Editorial

Money Talks

The Football World Cup which is currently occupying people’s attention both on the sports pages as well as in the mainstream news, is already the subject matter of documentaries and investigative journalism. Regardless though of what is said and what is written, the host country will do whatever it wants however it wants. For the uninitiated, the awarding of the Football World Cup; the world’s second greatest sporting event, to a country with no history of football was controversial from the start: indeed, it was unbelievable.  Everyone knew how the awarding of the event was rigged but no-one had the teeth nor the capability to challenge where money talks and where commerce, politics and pocket lining go hand in hand.

Aside from the right or wrongs of this, one question that seems to have been overlooked is what is the purpose of hosting such a mega global event in such a small, though super rich, country? When China hosted the Olympic Games, it was designed to make a statement that China had arrived on the worlds stage, that it was ready to play its role in the commercial world and to prove it was capable. With the benefit of hindsight this has proved to be correct and the Olympics were the launch pad. Decades earlier both Russia and the USA hosted the games in succession to try “out do” each other in the eyes of the world in the midst of an ongoing cold war. For Qatar though, what is its purpose?

Is the move designed to show the world that it is a country open to business? Hardly, as the country and population is so small its barely twice the size of Sofia. Unlike China it cannot be a manufacturing hub. Is it a move to encourage sport in its own country: unlikely! Is the move an attempt to showcase Qatar as a rival to nearby Dubai located a mere 383 kms away which is now arguably the entertainment capital of the world, or at least anyone within say a six-hour flight. The answer again is “’hardly’” as entertainment in Qatar is limited, or should that be almost non-existent! A funny story was by two sports journalists who went for a walk on the corniche one lunchtime shortly after arriving. With the sea on one side and Football fan huts on the other they set off, expect the huts that were supposedly for football fans to visit were all closed and there was absolutely no-one around. After a 25 min walk, they turned around and went back to the only place there was life: their hotel. To put a local context onto matters, the seafront corniche is a bit like walking along the sea front at Sunny Beach or Golden Sands in summer with the sea on one side of you but without the hotels, bars, restaurants, cafes and shops on the other side. In fact, there is nothing there. So aside of showing how much money the country has that it can afford to build seven new stadiums that will be dismantled as soon as the event finishes, what is the reason for hosting the event? Apparently, the country had around 100 hotels prior to the World Cup planning and a further 100 or so have been added to the hotel stock. What will happen to these hotels once the crowds have gone? There could be a lot of cut price accommodation around very soon.

Its also worth mentioning that initial feedback is that a lot of the aforementioned hotels found themselves surprisingly with lots of empty rooms which they had banked on selling at premium rates in the initial stages of the tournament. A surprise? Probably not when you see the actual rates being charged and also if you add in the fact that there are 48 flights per day from nearby Dubai where an even more plentiful supply of hotel rooms are available with entertainment to boot! The only problem with travelling from Dubai to Qatar for the day is you are dependent on the Qatari visa system working which often it has not been with football fans refused boarding onto planes as their visas could not be confirmed by ‘the system”. The same ‘system’ also didn’t recognise many match tickets people were holding electronically as they tried to enter stadiums. All in all, this event is probably a bit much for Qatar. That won’t stop their party though.

Just to appease those with an eye on the environment, it is pleasing to hear however that the event will be carbon neutral. Honestly: or that’s what is being said by the hosts. That statement probably originates from the same sources that argue that large numbers of migrant workers did not die in building the infrastructure surrounding the event and nor were they kept in in-human conditions and paid scant amounts. A final amusing add on surrounds the match day attendances being given. On numerous occasions, the figures given are (for example) 42,645 although the stadium only holds 40,000 spectators! That is also with visibly lots of empty seats during the duration of the matches. The propaganda machine is at least on the same page.  The next chapter of the book talks about meeting Peter Pan and Santa Claus.

Back to the future

Home no more

The passing away of Karimi Nasseri has been announced. He is the man who called Paris Charles De Gaulle Airport his home for 18 years and inspired the flim ‘’The Terminal’” which featured Tom Hanks and Catherine Zeta-Jones. He was born in 1945 in Iran but due to immigration issues effectively got stuck in the airport when he flew there in 1988 on a visit to try locate his mother. He had the option to leave the airport in 1999 when he was granted refugee status but refused to do so though he did eventually leave in 2006. Shortly before his death he returned again to live in the airport. He passed away at his home ie Charles De Gaulle Airport.

Size matters

One year ago, airlines had their begging bowls out pointing in the direction of their respective home governments crying for handouts whilst at the same time crying the poor tale. So, as they now make profits and indeed record profits, will they re-pay their loans back or increase their tax payments to the same benefactors as a mark of goodwill and at the same time relieve the tax burden on the man in the street? Unlikely. Some airlines however are doing better than others and get on with the job regardless. UAE based Emirates Group may well be a good example of this.

The Dubai based group has just announced a six-month profit for the first half of 2022 of 1.2 billion USD. Two years ago, the entire fleet was grounded due to Covid. To enable this, its interesting to note that of its 68,379 passenger flights in the first half of 2022, 25% were operated by the Airbus A380, proof if ever it were needed that size matters.

Confirmation

Last month our editorial feature was connected with the myth that stopping short haul air travel and getting people onto trains will solve the carbon issues that surround aviation. The gist being that its long-haul flights that is the main issue and cutting short haul flights is merely a smokescreen. The subject matter is clearly a hot potato as several additional reports on the matter also appeared concurrently. One notable one is from the NGO the Travel Foundation, working together with numerous other European NGO’s and Universities in Holland which takes the point even further.

It says that long haul travel should be capped at 2019 levels until the industry learns how to decarbonise itself. Pointing out also that whilst long haul travel makes up just 2% of all travel, it is by some distance the most polluting at around 19%.  It adds that if left unchecked such travel will account for 41% of travel total emissions by 2050 yet be just 4% off all trips!

The report then goes on to say that current feel-good strategies that rely solely on carbon offsetting, technological efficiencies and the current “’buzz” concept, “biofuels” are totally inadequate (aka useless). Additionally, it also adds the obvious that the poorest countries are the ones that have the least resources to confront the issues whilst at the same time they are also the ones most likely to suffer from global warming et al.

Unless a new Pandemic appears in the near future, the aforementioned is likely to be the next big talking point across travel and is also likely to gain momentum as more and more people seize their chance to have their voices heard.

Hotel rates soar

The hotel industry looks like it is making hay whilst the sun shines with more hotel groups forecasting huge profits. The latest is the Hilton Group who made an impressive 346 Million USD profit in the third quarter 2022 and predict a year end profit of circa 1.2 billion USD! During the same financial quarter, some 13,000 hotel rooms were added to the Hilton portfolio to help boost their numbers and additionally Hilton has some 416,000 rooms in their pipeline.

As if to support the booming hotel sector numbers, London’s daily average hotel rate soared to 199.95 GBP per night in October compared with 162.07 in 2021. Whilst comparing 2022 with 2021 is dubious, the rates being charged in London as well as other European cities echo the sentiment of revenge travel. The London rates are forecasted to go even higher to 212.60 in 2023. The concept of the cheap weekend my soon be a thing of the past.

Heading West

The demand for travel to North America from the region is probably not what it was some twenty years ago when the opening up of Eastern Europe saw a clammer for a new life across the pond where the streets were lined with gold. Eventually reality prevails and the easier option of a new life in Europe came along quickly. There is however still a strong demand for travel to North America to visit friends and family and countries like Poland and Serbia have a large diaspora there. To accommodate this and to also possibly seize a business opportunity, Air Serbia plans to start twice weekly flights to Chicago from May 2023 which will rise to three times weekly a month later. The airline also interlines with American Airlines and Jetblue in the USA which will also facilitate onward connections. Connections will be available from Sofia.­­­­­­­­­­­

EU in a cloud

Amidst the reoccurring banging of the drum regarding travel and greenhouses gasses, the political points scoring of European politicians fails to highlight the fact that it is the EU’s own intransigeance and indeed ineptness that fails to stop an immediate reduction in emission by 10%. If EU parliamentarians could only get their act together, 10% is the conservative calculation of the potential emissions that could be cut if Europe had a “”single European sky”’. Translate this to Air Traffic Control system.

Presently each country looks after its own air space and a plane on a journey across Europe is handled by numerous air traffic control centres handled by the country being overflown. This often means circuitous routes being taken and hence longer journeys which means more fuel burn.

When every political sound bite seems focussed on getting rid of short haul air traffic and reducing the carbon emissions by 5.9% across Europe, why not reach a figure of 10% faster? The answer is, of course, politics.

More black holes

Remember the days not so long ago when receiving funds/grants/loans from your home government was the signature on a death warrant in the eyes of the EU? Airlines such as Malev and Cyprus Airways can fill you in more on that score, but that hardnosed and arguably ill thought out attempt at capitalism didn’t last too long. Alitalia were beneficiaries of a revised mode of thinking within the EU and they have benefitted massively financially from state hand outs over the years; until they closed after losing 11 billion Euros!  Italy’s Alitalia phoenix airline is ITA and they have just received a ‘”further’” 400m Euro from the Italian government which will take the total handed out to them to 1.35 billion Euro’s.

The argument for the funds is that it will facilitate the airlines development having commenced operations in 2020. That development it is hoped, will allow the airline to be flogged off to the highest bidder: assuming one is out there. Reports are that the likes of Lufthansa, Delta Air Lines and Air France-KLM are interested though one questions their seriousness and the fact that history has taught them to steer clear of black holes.

Crypto travel

About three years ago in the days before Covid and when news stories were thin on the ground, the rise and rise as it was at that time of cryptocurrencies and the huge profits some people were making out of them, became headline news and effectively created a new demand for this new form of “currency”, a demand that in turn pushed the prices of existing cryptocurrencies even higher. The less sanguine of the population might at this juncture have pointed out that cryptocurrencies, if they were to be successful, would need the buy in from global governments and central banks; neither, in the cold light of day, would likely be forthcoming or welcoming to this new player. Putting it another way, it’s a bit like Turkeys voting for Christmas or the Communist Party voting for democracy. It isn’t going to happen. That said, it doesn’t mean to say that cryptocurrencies wont one day become a standard and usual form of payment for everyday products and items being bought by everyday people; it’s just that that point is some way off. So how has the travel industry taken to cryptocurrencies?

No matter what and no matter where, there will always be early adopters in society, so its normal that in an attempt to gain market advantage, certain business’s will be keen to be seen as adopting cryptocurrency as a form or payment. It’s a totally different question as to whether anyone or whether any critical mass of people actually use this option! In travel, the odd tale is shared, often for marketing purposes, about how people are using crypto as a means to pay for their travel. The short-term issue though may well be that its people with a younger demographic i.e., millennials and Gen Z ers that are forever using technology that are more likely to try use crypto to pay for things, but that is not likely to be big ticket items such as travel. Not yet anyway. Articles connected with travel and payment options always conjure up a story to suit an angle and one read recently was claiming that clients who use crypto to pay for travel are usually sophisticated and are buying premium products for long haul flights (first class) and for deluxe hotels. What that doesn’t say is why such clients use crypto and whether they are doing so to hide from the tax man! A more than likely scenario.

Perhaps the real hindrance to crypto gathering any momentum soon in the sphere of travel is perhaps the credit card! People have got used to (largely) paying for travel products using their cards because they also provide them with a degree of safety and security when booking a holiday, a hotel or any other travel service. Business’s use cards to pay for their staff travel and for expenses whilst travelling such as meals and taxi’s. How crypto can replace that habit as well as the whole process involved in business’s and in their expense management is a question no-one has even began to consider. So crypto in travel? Not in any meaningful volumes anytime soon.

Getting back to normal

Reports and articles based around such reports abound when it comes to both forecasting the future numbers for the travel industry as well as evaluating where the travel sector is vis a vis past years. As is the case with all such reports, the devil is in the detail and whilst for example the headline maybe that for example travel transactions will be 75% in 2022 compared with 2019 – the last normal year – the word normal is an interesting one as 2022 is not normal as generally speaking January and February barely existed in travel and the re-start did not gain momentum until March. Hence, to put it mildly; we are comparing 12 months of 2019 with 10 months of 2022.

Aside of this fact, the habits of people booking travel are also interesting in that for business purposes, people are now taking longer trips with one report showing the duration of trips increasing from 4.6 days in 2019 to 6.7 days in 2022. The period when travel is booked ahead is also changing with people booking closer to the departure date at 21.1 days average now as opposed to 23.4 days average in 2019, though this figure can also possibly be explained by the fact that people were unsure if travel would actually take place over the previous two years and if anything had to be refunded for a cancelled trip, then the processing of refunds by airlines and hotels could take months. Hence the later the booking was made, then the less likely would be the trip was cancelled.  Whilst on the subject of refunds, an interesting fact is that in the first months of this year, 1 booking in 49 was being refunded wheras that figure has now dropped to 1 in 86 i.e. less trips are being cancelled.

So, the take away from all this is that travel is slowly but surely getting back to normal.

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