30 May 2007

Expedia has largest share by far of online hotels in South Florida

According to Travel Weekly's Travel Technology Newsletter MIAMI-DADE COUNTY QUIETLY NOTIFIED ONLINE TRAVEL COMPANIES in February that it would commence tax audits related to unremitted 6% hotel bed taxes. In March it sent them estimated tax assessments totaling almost $10 million for the past five years.

What is interesting is the market share of each of these players.

If we just use the tax numbers and assume an equal average daily rate then the share of business for hotels in South Florida is quite startling.

Expedia: 60.1%
Travelport: 14.1%
Priceline: 11.1%
Travelocity 8.3%
Others 5.8%

After 5 years activity this represents quite a significant share. However the total numbers are not that great. if we assume about $120 per ADR then it only represents a total of approx 800 rooms per night occupied and sourced by the OTAs' guests in South Florida. Just about enough to fill the Fontainbleu twice over.

So still lots of room for growth.

Now I wonder if the hotels are also feeling the heat from offering some of their stuff online.

Any clues anyone?



SQ Biting off more than it can chew with China Eastern?

Already the industry analysts are wagging tongues at the SQ investment into MU. One of the weakest of the big China Airline companies MU has not had a great track record since it became one of the designated major National and International carriers from China.

SQ has had a good record as a passive investor (think Tamasek) in Silk Air (its own subsidiary) and Tiger Airways. That is close to home. However its forays further afield have been somewhat of a mixed bag. It has its significant holding in Virgin Atlantic (not any of the other Virgin group airlines) which has not shown a significant impact although both parties are happy with the deal. But then we can look at the Air New Zealand episode that frankly many at SINHQ would rather forget. Much has been speculated as to what MIGHT have happened if SQ had followed through and bailed out Ansett. My wouldn't the world be a different place!

So its going to be worth following to see what role SQ management takes in the running of MU. There is clearly potential value on both sides. Similarly Air China is doing all it can to fuse some knowledge learned from CX in improving its product and bottom line. China Southern has not yet seen much out of its DL match up.

But the night as they say is yet young and we all know China plays for the long haul - and for keeps. As long time China watchers - we recommend paying attention to how this shakes out for the long game. China is determined not to allow any embarrassment occur prior to the 2008 Games. After that we see a loosening of the reins and a significant expansionist pursuit by many of the players. There is room for many victors.

Don't worry - Be happy apart. Galileo and Worldspan to remain Seperate

Forget synergies - its all about making a buck. So what if you have 2 sets of infrastructure to support the "Full service" suites of both now isolated systems, Blackstone led Travelport has announced that it will keep the 2 GDS apart rather than go through the enormous pain and cost of a single platform.

On the one hand we applaud the rationality of the argument not to go through with the very painful exercise (Ed: I have done it twice!). However we believe that there will be a significant amount of confusion amongst the respective customer bases. we just hope that Travelport has some good integration strategies up its sleeve or else the sheer cost of supporting 2 data centers and two product lines has got to be a Controller's nightmare.

Rest assured your trusty team at ITK will be on the case watching the situation and reporting back from the field including customer reaction and some insider news.

Travelport - we wish you success. Please make it clear what you are really going to be doing. We would like to have a clear story to present to the world.


ITK Team

29 May 2007

Did BA put itself in play? Goldman Sachs thinks so or...

Talk about a tangled web. So follow the story if you can. BA owns about 10% of Iberia. BA used to own a sizable chunk of Qantas. TPG has failed in its bid as APA to get control of Qantas. BA joined the TPG based consortium bidding for IB. IB's advisers are Goldman Sachs. Goldman raised its ownership in BA to over 5% making it the 4th largest shareholder in BA.

Got it?

OK so if we read the tealeaves (something we love to do at T2 although personally I think hot caffeine based drinks are over-rated) then there is something going on.

BA has been the target of some speculation of a PE based bid (in the old days we used to call these LBOs). Why? its that juicy cash flow - GBP 800 million a year. (That's $1.6 Billion in greenbacks). With Private Equity cash chasing just about anything that moves - BA is a good target. However its institutional investors in the City would likely harrumph a lot at this.

But you have to think that that there is some truth in all of this to BA being really in play.



28 May 2007

Virgin Oz - Splits 4 ways

Following in the footsteps of its arch rival Qantas - Virgin Blue is now the uber-brand for the Ozzie carrier. As it has slowly and relentlessly moved upmarket with its primary brand going after the corporate market - Virgin has seen its low cost roots (and routes) usurped by the upstart part of the Qantas group - Jetstar. With Tiger airways a mere few months away from starting domestic Oz routes - Virgin is not sitting still.

The company will now have 4 main brands:

Virgin Blue will be the premium branded service for Domestic routes.
Pacific Blue will be APAC regional routes including TransTasman services already in operation. The two newcomers will be the Long Haul (initially Trans Pacific) 777 service and the even sooner to be launched LCC player.
Commenting to Travel Weekly Australia at the Australia Tourism Exchange on Monday May 29th, Brett Godfrey, Virgin Blue CEO said "As we already have an Aircraft Operators Certificate (AOC), we can be up and running almost immediately". This pits Virgin Blue firmly against its rival. With some variation!

We believe that now the ownership issue is long resolved the company has been planning this expansion strategy for some time.

With Qantas itself in somewhat disarray following the recent debacle of the APA aborted tender and the subsequent resignation of 2 board members, we can see that there is life in the old dogs yet. Now why didn’t Ansett do this???? Answers on a postcard or email to me asap....