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April 2017 Newsletter

Editorial

The Sharing Economy

The rise and rise of the ‘sharing economy’ is well documented’, the names of Uber and Airbnb are known by many travellers and judging by the market shares they have attained in their respective travel sectors, they are used by a huge and ever increasing percentage of people who travel whether it be for leisure or business. Of course as with any product there are positives and negatives attached to them. The positive of the Uber’s and Airbnb’s in their own opinion is that they are cheaper to use than rivals. They also offer the opportunity for car or property owners to use their vehicles or property part time to generate extra income for themselves. All so far reasonable and sound in their theory but on the flip side of this, a new word has appeared in the travel speak and that is the word ‘disruptor’. Airbnb and Uber are what nowadays are referred to as a “disruptor’; they break the mold or go against the grain of how the business has traditionally operated and often against the wishes of stakeholders or people who hold travel budgets.

The city of New York was one of the first places to question both Uber and Airbnb, with the latter, the city quickly realised – no doubt with a bit of prompting from the city’s hotels – that significant amounts of taxes were being lost; that is hotels were seeing less people staying with them and thus were paying the city less in taxes as some guests were now utilising Airbnb properties. In the past year both London and Paris have noted a curious yet obvious side effect of Airbnb in that property owners quickly realised that they could make more money on short term rentals via Airbnb than they can through traditional long term rental. Transcribing this into an example from Sofia, a central apartment can comfortably gather income of 40 – 50 Euro per night which means in theory an income of 1200 – 1500 Euro per month whereas realistically the same apartment would only rent for only 300 – 400 Euro per month on a longer term arrangement. In London for example, this has resulted in the sudden reduction in the availability of rental properties as property owners change their business model. The net result being an increase in the cost of traditional home/apartment rentals for those wanting a long term arrangement as the availability of such properties decreases and prices increase with the reduced supply. This has resulted in Airbnb capping the number of days a property can be rented out in London to just 90 days per year.

There is also another side to the sharing/disruptor factor in the travel sector and that is whilst Uber and Airbnb works for people taking private leisure trips, for those travelling on business – the numbers of which should not be underestimated – there are significant ‘”duty of care’” concerns around this area; perhaps less so with Uber although there are still issues, but certainly with Airbnb. Business travellers have expectations of quality, security and safety with hotels but step outside this and there is absolutely no surety of what you are staying in and how safe it is when you use an Airbnb type property. As we state, for leisure travellers this is fine but companies have both a different requirement for their staff and also a duty to ensure they are safe and sound; Airbnb, as yet, cannot provide that. Our own research on this issue seems to agree with the Senior Management of larger and medium sized companies that they ‘”dare not’” for fear of legal implications, use Airbnb for the moment.

All travel services and all travel providers have their place, the sharing economy and Uber, Airbnb et all will be around for a long time to come; but they are not for everyone.

Mark Thomas

Managing Director

HRG Bulgaria

Ban Succeeds in its objective

In our editorial ‘’there are many ways to skin a cat’ last month we emphasized the point that the lap top ban imposed by the USA on several airlines was less about security but as much about making a dent in the business model of those airlines, most noticeably the Gulf Carriers, to appease the concerns of US based carriers; banning lap tops was simply a means to and end. That end appears to have borne fruit as Emirates subsequently announced plans to trim back operations on five of its twelve US routes. Of course, the reason given was weak demand (no-one wanting to travel to the USA these days…!) but the message was clear to all who are not blinkered. The USA can not simply ban an airline from flying to its shores so blatantly, but this is where politics enters the frame. At least no-one can accuse Mr Trump of not following through on his promises to stimulate American business.

 

 

Ship engineer gets 1m reward for shopping

 

A British Marine Engineer has been handed a 1m USD reward after he reported illegal polluting by Princess Cruise Ships. The engineer was newly recruited by the Cruise Line back in 2013 when he noted a “’magic pipe’ that had been fitted to the ships to illegally get rid of oily waste. He collected evidence including photographs which led to the ship being inspected when it reached the UK and also later in New York in September 2013. The result was that the cruise line was fined a record 40m USD as punishment.

Aside of the fine, the Miami Courts also ordered 78 of the sister ships to Princess i.e. Holland America Line, Seabourn Cruise Line and Costa Cruises to be subject to a five year environmental compliance programme.

The engineer meanwhile is living happily ever after.

 

Better late than never

Malaysia Airlines are the first airline to sign up to a new satellite racking system. The technology attached to the system allows aircraft to be monitored in real time anywhere on the planet and where existing systems are unable to track aircraft.

The calls for such a system to be engaged by aircraft came after the disappearance/abduction of Malaysia Airlines Flight MH370 three years ago.

 

Sunny side up

Sunny Beach has been ranked as the most affordable beach resort in Europe by the UK’s Post Office Annual Study of tourism costs. The research is based on the costs of a shopping basket of everyday items. The Top and Bottom five in terms of costs were:-

Cheapest Five Resorts

  1. Sunny Beach
  2. Algarve, Portugal
  3. Costa Del Sol, Spain
  4. Marmaris, Turkey
  5. Paphos, Cyprus

 

Most expensive

  1. Ibiza, Balearic Islands
  2. Sorrento, Italy
  3. Nice, South of France
  4. Zadar, Croatia
  5. Lisbon Coast, Portugal

 

Ban lifted on Uber

A court in Italy has lifted the suspension on Uber Car services operating in the country. This follows on an earlier ruling of a court who rules that Uber contributed to “”unfair competition”.

Meanwhile in New York, Uber could be forced into adding a tipping function onto its app. Surely though one of the ideas of Uber is that clients know exactly what the fare of the ride will be before they get into the vehicle?

 

The elements win

The Azure window, one of Malta’s most famous attractions collapsed into the sea last month after strong storms battered the island. The rock arch was easily identifiable and was an icon for the marketing of Malta and Gozo where the attraction was located. It was also featured in several films including the Game of Thrones.

The dive to the bottom

An interesting episode last month involving British Airways typified the approach that most airlines now have towards their operations without realising the damage they are doing to their brand image. The trend is guided by the obsession not to improve ones product so that a client wants to buy it through choice and so become profitable through increased sales, but rather to reduce costs as much as possible so that service is stripped to the bone to facilitate profit. The case in question was a BA flight destined for the Caribbean that was delayed for 5 hours due to toilet rolls not being loaded on the plane. Further evidence then appeared from inside the airline of how staff is being trimmed back as well as how aircraft are serviced including how frequently and how thoroughly the planes are actually cleaned on the inside.

This mode of operation will no doubt be how the Low Cost Airlines work but the travelling public still expect BA and others to have  both a better service offering and better servicing (this means employing enough staff) of the product they ate buying. The trouble is the (Spanish Low Cost background) management of BA and management of other traditional airlines think differently.

In the same breathe – this is not a swipe at BA but the other legacy airlines also – BA intends to add extra rows of seats across its fleet of A320/321 aircraft. This will mean less leg room and in BA’s case bring it into sync with sisters Iberia, Aer Lingus and Vueling.  In other words BA are saying we will all be the same, this ‘”same’” is sadly the lowest common denominator.

It gets worse for united

Fresh from their debacle when they saw fit to violently off load a passenger so their own (sub-contracted) staff  could replace the designated unfortunate one, United Airlines have just potentially landed themselves in even more hot water – if that’s possible – after a giant rabbit they were transporting from London to Chicago was found dead on arrival in the USA. The rabbit, named Simon, who had just undergone a thorough medical examination before ‘boarding’ the flight was just ten months old but already 3ft long and was expected to surpass the size of his father Darius who is 4ft in length.

The rabbit was raised by a UK breeder but had been bought by an as yet unnamed famous US celebrity.

Speaking of English

In what is arguably as stupid a case as one is likely to find, a UK court has found against taxi app Uber who had challenged a ruling that its taxi drivers take an English language test in London!

The UK court said the authorities were entitled to require private drivers to demonstrate  English language compliance in the interest of safety and to maintain standards.

A rather ridiculous statement from Uber was that 70,000 applicants might thus fail to receive a licence over the next three years. Or, translated, 70,000 potential drivers can’t speak English….in London!

Despite the fact that the number of British people located in London is a minority and getting smaller, the very least any visitor to London or indeed anyone taking a cab in London expects is for them to speak the local language. This might also apply in New York, Frankfurt, Paris et al.

 

Online to grab you

The ability to book anything ‘on line’ from the comfort of ones own home or wherever one finds the time is one of the great changes in all of our lives. Booking travel is one of those items or even commodities that is easier than ever to book; all be it more expensively despite the fact most believe they are saving money. Just to put some transparency to the matters, the European Commission has found that of 352 travel websites, one in three didn’t have the deal(s) they were advertising. That will hardly come as a surprise to many, the sites real intention is to grab the attention of the site visitors and then hopefully sell or up sell them something different.

Cashless airline

Hardly an earth shattering press release but when one thinks about where society has come to and in such a short space of time, one wonders if indeed something like Bitcoins will soon be the only form of payment Airline XYor Z will accept?  BA’s press release noted that from April 1st (this wasn’t a joke either) they will not accept cash payments at any of the airports they operate from. This covers all payments for things such as extra bags, additional/leg room seats, changes to tickets etc.

BA, in its defence did say they its staff would always try and find a method to convert cash to another form of payment. Whether this includes helping clean the plane or carry loo rolls on board (see dive to the bottom article), this wasn’t clarified.

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