30 June 2007

TravelClick 2006 Stats show wide variance in Hotel Yield by Channel

Sorry folks i have had this one to write for some time now. Finally getting round to it.

The TravelClick 2006 stats show a huge discrepancy between bookings made via GDS backed web sites and those via GDS/Travel Agencies. For 2006 the number is 41%. This variance has existed for some time. For example in 2004 the ADR difference was a similar 26%. In order to understand the difference you have to consider the source. We consider the TravelClick numbers to be skewed due to the source of the tracking and the lack of broad reach of the numbers. Its based on GDS based sales. Thus there is always a higher skew of bookings from Travel Agents as is clear. Since this occurs the comparison is fair but it is like comparing apples from the same tree rather than between trees or even different varieties.

Formally they are issuing a caution that this discrepancy is unsustainable. DUH!!!! The web is about transparency. The next gen hotel systems currently being designed (such as 2nd Travel and Pegasus GuestClick) will remove much of the need for a discrepancy.

Here is the full PR release but you can get it off the TravelClick website


PR Release Follows:

Press Releases
Worldwide Electronic Hotel Revenue Up 19.3 Percent in Q4 2006
TravelCLICK's eMonitor Reports Annual Growth for Room Nights at 8.4 Percent, ADR at 7.4 Percent
CHICAGO, April 25 /PRNewswire/ -- TravelCLICK's quarterly eMonitor results indicate continued robust health for the hotel industry based on electronic distribution performance for the fourth quarter of 2006. The data shows that worldwide electronic hotel revenue from the Global Distribution Systems (GDS) and key Internet sites increased 19.3 percent over the fourth quarter of 2005. The number of electronic room nights booked for the fourth quarter increased 7.7 percent over the same time last year, while the Average Daily Rate (ADR) increased by 10.8 percent. The average length of stay for the fourth quarter 2006 was 2.06 nights, nearly the same as last year.
eMonitor results are compiled from TravelCLICK's comprehensive proprietary database, which is the exclusive source of hotel industry electronic distribution data from the Amadeus, Galileo, Sabre and Worldspan GDS. The database of electronic distribution performance provides a comprehensive foundation for data analysis and trend forecasting that is used by the global hospitality industry in the development of integrated distribution strategy.
Observations for the market based on this latest data include:

-- Hotel bookings through the GDS continue steady sustainable growth on a
large base of more than 50MM.
-- In 2006, ADR for room nights booked through travel agents was
41 percent higher than ADR booked through consumer Internet.
-- In nearly every segment and top destination market, ADR continues its
strong year-over-year growth.
"Within the GDS, there is a sustainable trend of much higher ADR business opportunity when compared to other online distribution channels," said John Hach, Vice President of eMarketing Products at TravelCLICK. "The ADR variance of 41 percent provides compelling evidence regarding the need for hoteliers to reach travel agents during their primary point of customer interaction."
Travel Agent Component
Travel agent bookings represented 79.3 percent of total room nights. The travel agent component of GDS bookings had an 11.5 percent increase in ADR and an 18.5 percent increase in revenue versus the fourth quarter of 2005. Travel agents also continued to be a key source of higher rate business for hotels. The average rate for room nights booked through travel agents for the fourth quarter of 2006 was 43.6 percent higher than the average rate for room nights booked via the Internet for the same period last year.
Year-to-date for 2006, travel agent hotel room nights via the GDS were up 6.3 percent, driving an 8.4 percent growth in ADR from the same period in 2005.
Internet Component
Internet room nights, sourced from consumer online transactions on third-party websites powered by the GDS and Online Distribution Database (ODD), showed a gain of 13.6 percent compared to the fourth quarter of 2005. ADR was up 9.2 percent for Internet bookings; revenue was up 24.1 percent compared to the same period last year.
Fourth Quarter 2006

Room Nights %Change ADR %Change
Total GDS and ODD Hotel eCommerce 31,786,682 7.7% $149.52 10.8%
Travel Agent Component 25,200,589 6.3% $159.56 11.5%
Consumer Internet Component 6,586,093 13.6% $111.08 9.2%

Year-to-Date 2006

Room Nights %Change ADR %Change
Total GDS and ODD Hotel eCommerce 131,127,784 8.4% $142.83 7.4%
Travel Agent Component 103,468,230 6.3% $152.17 8.4%
Consumer Internet Component 27,659,554 17.2% $107.89 5.5%

GDS Performance by Market Segment
Results for the fourth quarter of 2006 by market segment are shown below for GDS bookings only. All market segments showed increases in both room nights and ADR compared to the fourth quarter of 2005.
Fourth Quarter 2006

Market Segment Room Nights %Change ADR %Change
Luxury 927,508 13.6% $363.66 12.4%
Upscale 9,887,664 4.2% $191.08 11.1%
Mid-Scale 11,160,152 6.1% $121.67 11.9%
Economy 2,135,983 6.9% $81.51 8.9%

Year-to-Date 2006

Market Segment Room Nights %Change ADR %Change
Luxury 3,636,512 12.2% $345.94 8.6%
Upscale 40,244,398 2.4% $181.79 8.6%
Mid-Scale 46,615,608 5.2% $117.94 8.9%
Economy 9,453,732 7.8% $81.46 7.9%

Top Destination Markets
The top 10 worldwide destination markets in room nights for GDS and ODD-powered third-party websites, in order, were:
Fourth Quarter 2006

Top Destination Markets Room Nights %Change ADR %Change
New York 1,481,273 6.3% $299.00 10.2%
London 1,471,575 27.7% $213.04 12.5%
Los Angeles 1,015,225 4.2% $149.49 9.5%
San Francisco/Oakland/San Jose 941,533 7.7% $154.34 9.0%
Washington/Baltimore 870,787 -1.0% $177.92 7.6%
Chicago 804,459 6.5% $164.28 11.7%
Dallas 558,285 0.4% $119.26 10.1%
Atlanta 495,656 -1.7% $122.27 6.7%
Boston 465,155 3.3% $168.68 8.4%
Houston 437,893 4.0% $124.37 7.4%
To receive a free listing of fourth quarter results by top 50 cities worldwide in electronic bookings, please email emonitor@travelclick.net. GDS hotel booking summaries by individual local market also are available at http://www.travelclick.net/.
Sign up to receive TravelCLICK news by email or through RSS distribution at http://travelclick.mediaroom.com/.
About TravelCLICK
TravelCLICK (http://www.travelclick.net/) is the leading provider of hotel business process management (BPM) solutions that drive long-term profitability. TravelCLICK helps hotels maximize asset ROI by combining innovative market analysis and proven industry best practices with advanced technology to develop and implement high-return strategies. The company offers a full set of solutions including reservations and distribution management, market intelligence-based decision support, and marketing services. Serving the hospitality industry since 1996 and headquartered in the Chicago area, TravelCLICK has more than 12,000 customers in 140 countries.

Insane TSA proposal for Biometrics run by the airlines

Those wonderful mad cap keystone cops (aka the Dept of Homeland Security) are at it again. This time they are demanding that the Airlines install and manage the biometrics System.

This one will definitely run for a while. Given the current fiasco over passports – the TSA/DHS boffins have no clue about people processing. I think this stems from the last time they had to seriously think about it IE Ellis Island.

A brief aside here. I go through Security on average 2x a week. I can assure you the TSA is behind almost any other service in the world.

So considering all things that the airline have to deal with today for security – it is understandable why the TSA would like to shift the responsibility of the biometric tracking to the airlines for handling. But the TSA wants its cake and eat it. They wont share the results nor will they provide an instant alert scheme for the airlines.

Here is the full article. You be the judge – but one thing is for sure – this issue will not be going away.

Despite protests, DHS biometric data plan moving forward (06/07/2007)
VANCOUVER -- The U.S. Dept. of Homeland Security is sticking to its proposal to require airlines to collect fingerprints at check-in from departing travelers on international flights, in spite of vehement protests from U.S. carriers that the mandate would be costly and time-consuming and create longer check-in lines, and should instead be handled by the Transportation Security Administration.

Michael Jackson, the DHS' deputy secretary, attending the International Air Transport Association's Annual General Meeting and World Air Transport Summit here June 5, said the department still plans to issue a Notice of Proposed Rulemaking with the requirement soon.

"It's the only model that we can figure out that will work," he said, while insisting it would not create long check-in lines.

"People's dwell time at a check-in point is vastly longer than the one or two seconds it will take to simply put your finger on a fingerprint reader," he said. "I think it's going to be easy, iteratively, over time, to integrate this into the business model that the aviation industry has for doing its work, which is to make it easy for passengers to come through an airport and not have a burdensome delay."

Jackson, who wants the process in place by 2008, did make one concession: he said the DHS is willing to provide airlines with fingerprint readers for use at the check-in counters, and help them connect it to their passport card readers. He also said the department is willing to let airlines move the process to self-service check-in kiosks equipped with fingerprint readers and passport readers.

The proposed requirement stems from a DHS effort to beef up a 3-year-old pilot program called US-VISIT, which collects biometric data from foreign visitors.

Under that program, inbound visitors at U.S. airports and other points of entry are digitally photographed and fingerprinted at special kiosks. The resulting data are later matched against DHS' own database to verify international travelers' identity. Digital fingerprints are also collected when the traveler exits the U.S.

However, travelers are asked to provide the data on a volunteer basis.

Consequently, the DHS said, while the US-VISIT biometric technology "works," there has been a "low traveler-compliance" rate. It believes integrating the process into check-in would boost the rate.

29 June 2007

Shock Horror, LHR Owner admits its "Old and Dirty"

In a by line from the Gaurdian Newspaper of today - 29 Jun 2007
Ferrovial, the Spanish construction group that owns BAA, claims the Civil Aviation Authority is not doing enough to incentivise it to invest in Heathrow Airport.

Those of you who follow some of our personal trials and tribulations of travel through the world's busiest international gateway, know full well what we think of LHR. It is a disgrace. Check out this clip on YouTube: http://www.youtube.com/watch?v=zwB4G7XxyRI

Attempting to deflect the mounting customer and user criticsm the new owner of LHR operator BAA is trying to push the blame onto the HM Government. Sorry - but no dice here. BAA you have milked this cash cow for way too long. Now you have to pay the price.

There is a great article in this month's ATW on the subject: http://www.atwonline.com/magazine/article.html?articleID=1959

Having an Airport Operators License doesnt mean you can rape the customers.

Perhaps Mr O'Leary will get a little credit for his battle with Aer Rianta (operator of Dublin's airport).



NWA - First to cross the barrier wi9th Paypal

Not that we are against the credit card companies in any way - but we have been a long believer that the next major cost battle in airline distribution cost reduction would come in credit card fees. With Google Checkout our dark horse bet - we believe that the airlines stand to gain significant bottom line benefits in enabling non-credit card financial fulfilment from such players as Paypal and Google.

NWA finally becomes the first airline (by our understanding) to announce such a deal. It is even offering bonus worldperks miles to anyone who uses the service.

The leverage that this gains as well as the additional customers it enables is a win win for the airline. We are particularly encouraged about the impact in non-traditional (and therefore emerging) financial markets such as across Asia Africa and Latin America.

Pay attention boys and girls - this is a big shift

Now is the summer of our discontent...

Well our worst nightmare has actually come to pass. This summer - the US domestic air transportation system (if you can call it that) will grind to a halt or at least a series of significant outages.

I can attest to this personally. During the past week (W/C June 25 2007) I have been to the airport everyday. Each time I have been there the flights that i was involved in - picking people up, dropping them off or flying was at least 2 hours late. On Thursday a delay of 3 hours bumped me in Atlanta. But it gets better. There were no more hotel rooms available. To get to someone to actually talk too takes hours. All of the airlines have been similarly affected and while some handle it better than others it is clear that the massive cutbacks in staff are now beginning to bite. They are just unprepared for even minor problems. The system is SO fragile that it breaks at the slightest provocation.

I have seen families waiting for 24hours plus. People in Wheelchairs abandoned. Groups displaced and split up.

It is unpleasant and will only get worse during the summer.

I do believe (changing my position) that a passengers' Bill of Rights is now a must. I strongly urge the US to adopt the European model. But govern this and tie it to the role of the TSA so that there is a clear shared sense of responsibility with Government and Private Enterprise.

Southwest Hits Wall, Ryanair Next?

For some time we have been saying to our investor clients that the problem of growth would eventually reach the point of good old diminishing marginal returns. Southwest has finally admitted that this has happened to them. The core problem is one faced by other sectors – such as Microsoft – in that the ROI starts to decline over time due to effective saturation. For WN this means that they will now have to address the issue head on.

What we find curious is that WN doesn’t want to hit the competition head on. So the slowdown in growth is an acknowledgement of this. However WN has one ace up its sleeve. That is its planes. WN can fly the longest commercial routes in the county (eg SEA-MIA) with its 737-700s.

For WN we shall see them looking hard at Revenue opportunities and only dealing with the ones that make sense.

There is a lesson here for other LCCs. Chaps – sooner or later you will hit the wall. AirTran and JetBlue – I hope you are listening. Fortunately for Mr O’Leary – this problem is several years away. Long after he has left the CEO slot at FR.


Aeroflot drops out of AZ Bidding

Sounding the deathknell of the current auction - SU has dropped out leaving only the local Italian Airline left. Aeroflot said it was withdrawing because its advisers had not been given access to what it called critical information on Alitalia’s business. Almost identical to the owrds that Joint bidders Mattelin Patterson and TPG used. This leaves a single bidder that will hardly wash with the government. So once more the sickest airline in Europe is back on the deathwatch list