ATM and Dubai – A Perspective

I did say I would try and avoid doom and gloom stories- but I think that this is a story that should be told.

This week the Professor was in Dubai during Arabian Travel Mart. I use the opportunity to both catch up with clients, friends and even people who don’t fall into either of these categories. The marketplace is very subdued. There are grim faces everywhere. Rumours are flying of the doom and gloom variety. I can attest to several first hand observations of the depth of the collapse in Dubai. I do not use that word lightly. While there are some positive signs from Emirates of stable passenger numbers, EK is not immune from the same pressures that Legacy carriers such as BA and Delta are experiencing. The International Herald Tribune had an article May 8th 2009 on the impact of the biz travel downturn on SQ, BA and others. It is clearly a state of affairs that has astounded everyone by the depth and breadth of the reductions.

The ATM show itself was down in exhibitor volume. The halls that handled the property groups were actually closed. Throughout the show there were empty stand positions, something I do not recall from prior shows. I attended all 3 days and on no day did the attendance look anything like prior years. It was frankly very quiet, I had meetings at the coffee shop in the center of the halls and I could observe the traffic on both entrances – there was no rushing, no bunching . I am sure numbers must be down at least 20% probably a lot more. The building program exacerbated the problems of taxis and I am sure that this upset and frustrated many a show goer. I went out of my way to talk to hoteliers to get their perspectives. I was so taken aback by their war stories. Typical responses: “ we don’t know when we will be back to above 40% occupancy” and “I doubt we are even covering our opex let alone debt coverage.”

One night I went with some colleagues to the new Atlantis resort at the end of the first completed Palm. To say that it was quiet would be like saying a mortuary was a busy place. Rates are down universally. I spoke to several people who gave me first hand stories of deals they had received. Even the top hotels like the Jumeriah properties, The Fairmont and the Grand Hyatt all had evidence of heavy discounting.

The exodus of the expat community is also significant. While no hard numbers exist – I was again quite taken aback by the number of people I knew personally who had left or were leaving.

It is going to take a long time for normality to return. By normality – I mean reasonable yield and occupancy levels. Clearly Dubai has to do a lot to remarket itself and lower its costs. The Saudi traveler who is the most coveted customer these days has so many choices elsewhere that he needs to be courted and sold to rather than held at arms length.

New skills like selling rather than order taking will need to be learned.

Cheers

Stupid Vendor Tricks

It never ceases to amaze me how some suppliers treat their customers.

I most cases the customer is treated like an idiot. Or worse that he is given a useless offer that is just not deliverable,

Let me give you an example.

Avis… I rent them all the time. They tell me how wonderful I am and that they award me free rental weekends. So far I have NEVER been able to use them.

Now comes news of their latest offer. Rent for one week a premium car and you can have for 2 days a GPS for free. So of course we will all want to go through the hassle of returning the unit. And really we want to rent a unit for the whole 5 other days….

Hello people!!!

Note to vendors, treat your users with respect and they will respond to you. And ALWAYS remember Newton’s second law:

To every action there is an equal and opposite REACTION.

Cheers

Capacity continues to fall – dramatically – Are we there yet?

I have just spent nearly a week in the UK and have been looking at the current situation of the market. I think we all know that premium traffic is just a disaster. Last week British Airways announced a 2:1 sale on business class. This on top of their free seats for SMEs.

Capacity continues to fall globally. On this scale, the world's airlines have cut 6% flights for April 2009 Y/Y with a 3% drop in seat capacity. According to the latest statistics from OAG, frequencies and capacity within the UK for April are down year on year by 13% and 14% respectively, the last time the April figures for the UK were lower than this was in 2001. International services to and from the UK are down by 10%. The LCC sector is not immune either with a 12% reduction in capacity. In the USA another metric is the reduction of the number of routes. In one year according to anna aero the number has dropped domestically by 300.

So have we reached the bottom yet? Sorry – I don’t think so. With a bumper summer being promised for the UK – I don’t see people opening their wallets for flights. Instead they are going to be spending it in their back gardens and working on some DIY. This past April – while not the warmest on record was the 10th warmest April ever recorded. People are not going to be too keen to travel….

Of course if this week’s Bank Holiday is anything to go by – then we know that every bank Holiday this summer will be guaranteed to rain!

Cheers

GDSs Glorify Their Fare Performance! But Can You Trust Them?

You can tell I have been contemplating the issue of Trust.

As some of you may know there is much debate around the “who gets the lowest fare really” question.
Sabre is touting its Topaz based study. Now it has even gone to the expense of creating a website devoted to the achievements.

I make no judgment of the study or its methodology. However in our private studies – we can assure you that there are differences – frequently significant – between the results of the GDSs, the results of the OTAs and the results of the Airline.com sites. The results vary significantly market by market. (And don't get me started on the meta-search companies). Now we also see that as caching is being used more frequently we see difference that are frequently driven by the caching. The “look in one place book in another” only works when it comes with a performance guarantee from the inventory owner. This has been one of my gripes about meta searches. Quality measurements in the performance area is always going to be interesting and probably never coming. Obfuscation is still the order of the day. But I do think there is a glimmer of hope in that less and less people are relying on the GDS as the source of the fares and as a result (particularly outside North America) the issue of a trusted fare is being understood.

Inside the GDS the guarantee of a seat and fare via the PCA (participating carrier agreement) is passed onto the travel intermediary through the subscriber contract. Now that the GDS infrastructure cannot handle the sheer volume of searches on an economic basis – the current answer is to use Cached fares+availability such as via ITA’s engine. However by the time it gets handed off to another source for booking the cache may be out of date or just plain wrong. In the GDS world this is handled somewhat. But in the new world of open access this commercial coverage is still not quite there yet. However it will have to be.

Anyone willing to forward a solution to this problem and its very complex set of issues? (and no I am not accepting that everyone has to use the GDS as the answer).

Answers on a post card or the back of an envelope please….

Cheers

So Who Do You Trust?

In the current economic environment – everyone has to work harder for their daily bread. I dont think there are many people in the Travel Industry who would doubt that statement. Even Prince Waleed (Kingdom Holdings) is down quite a lot. The Evening Standard is even speculating that he may have to cancel his order for the second Private Airbus A380.

So against this backdrop – it is probably a good idea to ask “who do you trust?” As Media goes through a radical change this is a very pertinent question. eMarketer has just published a little piece from TNS Media Intelligence. In this the online players should take heart that their trust levels seem to be pretty high. However there are some really dark clouds in the study.

There is some very interesting data of differences in countries – so its well worth a click on over to this link to see it:

http://www.emarketer.com/Article.aspx?R=1007067

However – some bad news for people like the Professor. Private Blogs are trusted among the least. The most trusting are the Italians at a measly 14%. Everyone else is well below 10%. Makes you want to cry doesn’t it….

Sob Sob

Delta Introduces - ehemmm - Commissions

Say WHAT????

Yes... as a "trial" DL introduces 10% commission... from NYC area to LATAM

And who said generosity is dead?

Cheers

ATM 2009 - Quiet and Very Subdued

So the 2009 Arabian Travel Mart opened today.

Very quiet and very subdued. I participated in many events and spoke to a lot of people who are attending - many for the regular n'th time.

General perception.

UGH!

it is bad.

I can honestly say the overall management was its usual high standard - but the level of attendees was noticeably down.

No crowds at the reception/entrance.

The new taxi process however really sucks.

Cheers

The Icelandic Raiders Vanquished

What a difference a year makes. Just 2 years ago the Icelanders were tackling stakes in such companies as Easyjet and taking a large stake in American Airlines. Now look how far they have come. The last of the raiders is FONS. And this story (roughly translated from Norwegian) tells the story of the bankruptcy filing. Thanks to Professor Kai for this one.

"The district court of Reykjavik approved today to take Fons, holding company of Palmi Haraldsson and Johannes Kristinsson into bankruptcy procedure. The company owns Securitas and Plastprent. Palmi says this is a shock. The company has been in a better position than many other companies.

Fons has been a major company in the Icelandic economy for the past years and amongst other owned a large part in FL Group. With Securitas and Plastprent owns Fons a part of the English toy stores Hamleys and the Nordic travel agency Ticket.

"This is of course an enormous shock," says Palmi but does not want to comment further on the position of the company. The request had been made to put the copany into bankruptcy which the district court approved today. "

This is sad in my view. We need entrepreneurial talent to inject fresh blood into our industry.