July / August 2019 Newsletter
Summer is finally here but what appears not to be here are masses of tourists. Of course, the success or otherwise of a tourist season can’t be measured by the performance in just a few weeks of the year, but there is one undeniable fact and that is that summer tourist numbers appear to be well short on the previous year. Hoteliers, entrepreneurs, waiters as well as regular visitors all seem to be saying that its ‘” very quiet’” this year. Of course, the government statistics that pop out of the woodwork periodically may contradict this statement, but equally, it is probably no coincidence that the Minister of Tourism is looking for a massive increase in its marketing budget for next year. That may well have been requested because of the realization that you have to speculate to accumulate, which in this context means you have to market(sell) yourself to attract visitors, who in turn spend money which eventually (perhaps) finds its way into the starts coffers. The fact that no-one from any Government would ever admit there is neither capable local staff nor organisation capable of mounting an effective marketing campaign is a totally different issue however relevant and accurate.
Bulgaria has always tried to sell itself as an “affordable” destination that overs great value for money. Perhaps unfairly, this is often translated to mean ‘” cheap’. Many years ago the likes of Spain and then Greece were considered as cheap destinations but nowadays, one would hardly say they are going to Spain or Greece because it was cheap; good value yes but never cheap. The point being that a destination, be it a resort or a country, has to morph away from being bracketed as ‘” cheap’’ as being cheap does not provide for long term sustainability. Spain and Greece, to use the two examples would appear to have done just that.
Many people now find it as easy to get to Greece from Bulgaria because of the improved road infrastructure and the availability of cheapish flights, as it is to re-visit their historic haunts on the Black Sea. Once there, low and behold they find that the costs of good food in traditional restaurants are actually the same as the not quite so good food in not quite so nice restaurants along the Black Sea, where additionally, the service is often deplorable. One can’t generalize too broadly but like for like one can reasonably argue it’s actually better value for money in Greece. Thus it’s clear that the Bulgarian seaside is somehow going to have to reinvent itself and quickly too. The past few years has seen Bulgaria benefit from the hesitance of people to holiday in the likes of Turkey, Egypt and Tunisia. Whilst there is still some hesitation in this area, the numbers indicate that these destinations are bouncing back into vogue and Bulgaria will be one of those destinations to suffer because of this re-bound.
This is not to undermine the countries efforts in the sphere of tourism as the country has developed massively over the years. The beaches are as good as anywhere in Europe and the country can offer many things away from the sun and snow that most people associate with Bulgaria. Anything from wine tours to trekking to cultural tours, tourism is a multitude of offerings and alternatives. These alternatives are all here in Bulgaria but yet remain undiscovered and unnoticed. The longer-term future of Bulgarian tourism will evolve away from snow and sun but unless money is spent wisely by people with the right experience, this process could take longer than is necessary.
Hotels bottling it
The trend to become more sustainably aware is particularly prevalent in the hotel industry and in line with this trend, the InterContinental Hotels Group (IHG) has just announced that its entire portfolio of properties will move from offering bathroom amenities in the form of miniatures, to bulk size offerings. The move is expected to be completed by 2021. The 843,000 guest rooms that belong to IHG use a staggering 200 million miniature’s annually.
IHG were also one of the first hotel chains to commit to ridding the use of plastic straws; a target they are on track to achieve by the end of this year.
Venice bites back
Venice is very much in the news at the moment as it fights back against tourism! A strange dilemma as most destinations welcome tourists; Venice, on the other hand, sees tourists as a threat to the existence of the local population, though one wonders if the hotel and restaurant owners think in the same manner!
After a cruise boat crashed into the Venice Port quayside recently, the latest travel news from Venice sees the authorities imposing fines of 950 Euros on two backpacking tourists who brewed a coffee on a campfire in front of the Rialto Bridge. The fines were imposed after local regulations were introduced in May to protect Venice’s ”decorum”.
The new law includes bans on picnics in certain areas, bathing in fountains and not wearing shirts in public places.
Booking – enemy number one?
Most people will have heard of the online hotel booking website booking.com, which is probably the top of the pile at present in the popularity of online hotel booking sites. It is, however, public enemy number 1 for many and has been for some time. As the site gains popularity and hence power, it starts to dictate what hotels will pay it as commission for the bookings it makes. A typical percentage a hotel pays would be between 15-25%, the problem for many hotels is that if you don’t ’work with the site and pay the commission, the rival hotel down the road will and that’s where the guests head. Things might, however, be starting to change.
In the Caribbean, hotelier associations are considering banning booking.com due to their excessive commissions and (quote) ‘” the online giants new unfair and regressive commission policy’”. In particular, the online player is trying to charge a commission on staff tips!
Just how anyone can “get at’” staff tips which one always assumed was an extra gratuitous payment to staff in cash is another question! However, anyone who has been on a cruise will know that tips are often built into chargeable amounts or collected prior with the full payment.
For any monolith like booking.com, all it may take for its empire to crash down is someone (hotel group/association etc.) taking a stance against them and once the mould of acceptance is broken, the domino effect may ensue and suddenly the talk will be of “do you remember booking .com?
Almost to prove a point that it’s not just the hotel industry that views booking.com with a degree of suspicion, the Italian authorities are pressing the online seller to pay back 150 million Euro in back VAT which it says is owed from private Holiday rentals made through it. The online seller says that this is not their responsibility but rather the responsibility of the individual owners. By way of comparison, Airbnb which also takes bookings on behalf of individual owners does collect taxes on behalf of the Italian Government.
Max costs continue upwards
The fallout from the Boeing 737 Max aircraft after two fatal crashes involving it and the subsequent realisation from Boeing that they couldn’t blame anyone else for the tragedy, despite attempts to do so, is yet to be fully appreciated. No-one wishes to travel on a plane perceived as “unsafe” regardless of whether this is fact or otherwise. The fact that Boeing has in effect admitted guilt does little for the public perception of the plane. To that end, one wonders if future versions of the plane will be re-named?
Ryanair meanwhile has not been hanging around and planes built for it have had the word ‘” max’’ removed from the fuselage and replaced with “8200”. Ryanair had ordered 135 Boeing Max jets.
They may not be the only ones following this path. The airline itself is reported to be seriously considering halting production of the plane if the planes currently in operation remain grounded for any substantial amount of time. Boeing still produces 42 Max jets per month, none of which can be delivered until their flight ban is lifted. The cost Boeing expects to bear from this escapade: 4.9 billion USD.
The devil is in the data
The Marriott Group must sometimes wonder if their acquisition of rival Starwood, better known for its Sheraton brands, was a good idea or not. They acquired Starwood in 2016 but in 2018 discovered that dating back to 2014, the Starwood’s operating systems had been breached which resulted in 30 million of the group’s visitors in the European Economic Area, having their personal information compromised.
One hopes Marriott has a good insurance policy as the fine imposed on them from the UK’s data privacy regulator last month was 99.2 million GBP, which also took into account the interests of other EU member states. A similar set of lawsuits has also been filed in the USA.
They are not alone as the same EU body imposed a fine of 183 million GBP on British Airways for a similar data breach, though the airline says it will appeal against this ruling. BA had a theft of data that affected 380,000 direct customer transactions although some 500,000 passengers in total are thought to have been impacted following a cyber-attack between August 21stand September 5th2018.
The continued growth of Wizz Air seems to show no sign of slowing down and the latest news from the Hungarian based carrier is that it has ordered 20 Airbus A321 XLR aircraft; the XLR standing for eXtra Long Range.
This will mean that the airline can look even further afield for new destinations as the new plane’s range will be circa eight hours! The current length of its longest routes are five-six hours and it will be intriguing just where these new destinations might be.
In total, Wizz has firm orders with Airbus for a massive 276 aircraft between now and 2026.
Airport battle in Germany
The football team (s) of Munich have long tended to have the ascendancy over their German counterparts from Frankfurt; the complete opposite of the state of play at the respective airports where Lufthansa have always considered their ‘’main hub” explicitly or otherwise, to be Frankfurt. That though may be changing.
Lufthansa has been less than happy at their treatment in Frankfurt from airport operator Fraport and as if to make a point, the airline has started to relocate several of its A380 superjumbos from Frankfurt to Munich and thus deny Frankfurt from the revenue generated around these flights. From next year, the airline will base no fewer than seven of its A380’s at Munich which will mean a 50-50 split between the two rival airports. This is a big change from Lufthansa’s initial idea to have Frankfurt as its exclusive A380 base.
One wonders what Lufthansa will do if the spat with Fraport ever gets resolved, but as long as there is Ryanair in any equation; things always get messy – though cheaper for the traveller.
The long running saga that is the Tender for running Sofia Airport appeared to edge closer to some sort of decision recently with the initial awarding of the contract to French infrastructure investor Meridiam and Munich Airport; much to the chagrin of the other four participants who each promptly filed complaints.
The complaints would appear to have some merit as illogically they offered only the concession fee and lowest financial investment! Some of their proposals would also appear to fly against the very criteria they were supposed to fill.
More will follow on this score we are sure and it would be wise for the winners to keep the champagne in the fridge for some time yet.
Remember, the initial winners to supply the Bulgarian military with fighter planes was a Swedish company but that was soon binned; the same may ensue here. It should also be remembered that Sofia Airport was opened as recently as December 2006, it is thus hardly ancient yet the building quality and the deterioration in the facility would bring into question the quality of the previous build and /or the materials used as well as the oversight in its construction. Allied to that, the lack of ability to adequately maintain the facility really does result in a significant investment being required to bring it up to scratch.
By the way, Munich Airport would only be a sort of contractor and not the airport operator so forget the notion that German efficiency would be brought to the local fore.
Remember when it was predicted that video conferencing would be the death knell for air travel? Well, another year and another record year for air travel!
IATA (International Air Transport Association) has just reported that 2018 saw a 6.9% increase in air passenger’s year on year with 4.4 billion travellers taking to the skies.
What is also interesting is that the ‘” real’” cost of air travel has supposedly halved in the past twenty years and the numbers of cities with direct air links have doubled in the same period. Also notable is the fact that the Asia-Pacific area now represents 37.1% of all air travel, easily beating both Europe and North America.
As for those employed in video conferencing – they are probably employed these days by the travel industry.
Almost but not quite
At long last, it actually appears that we may soon see the opening of the new Berlin Brandenburg Airport! This elephant in the corner of Germanic engineering efficiency was supposed to open in 2011 but due to major design flaws and a budget that has exceeded expectations three times over, it has not come close to welcoming its first visitors or indeed aeroplanes. It does though welcome a train each day that runs along the ‘” unused’” tracks to the airport station that has also never seen a passenger.
When the facility does (if) open, it is intended to eventually cater for 40 million passengers. The latest opening date targeted is October 2020. Apparently.
It looks like finally, the motorway that links Sofia with Greece; the Strouma Motorway is on its way to being completed. The last remaining piece of the jigsaw required is the building of the Kresna Gorge Section of around 35 kms. This section was always going to be both the most difficult and the costliest with the argument raging between tunnelling the route, building sections on stilts or even routing it the long way around and thus avoiding the need to tunnel extensively.
The option chosen appears to be one that will see the route to Greece being operated on a significantly refurbished two-lane road heading in one direction (south) that currently is serving both North and South heading traffic. The way north will be on newly constructed sections that will be partly elevated. Similar motorway setups can be found across several European countries.
No time frame for the construction has yet been given as no doubt the tender process will need to be started/followed, before the designated construction firm(s) can be named.
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