Editorial Don't Challenge the Narrative Some 2.5% of the worlds carbon emissions are apportioned to…
The New Facts of Life
Anyone who has travelled in the post pandemic era will be more than aware that both the cost of the flight to your destination and the cost of the accommodation once there has seen almost an almost meteoric like explosion. Its small wonder that many airlines are making record profits and the media has not been backward at reporting these. As for hotels, they tend to operate on a slightly different PR level with much less noise surrounding them and certainly much less reticence is shown by travellers when costs become a topic of the conversation. As for the hotels themselves, its probably no big secret that almost without exception, they struggle on their staffing levels, a fact which also explains why many hotels limit their guest numbers; they simply can’t service them with the staff available. However, with this particular facet, the laws of supply and demand come into play and reduced guest numbers don’t always equate to lost revenue! If there are less rooms available then the rates for those rooms that are available can become higher; the net result is more revenue per room! This then all starts to get a bit technical when it comes to hotel performance vis a vis numbers. However, regardless of the devil in these details, the financial numbers coming in from hotel groups generally are certainly going to make their shareholders happy.
In Europe, the average daily rate in hotels this July was up some 47% compared with 2019 – the last normal year of activity! In France alone this figure showed an 87% increase, Italy was 51% whilst the UK saw an increase of 31%. Just to support the comments behind our opening paragraph, the actual occupancy of guests across Europe was 3.9% down when compared with 2019. Thus; less people = more money.
When it comes to the actual hotels, the big boys certainly appear to be making their own shareholders happy. The InterContinental Hotels Group (IHG) revenue for the first half of 2023 rose by 24% to 2.23 billion USD compared with last year with profits for the half year reaching 459 million USD. When announcing their figures, they also made the comment that there has been no visible “’cooling off” of demand and that the public accepted the price increases. This constant demand for travel is certainly a comment that many travel professionals re-iterated would occur once the hype around Covid disappeared; people at the end of the day want to travel be it for work or for pleasure. A fact that those with a green agenda find difficult to understand as they lay in their tent at night on a rain swept field. Fellow hotel giant Marriott International also reported strong figures with their revenue globally up 13.5% year on year so far. Their average daily rate in Europe reached 219.59 USD per room per night whilst for the USA and Canada that figure was 187.44 USD. To also prove their faith in the hotel sector, the group also added some 33,100 rooms to their operations with some 240,000 further already under construction. Finally, the Hilton Chain also announced far better than anticipated results that went against the perceived narrative. In their results they stated that “’ strong demand was seen across all segments with no signs of weakness”. Which, one assumes will mean that the jobbing journalists will need to re-think their next articles. Their global occupancy rates reached 77%, the highest post pandemic which resulted in revenue reaching 2.66 billion USD up from 2.24 billion the previous year. Also, eye catching was their news that they have 3000 new properties in their pipeline, many of which are conversions as opposed to new builds.
As we reach the back end of what has been a pretty warm summer for many of us, the fact of the matter is that just as we have got used to the new prices for anything and everything we see in our shops and which we all at one point said that “” we would never pay””: we all do. The same on one hand appears true for our travel products. The hotel and aviation sectors have also possibly been aided by the post pandemic surge: the surge from people to do what they were restricted from doing for two years; rightly or wrongly. Despite all the taxes governments put on travel as it is perceived as a soft target and despite the clamour from environmentalists who travel the world to tell us what is best for us and what is not (SIC), at the end of the day people have an inert desire to travel.
Jamadvice Travel | BCD Bulgaria
Jumping Off Attacked Again
If you are travelling by bus or train from Sofia to Plovdiv, where the bus/train stops briefly before continuing on to Bourgas and the cost of a ticket from Sofia to Bourgas is 50 Leva whereas the cost of a ticket to Plovdiv is 75 Leva, then you would be quite normal and in order to buy a 50 Leva ticket and disembark in Plovdiv! This is what most sane and logical traveller would do. Any comments by the bus/train company that this is out of order would likely be met with hilarity from the general public at how stupid the bus/train operators can be. Its also pretty sure that any threat of legal action by the bus/train operators would be treat with the utmost contempt by the legal profession. So why do airlines think differently and try manipulate logic and common sense in their favour?
Skip lagging is the term airlines use to describe when a person buys a cheap ticket (though it doesn’t have to be a cheap ticket) for a destination but leaves the airport during a layover without catching the connecting flight. Airlines have long tried to outlaw this as a defence of their questionable pricing policies but airlines like Lufthansa and United have both lost cases in trying to sue passengers who Skiplagg. American Airlines are the latest airline operator to have a go with a law suit and are trying to sue a website actually called Skip Lagged.
Generally the laws of the world are in favour of the passenger and within Europe its interesting that the laws of Italy allow “’Skip lagging’’ if the tickets were booked in Italy and a Spanish court in 2018 also declared skip lagging to be legal.
Of course, American Airlines are a USA entity and as the case with the infamous McDonalds coffee case study (look it up) how the judges think in the USA and how judges think in Europe can be totally different. Meanwhile, from a business perspective; wouldn’t it be a good idea to set your Skip lagging website up in Italy or Spain or simply buy your tickets through legal entities in these countries?
Many a cynic can be heard suggesting that the very last people to run an economy are politicians. Running a country is like running a business and whilst often, un-popular decisions have to be made, when it comes to the day-to-day commercial side of running an economy, there is little doubt that the private sector brain wins hands down over the public sector brain. A perfect example of this is running its course in the UK.
The UK government scrapped the tax-free shopping scheme following Brexit with the short-sighted argument that it would save the treasury 2 billion GBP per annum. Every man and his dog involved in anything commercial, which includes just about every business grouping and major business calculates that the net effect of not having tax free shopping loses the economy around 2.3 billion GBP!
Even if you question the assumptions and the actual maths, engaging logic doesn’t require an Einstein. Dubai booms in part due to its expansive shopping opportunities and major European capitals like Paris and Milan are seeing a surge in shopping tourism that in turn has the knock-on effect of increased spend in hotels and restaurants. The UK’s tourism sector contributed 214 billion GBP to the economy in 2022, that number will increase as the years tick by, the figure of 2.3 billion GBP currently lost by the economy through the absence of tax-free shopping will also increase rapidly as tourism and indeed shopping tourism shows no sign of abating globally.
India’s New Departure Rules
Anyone travelling out of India now needs to have a 2D barcode to enter the airport. This is “as well as and not instead of” the usual boarding pass issuances. Travellers are being recommended to print out this barcode in addition to storing it on a mobile device.
Wizz in the Bad Books – Again
Wizz Air has incurred the wrath of the UK’s Civil Aviation Authority after an avalanche of customer complaints with passengers not receiving the assistance aviation passenger rights demand. The statement produced by the CAA stated that the authority had been engaging with the airline for some time now regarding violations of passenger rights in respect of financial compensation when flights were delayed or cancelled. Many stories have already appeared in the media connected with Wizz Air withholding refunds and compensation to passengers even after court orders have been issued.
The CAA is going to closely monitor the airline’s future compliance with revised policies including faster refunds and compensation payments. The regulator will also work with Wizz to ensure that compensation claims where delayed passengers have had their compensation incorrectly rejected, are paid out.
Strange that Wizz at the same time reports whopping profits and one would bet their cash flow statements are extremely positive! Even in a pandemic. its better than borrowing money from a bank.
Where’s the Bags?
If you were travelling by plane in 2022 then the chances your luggage was lost en route were massively higher than it has been for over a decade. Some 8 bags in every 1000 were lost, the reasons many but not least to do with airports and ground handling companies reducing head count to save money and to “”to hell with the service””. This probably explains and justifies why so many people have now got into the habit of travelling with hand luggage only; but that’s another story. Of course, the airlines will try every trick in the book not to pay out a fair amount in compensation for losing your bags as this was quite clearly “’your fault in the first place” (sic).
The good news is that lost baggage figures are getting back to normality with mishandled bags in the first half of 2023 dropping to around 6 pieces per 1000 items and as new technology is gradually adopted, this figure is expected to decrease even further.
Just as a side comment, if you really do want to keep accurate tabs on where your bag really is, try some Apple AirTags then even if the airport handling services don’t know where your bag is; you do.
Block the Barcode
Social Media platforms are not everyone’s cup of tea but there is no denying that a huge number of social media users think the rest of the world is actually interested in every little thing that they do in life; this includes knowing about their travel plans. To this extent they probably also have never thought about the security risks they open up for themselves.
Posting pictures of yourself in some far-flung destination often means your home is empty, but this might not be the biggest risk you face. Anyone posting a copy of their boarding pass showing the world that you are about to travel to Ibiza, Mykonos or Benidorm looks good in your eyes but whilst the boarding pass itself doesn’t say too much about you; the bar code on the boarding pass does!
The barcode can contain your name and ID number, it can contain your flight reservation number, frequent flyer details and even passport number. With this information, hackers can easily access your flight bookings and do whatever they wish with it and even transfer frequent flyer miles without necessarily having to crack passwords. From there the data can find its way onto the dark web where full bloodied social engineering tactics can engage to assume a total identity theft.
So, the moral of this story is either drop social media or be careful: the world doesn’t have to know “’everything’” you do.
Where The Money Goes
Journalistic Travel Experts who migrated to their new function after being health experts during Covid, were vociferous in their literary concoctions some 24 months ago that travel would either a) never even be the same again or b) not get to where it was post pandemic until 2026 or 2025 at the very earliest. Unlike forecasts of an economic recession which to all intents are self-fulfilling, people wishing to travel for business or for pleasure didn’t heed the doom and gloom prophecies with recent financial results from the travel sector merely emphasising the point that we are now “almost back to where we were, or even we are back there already!” The latest forecast from the Business Travel sector reinforces this comment and states that figures in 2024 will actually surpass 2019 levels. In terms of the actual amounts spent globally on Business Travel, this will reach a massive 1.4 trillion USD in 2924 and continue upwards to reach 1.8 trillion USD in 2027.
Within these figures, what is interesting is the break down of where that money is spent on business travel. Some 18% goes on air travel, 38 % on accommodation, 19% on food and beverage, 13% on ground transport and 12% on other items. The average amount spent per trip is some 1,018 USD per person (942 Euro).
Dissecting these figures, it is interesting to note that the area that often leads to much huffing and puffing of the CFO’s cheeks. the airfare, is perhaps not quite as significant as first imagined. Our editorial already notes the explosion in accommodation costs and perhaps it is here that anyone looking to maximise their budget should focus their attention.
JA! More Profits
The theme this month has been very much on financials as more and more travel providers report better than expected performances; the Lufthansa Group of airlines (Lufthansa, Swiss, Austrian, Eurowings and Brussels Airlines) once again appear to not want to miss the party. Their second quarter results show revenue increase 17% year on year to 9.4 billion Euros with a net profit of 881 million Euro’s. For the half year, revenue reached 16.4 billion Euros. The Group expects the airline capacity to reach 85% of 2019 levels, up 20% on the previous year with the annual EBIT is expected to be “at least” 2.6 billion Euros.
As with our editorial feature regarding accommodation, these figures show that you don’t need full operational capability to be in place to make whopping profits!
What happens when, due to a technical mishap, your in-flight catering has to be “thrown away’ immediately prior to departure? Do you; delay the flight, possibly for several hours whilst replacement food can be provided, or send the plane out as normal and leave the passengers hungry? Neither option is ideal and arguably people will prefer to fly on an empty stomach rather than risk having several hours delay at an airport. This is the conundrum facing the BA crew on a flight departing the Turks and Caicos Islands in the Caribbean en-route to London via a stopover in the Bahamas. The solution the crew found: get in KFC – lots of it.
The story sounds bizarre but buying as much KFC whilst the plane stopped off in the Bahamas was the quick fix solution the crew took. Taking into account the options available for the crew and passengers, it seems at least the idea was appreciated although the local KFC branch nearest the airport couldn’t quite make enough fries and chicken strips all for all the passengers so in many cases it was one piece of chicken each! Which begs the question; did Business class passengers get the same?
BA did also give the passengers refreshment vouchers to try help compensate for the mishap. One assumes it wasn’t for use at a KFC.
An Average Increase
Here in Bulgaria, the vast majority of people who travel for business, indeed over 90% of them, travel to Europe as their final destination. Pre-Pandemic, travel to Asia was starting to gather momentum, whilst travel to the America’s was usually leisure focussed. The fact that European cities are the eventual destination for most people usually means that the actual airline ticket cost is relatively modest, a caveat to this is that immediately post pandemic, as people clambered to get on the move again, airlines where not shy at maxing their revenues to make up for lost revenue over the two previous years. The result was sky high ticket prices which perhaps surprisingly people accepted. However, the CFO’s or budget holders of local companies must be relieved that generally they don’t have to pay an average of 693 Euros per flight ticket which has just been announced as the global average for a person travelling on business. This is an all-time high and out strips the 2019 figure of 620 Euros. By the end of 2023, this average figure is expected to increase again by some 2.3%.
However, as we have already noted in the piece ‘where the money goes’, more focus should be made at hotel costs rather than flight costs.
On and On
The ongoing saga surrounding the autocratic measures announced by the Dutch Government continue to irritate just about all European airlines and airline groups. The Amsterdam Court of Appeal recently overturned a lower court ruling rejecting the governments move to restrict airline movements at Amsterdam Schiphol Airport from 500,000 per year to 460,000 per year.
In simple terms, the Government decision appears to contradict the laws of the European Union, but one could also argue that its quite normal in some countries for the EU laws to be selectively ignored. Magic words that provide the Monopoly type get out of Jail card are “security and environment”. Using these as an excuse seems to provide justification to do whatever one wishes, whenever and however you wish and with no comeback expected. Unless you want to jeopardise your career that is.