Editorial

Managing Tourism Better

The Covid era is behind us and people have developed an inherent desire to travel, due in part possibly by the restrictions previously imposed on them.; this is a fact and not an opinion. The current year of 2024 is set to be a record breaking one for each and every aspect of the travel industry, be that for the airlines and the numbers who will take to the skies, or the hotels, resorts and cities who will absorb this demand. Like with everything else however, the news story that often garners the most attention is not the success story, but the bad news story. When that is applied to travel, that story seems to be focussing on the small minority who think that travel and tourism is one of the world’s greatest evil. Two examples have made media news over the past couple of months, the first example is Venice which in fairness has never been far away from a bad ness story for several years, the second is the island of Majorca.

With Venice, the battle of traditional urban life v get rich quick commercialism has already seen cruise ships banned from entering the cities canals, the number of cruise ships entering the city had gone beyond saturation point. Another recent move has seen the city apply a 5 Euro charge to day trip visitors in another attempt to limit their flow. Other moves by the city authorities also sees loudspeakers banned and group sizes limited to 25 in size. Whether these moves will have the desired effect, only time will tell and anyone who has visited Venice recently will testify that the visitor numbers consistently make appreciating the historic city a test of endurance rather than a spectacle of enjoyment. What is also becoming a serious issue for Venice is a decreasing resident population which has the knock-on effect of reducing the people working in the hospitality sector. Indeed, a recent observation from visitors noted that it was rare to see an Italian working in a restaurant. Some 49.000 tourist beds can be found in the historic centre of Venice which outweighs the number available to workers. Some 50,000 people now live in Venice whereas in the 1970’s that number was 150,000. The net result is that locals simply can’t afford to live there so have left the area to seek employment elsewhere.

The Island of Majorca has also seen resentment towards tourism and some 10,000 people participated in a march in May highlighting the issues tourism was causing the island. However, if “only” 10,000 have negative sentiments towards the hospitality industry then is that more a case of a noisy minority getting un-necessary media coverage?  Majorca has a population of some 940,000 people and the travel and hospitality industry employs over 100,000 people which is over 20% of the islands total workforce. Over 3000 flights per week arrive at Palma Airport in the summer months. These bring in tourists that contribute 40% of the islands GDP! 10,000 people have to be listened to, but so too do the voices of 100,000. We do live in a democracy after all, don’t we?

The fact of the matter is that whether we like it or not, people today want to travel more and more and equally, more and more people have the financial resources and indeed the time to travel more frequently. This statement would also include the tourists from new source markets such as China and India as well as some of the old favourites like the Koreans and Japanese. People from these markets want to discover the world and its hard to imagine them travelling to Rome and Paris and not seeing the Coliseum or the Eifel Tower; demand has to be satisfied. What the problem is comes down is how tourism is managed, or indeed is not managed and who wins and loses from it. In the case of Majorca or indeed any island, it is surely easy to restrict arrivals at airports and ports by limiting the flights and boats that arrive. This is harder to do for a city like Venice. Limiting visitor numbers though goes against the free-market concept but if the free market allows apartment holders to convert their properties into short term lets only, then surely this is short termism and in the economic result in the end is that everyone loses. Except that is, the early entrepreneurs will have sailed off long ago into the sunset with their fortune.

Back to Normality

Off the Rails

The plans of a start-up rail operator that had visions of operating overnight rail services out of Paris has been abandoned. The concept has received significant PR support in the B2B world but a lack of investment means the project, which started in 2020, has been binned. The first line was planned to be Paris – Venice with the concept being that this was a ‘’hotel on wheels” with private ensuite bedrooms, restaurants and a bar. The plans further went to encompass destinations such as Barcelona, Rome, Marid and Berlin being served as a part of business plan that included cities within an 800 – 1500 km radius of Paris.

Interestingly, the founder of the operators that planned to operate these trains made the comment that investors are not interested in such projects, perhaps he was suggesting that if its not an IT project, interest wanes, as appears to be the case in many projects. Further and perhaps more relevant, the point was made that whilst the EU has a project to open up cross border train travel, the project was not designed to favour new entrants into the rail market, but rather protect the interests of the current quasi state players. A scenario that has been relevant for decades and which has held back the integration of the rail sector within Europe, but not even the EU seems capable of changing the monopoly habits of a lifetime.

Bags of Optimism

Something that we have touched on before is the subject of lost baggage for travellers and the annoyance and inconvenience this causes. The good news is that the continued improvement in the decreasing numbers of lost bags shows no sign of abating. For 2023, the number of bags mis-handled in the aviation sector fell from 7.6 per 1000 passengers to 6.9 per 1000. This comes despite the passenger numbers increasing in 2023 for the first time in five years to 5.2 billion.

In the longer term, the figures show that since 2007, passenger’s numbers have increased 111% though the number of lost bags has decreased by 63%. The region with the “’worst’” performing stats for bag losses is Europe with 10.6 bags per 1000, whilst the best performing region is Asia just 3 bags per 1000 passengers.

Other interesting data shows that two-thirds of airlines now offer unassisted bag drop whilst 85% of airports offer self service bag drop. The word “security(?)” springs to mind here! Further, 32% of all passengers now rely on baggage collection information now being sent to their mobile devices.

Floods of Thought

A slightly random tongue in cheek thought came to mind last week as severe weather over the island of Majorca saw the airport closed for several hours due to flash floods with more than 100 flights delayed, cancelled or diverted. Many of the flights that were diverted went to Valencia, Barcelona, Minorca and Ibiza. Of course, there is a significant knock-on effect for planes having to divert as not only are the aircraft bringing in passengers to a destination, they are taking home passengers from that destination. The tight deadlines that airlines now have also means that flights later in the day will be affected as the planes are “out if position”. There is however a solution if we believe half of what we read. Rail.

The greens and environmentalists across Europe may be a minority but they shout loudly. If they had their way Europe would be connected by railway, even solar powered railway that will transport people across the continent to enrich themselves with the cultures of their European neighbours. So why not enrich people’s culture with trips to Majorca, Minorca and Ibiza by rail; just think of the reduction in the carbon footprint this would facilitate with no need for the 2842 weekly flights to Majorca alone for June 2024. Except that is these destinations are islands and despite a small minority of self-destruct people who wish to shut these islands down, such destinations depend on air connectivity for their very economic and social survival.

What goes Around comes Around

If anyone cared to think about how today’s society functions, they would probably increase their blood pressure to alarming levels, black is not always black and white is not always white, especially in today’s social media dominated world. However, we don’t have to think solely about today’s business practices to realise that large corporations are the tail that wags the dog that is called government, no matter how big or small that dog is. Imagine a business where you paid for something many months in advance but if you decided not go ahead with the plans you lost your money? OK, so placing an order for a new car or a house which is then partly completed might not draw sympathy for the car manufacturer or house builder but if what if you buy an airline ticket in January for October but cancel in March, is the airline inconvenienced – no, but you may well not get your money back. What if you need to change the date of travel by one day, does that inconvenience the airline significantly – no, but again they not only will charge you extra for the change but they might also keep all your money for the first ticket and advise you to buy a new ticket instead. The bottom line is that the airline industry works to standards that fall below the line of ethical behaviour in many cases, it is therefore amusing(!) to see three airlines have been fined 2.5 million USD in America for delayed Covid refunds.

The airlines are Lufthansa, KLM and South African Airways. Lufthansa have to refund 775 million USD, KLM 113.3 million USD and SAA 15.2 million USD. Meanwhile the first two of these airlines had also to pay a separate fine to the US Treasury of 1.1 million USD.

Whilst this is a step forward in bringing airlines to account, one can’t but help think that during Covid when all businesses were cash strapped and doing whatever they could to stay alive, having the travelling publics cash in the airlines bank account was easier and cheaper than knocking on either the bank managers door or the governments door for a bailout. There would be every little interest from the airlines in getting clients’ money back to them fast, if at all. As such, the fines are well worth it if the means justified the end to them.  Trust an airline at your peril.

New Homes for 3 Euros

The small town of Sambuca di Sicilia on the island of Sicily is selling another batch of houses, this time for 3 Euros! This is the third batch that are being sold and the commune is not the first in Italy to do this, the communes of Castropignano and Sant E’lia a Pianisi have already run projects to find owners for run down properties, in Sambuca’s case, many of the town’s houses were left vacant after an earthquake in 1969 and have fallen into severe disrepair with the municipality taking them over. So far 250 houses have been sold generating 20 million Euros in revenue for the local economy through work provided by local architects, surveyors, interior designers and builders.

It should be noted that 3 Euro’s is only a part of the equation as buyers have to lay down a deposit of 5000 Euros in order to bid for a house (which will be returned if your bid is unsuccessful). Th e actual cost of renovating such houses can be anywhere between 30,000 – 200,000 Euros and the local Town Hall monitors all the work and ensures that not only are the deadlines for completion of the work met, but also the renovation work is completed in traditional style and in keeping with the surrounds; otherwise, you forfeit the purchase.

So, why not roll that idea out in Bulgaria? There are hundreds of villages that are almost deserted and left with an ageing population. Whilst the idea is sound in theory, in practice the chances of finding capable architects, surveyors, interior designers and especially capable local builders might be something of a challenge to put it mildly. Unless of course the deadlines for completion extended a decade or so.

Muscial Chairs

In a few weeks the EU regulators will decide if the Lufthansa group can continue with their absorption strategy of taking over the key airlines in adjacent countries. The current ongoing focus is to take over the remnants of Alitalia which are now renamed ITA. Lufthansa first bid for ITA in May 2023 but the EU has frequently said it had “competition concerns’ and that the deal could increase prices and decrease the quality of airline services. Milan Linate Airport is almost entirely dominated by ITA operations.  To counter that, it seems that Lufthansa has offered to give up some 15 – 17 daily slot pairs at Milan Linate Airport as well as allowing competitors to take over some of the ITA’s Long Haul flights out of Rome to North America including San Francisco, Washington, Chicago and Toronto.

Musical chairs in another format.

Sporting Chance

As the summer sporting season begins, it will be some time before we hear about the impact on accommodation rates across Germany and France. Germany is hosting to this summers European Football Championship across 10 of its cities whilst Paris is host to the summer Olympics. Its been well documented that hosting such events has its own pros and cons. For example, when France hosted the Football World Cup in Summer in 1998, the actual total visitor numbers to France during the summer months declined. Potential tourists not interested in football were obviously scared off by price hikes and the hassle associated with such events. For Paris, the world we find ourselves in today means that security will be tight with access to areas around the many sporting venues limited to event ticket holders and residents; enter the infamous barcode process. Paris though has a recent chequered past in hosting big sporting events so one hopes they will have learnt from previous debacles and finally run a smooth and efficient operation.

So only time will tell if 1998 will repeat itself for France and if the 10 host cities of Germany benefit to the detriment of the rest of the country.

Not Solely a European Problem

The World does not mean just “Europe” and neither should Europe make up for the rest of the world. If we look at the most polluting rivers around the world none of the Top 10 are in Europe with the first entrant from the Continent being the Danube which is ranked the 12^th most polluting river in the world. Yet the media makes it sound that Europe is the graveyard for mankind and the source of all things polluting: this includes air travel. The truth is very different.

IATA Head and ex British Airways boss Willie Walsh was quite firm at a recent IATA heads together when it was put to him that perhaps ‘’Europe should slam on the brakes and stop growth to facilitate carbon emission targets”. Obviously, the person asking the loaded question favourite colour is green but the response from Walsh pointed at common sense when he retorted; ‘typically such conversations are European conversations and solely European;” in short, Europe will not baby sit the rest of the world.”

He went on to point out that India is experiencing a huge aviation boom as flying is often the only way to get around such a large country. Travelling by train from one end of the country to another can take many days and road transport is even worse. Africa only makes up 2% of global air travel but that should be and eventually will be, much higher as this would also generate huge economic benefits to the continent.

The upshot of the response is that countries and regions outside Europe do not see the need to restrict growth, indeed just the opposite. It is hence a very much European fascination.  Carbon Emission reductions will take place as technology and efficiency drives the industry. Perhaps ironically, not investing in travel and generating economic benefits may see this rate of technological advancement slow down.

Another Spurious Tax

Lufthansa has set a sad trend which will no doubt have all other airlines rushing for the “cut and paste” key. With immediate effect (June 26th) they have introduced a “environmental cost surcharge”. Any other business or even any other business within the travel and hospitality sector will simply absorb such (unnecessary) costs into their routine expenses and price their products accordingly. Can you imagine a hotel giving a rate but then adding we also charge X Euro for the (unnecessary) paperwork we have to complete to meet environmental tick boxes?

That said, airlines have always been good at creating add ons that are not really add ons, but let’s pretend they are. The cost of a ticket to say the Caribbean may total 1000 Euro’s but the airline will break that down to read for example flight cost 350 EUR, then a breakdown of non-negotiable Taxes 650 EUR. The airline can argue they are being transparent but it really is perhaps more finding an excuse, the price the traveller pays is the only price he or she is interested in and not the excuse.

The current environmental tax – note the word “current” as these fees will no doubt increase at the first opportunity – is between 1- 5 Euros per flight for Economy class in Europe and between 6 – 12 Euros for Long haul flights per leg.

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