outside of this zone.  The bill would also establish an onboard monitoring program to ensure that ships comply with the law.

Three good reasons for the cruise industry to wake up and smell the waste -

A) Sen. Durbin is the Assistant Senate Majority Leader – effectively the no. 2 in the Senate, and he represents Illinois and has excellent relations with President Obama.

B) Rep. Sam Farr is co-chair of the Congressional Travel and Tourism Caucus – which basically means the guy who’s supposed to be protecting your interests is pulling the rug out from under you.

C) The issue is too big to be left alone - the U.S. is close to hitting ten million annual cruise passengers. The average cruise ship produces over 1.2 million gallons of wastewater every week, and there are more than 230 cruise ships operating around the world, generating millions of gallons of wastewater daily.

A single ship can produce over 200,000 gallons of human sewage; one million gallons of graywater from kitchens, laundry and showers; more than 10,000 gallons of sewage sludge; more than 130 gallons of hazardous waste and over 25,000 gallons of oily bilge water that collects in ship bottoms.

Sen. Durbin had put up the same bill in 2008, but the Senate apparently had better things to do at that time. While introducing the bill, he explained why he feels strongly about this - ” Under the current system, these ships can directly dump their waste into our oceans and the Great Lakes with minimal oversight.  Vacation cruises can be a wonderful way to see the world, but we cannot afford to leave the destruction of the oceans in the wake of these ships.”

Sen. Durbin’s legislation is supported by environmental groups including Friends of the Earth; Earthjustice; Oceana; Surfrider; Campaign to Safeguard America’s Waters; and Northwest Environmental Advocates.

Neesha Kulkarni, Legislative Associate at Friends of the Earth, added that “Advanced technology is available to treat this waste, but the cruise industry has failed to install this equipment on a majority of its ships.”

And Rep. Farr chimed in with his own recriminations – “Big cruise ships make for big pollution; it’s an unavoidable truth. Unfortunately, responsible disposal of that waste hasn’t always been a given. The cruise ship industry is way overdue to take responsibility for its actions.”

The US House has also approved legislation requiring cruise lines to improve their passenger safety record, with new and stringent requirements related to crime prevention and reporting. This bill (HR 3619) is also now heading for the Senate for approval.

In short, it’s time for the cruise industry to clean up it’s act, or Congress is quite willing – and likely, to do it for them.

Photo by ccgd

The National Business Travel Association (NBTA) has issued the 2010 U.S. Business Travel Buyers’ Cost Forecast report to its members. The report says businesses are expected to travel a lot more, with air travel and car rental costs expected to remain nearly flat and hotel rates expected to decline by upto 8%.

NBTA 2010 Business Travel Buyers' Cost Forecast

A whopping 69% of travel managers responding to the NBTA survey said that they expect business travel volume to grow in 2010. 56% said their projected travel spending has increased for 2010, while 31% said it remains flat.

On an equally optimistic note, the number of travel managers expecting spending cuts in 2010 has gone down:- Meetings (-27%); non-essential travel and conference (-20%); and event attendance (-15%).

NBTA President and CEO Craig Banikowski warned however that “The uptick in business travel in 2010 will take place within the framework of a new corporate culture in terms of travel. In the ‘new normal,’ we see stronger travel mandates, greater use of pre-trip approval and audits, tighter restrictions on premium class travel, more focus on travel ROI, and enterprise-wide strategic meetings management.”

As a result, the NBTA survey also indicates that 70% of buyers expect to negotiate better hotel discounts for 2010.  More than 30% forecast better discounts with airlines and car rental companies.

One area of concern is the growing list of ancillary fees charged by airlines - which the report says may push the cost of an airline ticket by 30% or more.

From what the report says, it seems like 2010 is headed for a year of increased volumes and more travel spending, but at lower prices than what we have on offer today. It’s harder than expected for the travel industry in the short term – although much, much better than 2008 and 2009, and the business travel growth also bodes well for 2011 and beyond.

You can download the full report on the NBTA website – www.nbta.org/2010forecast

Wall Street is ready to put it’s money on travel again, with a rash of IPOs scheduled for the coming months. Here’s an overview of the major public offerings that are going to hit the markets late this year or early next year.

Travel IPO market heating up

Hyatt Hotels Corp. – Back in August, Hyatt had filed plans for a $1.15 billion IPO with the SEC. A couple of days back, they filed an amendment, which offers some more details.

According to the new filing, Hyatt is offering at least 38 million shares of Class A common stock for between $23 to $26 per share. Hyatt will be trading in the NYSE under the symbol ‘H’.

Las Vegas Casinos – Sin City’s big players are cashing in big time on the Hong Kong Stock Exchange. Las Vegas Sands Corp. has already filed for it’s own $2 billion Hong Kong IPO, which is due to complete its listing next month.

MGM Mirage, which operates the $1.25 billion MGM Grand Macau, is also planning a Hong Kong IPO, according to MGM Mirage Chairman and CEO Jim Murren. Earlier this month, Wynn Resorts Ltd. raised $1.87 billion in what was Hong Kong’s second biggest IPO for the year.

REITs – The flood of hotels going into foreclosure you saw in the past few months was a result of hotel companies bailing out of big mortgages based on pre-recession valuations. Hotel REITs are now looking to boost their liquidity and be ready to invest on the same undervalued properties, but with smaller mortgages.

Sunstone Hotel Investors Inc., which handed back the W San Diego to lenders in June because the property was devalued, is now planning to sell at least 14 million shares.

The Chesapeake Lodging Trust filed IPO plans in September to raise up to $460 million. Last week, the Pebblebrook Hotel Trust filed for a $402.5 million IPO, with plans to buy upscale hotels and resorts in the 20 largest US cities.

Blackstone Group – Earlier this month, Blackstone CEO Steve Schwarzman sent a letter to investors in which he said that the group was gearing up for IPOs for eight of its companies, including Europe based Merlin Entertainment, which owns the Legoland Parks. Blackstone recently announced the purchase 10 more theme parks from AB-InBev for $2.7 billion.

Another of Blackstone’s assets – Travelport, is all set to revive it’s plan for a listing in London. Travelport was purchased by Blackstone in 2006 for $4.3 billion, and was looking good for an $8 billion floatation in 2007 just before the markets crashed. The plan was shelved at that time.

Travelport’s GDS competitor Amadeus IT Group SA, owned by London based private equity group BC Partners and Cinven Group, is itself on the verge of a similar $8 billion IPO listing on the Madrid stock exchange, provided the markets remain buoyant next year.  

Both Travelport & Amadeus are pressing ahead with their respective IPOs after merger talks between the two reportedly ended in nought. And Sabre Holdings, which was acquired for $5.4 billion in 2006 by private equity firms TPG and Silver Lake Partners, has similar tentative plans for an IPO sometime next year.

Photo by rednuht