Travel Trends

New Zealand travellers spend the most, Korean tourists prefer payment cards to cash, and 18% of Australians reckon you can't beat a money belt for financial security while on the road. These are among the results  of a new Visa survey of Asia Pacific travellers. No surprise that the most isolated travellers – Kiwis and Australians – are the biggest spender: they have no choice.

The average Kiwi tourist spent US$5588 on their last overseas trip, slightly more than their Aussie cousins who outlayed US$5258. More telling is the finding that Japanese tourists are now among the tightest travellers with an average spend of US$2141, less than all but two Asia Pacific countries. Indians, Chinese, Koreans, Malays, Taiwanese and Singaporeans all spent more. How times have changed. More …

Brisbane Better Than Most

NEW research shows Australia is the most resilient of the Asia Pacific hotel markets with Brisbane, Melbourne and Sydney weaker than a year ago but still recording occupancy rates of 70% or more, according to the May stats from STR Global. The biggest losers have been the once hot markets of China, India and Singapore, where room revenue has plummeted up to 36% in a year.

However, it must be said the Average Room Rate in Singapore, S$241 during May, is still far higher than Australia (A$161) even though average occupancy is significantly less – 63.5% compared with 69.2%. On that basis, you’d have to think that Singapore has further to fall unless demand picks up. It’s worth noting a couple of markets rebounded. Bali recorded an 18.5% increase in room rates while Tokyo (+12.9%) and Osaka (+8.7%) also improved.

Boeing Dreamliner

BOEING and Qantas have cut a deal that will save the airline group A$3 billion but impact on the international expansion of Jetstar.

The low cost carrier was originally scheduled to receive 15 B787-9, the long-haul version of the Dreamliner aircraft, last August, but the delivery date has now been pushed back to mid-2013 assuming no further delays.

As part of the new arrangements, Qantas has cancelled orders for a further 15 B787-9s worth A$3 billion but at this stage remains committed to buying 50 of the aircraft from Boeing, which has had enormous problems completing its development due to a myriad of reasons including worker unrest, production and supply chain issues. More …

Big hoteliers want to move away from contracted rates

GOOD luck to InterContinental Hotels Group on its push to shift corporate accounts away from fixed rate contracts – which is what a majority still prefer – to dynamic pricing. The timing is certainly better than when Accor Asia Pacific launched a similar campaign a couple of years ago.

At that time hotel rates were rising and major companies believed (with some justification) they’d be better off negotiating a set rate for the year rather than getting a discount off rate of the day. So some switched but many preferred to stick with contracts.

Now prices are falling – in some cases sharply – and the equation has changed. Why lock in a rate when it’s likely to be under cut? In theory this sets the scene for the mass migration of corporate accounts to dynamic pricing. More …

THE numbers are all good for Wotif.com, which has upgraded its profit forecast to A$42m this financial year, though one analyst from Linwar Securities, James Bales, reckons its shares are exorbitant at a price earnings ratio (share price divided by most recent earnings) of around 21. I’m not so sure, given the virtual monopoly it has an online accommodation and the PE ratios currently accorded to other travel companies.

For example, Qantas, facing a mountain of competition and issues, is far more expensive, trading on an extremely aggressive PE of 32. Meanwhile, the market is valuing online retailer Webjet and traditional agency giant Flight Centre the same with a PE of around 12. Interesting – which one is correct? Meanwhile, Jetset is trading at a miserable 4x earnings, while Virgin Blue doesn’t even have one. Something to do with earnings I guess.

DEMAND must be really tanking with a new wave of cheap international airfares. Qantas is now offering a return airfares ex-Sydney to Singapore from A$658, Los Angeles for A$951 and Shanghai A$981. Interesting to note that Qantas is heavily publicising the fact that these deals can be bought through travel agents such as Travelscene and American Express. The same ads encourage frequent flyers to burn points by taking up the offers.

ONLINE Travel Agency airline bookings in Australia have soared by 26% while aviation sales though traditional agents slumped 12% in the year to April. Airline bookings were down overall with Europe hardest-hit, off by 25%. The only bright spot was the Middle East, which attracted 8% more Australian visitors. “These are some very sobering figures for the Australian travel industry,” said David Brett, President Amadeus Asia Pacific, at a briefing in Sydney.

The sharpest declines were recorded in business class with the shift to economy sending demand plummeting 36%. Trans-Tasman traffic fell 21%. “We are seeing some signs of hope with long-haul travel numbers improving slightly in April. However, the picture remains pretty bleak.” Amadeus Australia Managing Director Tim Russell said OTAs were benefitting from the belief that everything is cheaper on the web. It's also likely that travellers are increasingly booking point-to-point destinations closer to home. More …

STA Travel has become the first 'traditional' Australian travel retailer to embrace social media with the launch of a new website designed to broaden the company's appeal among 'young people' beyond its core student market. The first phase features blogs and destination content with user generated accommodation reviews to follow in the next few months. Strong images are also used "The new site is a significant step in the rebranding of STA Travel, which is broadening its appeal to a wider audience of young people beyond the traditional student market," said Basil Hyman, Product and Marketing Director of STA Travel. The company was founded 30 years ago and now has 400 branches around the world, including more than 100 in Australia and New Zealand.

THE new television ad for Virgin Blue inadvertently sums up the branding dilemma faced by the airline, which launched as a Low Cost Carrier in August 2000 but has been moving steadily upmarket ever since, so much so that a couple of years ago CEO Brett Godfrey was publicly toying with the idea of launching a … Low Cost Carrier. This thought didn’t fly. Instead we now have a feel good ad that reminds people of the days when Virgin was positioned as cheap while emphasising service and attractive people. 

It contrasts the travels of a Brad Pitt lookalike in 1999 and 2009.  Ten years ago he drives (airfares too expensive) now he flies into the arms of his beautiful girlfriend faster than you can say “corny” while a comforting voice says: “Of all our great ideas the best one was to make it possible for all Australians to fly”. Clearly the advertisement is designed to foster an emotional connection. But does it really say anything? I'm not sure.  More …

Taking the plunge at Perisher

SOME bullish pricing strategies from a couple of Aussie ski resorts despite rampant travel industry discounting. 

Perisher Valley is leading the way, listing its adult day rate at $102 for both high and low season despite the big seasonal variations in the number of lifts running.   In other words, the product is very different yet you pay the same price. I can’t think of any other industry where this would happen. Thredbo has also adopted this flat rate policy on its day rate but is priced marginally lower at $99. 

Both resorts say  they run spot specials on the day rate throughout the early season. For example for the first week or so Perisher had a special adult day rate of $85, but a quick check today (June 29) shows both are now fully priced. 

The Victorian resorts do have early bird day rates that are set in stone until the July school holidays, and Mt Hotham gets kudos for some smart early season marketing including lift, lesson, lunch, equipment hire and resort entry in a package costing $76. It seems like the smart thing to do given the intense competition now in evidence for the holiday dollar.

AIRLINE profits may be under pressure but upwardly mobile low-cost carrier Jetstar has no intention of cutting back on advertising, vowing to maintain its annual ad budget of $30m a year. But Jetstar is looking for new ideas and better value with head of Marketing and PR, David May, announcing that the carrier had shifted its media buying account from Zenith Optimedia to Maxus. “It’s good to get new ideas … our business has changed dramatically,” May said. Travel Trends: June 10, 2009

TWITTER now having a real impact on search and web traffic. Tweets are starting to show strongly in results while users are increasingly deploying the medium to highlight web items of interest. The shift is well summed by Steve Johnson in an article for Time. Here's an edited highlight:

Skeptics might wonder just how much subversion and wit is conveyable via 140-character updates. But in recent months Twitter users have begun to find a route around that limitation by employing Twitter as a pointing device instead of a communications channel: sharing links to longer articles, discussions, posts, videos — anything that lives behind a URL. Websites that once saw their traffic dominated by Google search queries are seeing a growing number of new visitors coming from "passed links" at social networks like Twitter and Facebook. This is what the naysayers fail to understand: it's just as easy to use Twitter to spread the word about a brilliant 10,000-word New Yorker article as it is to spread the word about your Lucky Charms habit. More …

AMADEUS claims to have increased its share of the Asia Pacific travel distribution market to 32.8% during the first three months of 2009, making it the top Global Distribution System in the region.

The increase has come in a falling market and at the expense of major rivals Sabre Pacific and Galileo.

David Brett, President of Amadeus Asia Pacific, said during 2008 travel booked through Amadeus Asia Pacific fell by 4%, compared with an overall regional market drop of 7%.

Brett also claimed Amadeus processed more than 40% of all regional online bookings.

In Asia Pacific, Amadeus has offices in 39 countries, 19,500 travel agency customers, 92 airlines, and almost 200 hotel partners. Travel Trends: 3/6/09

TRAVEL search volumes increased by 25% for the first quarter of 2009, according to Google Australia. Air travel was up by 33%, car hire jumped 32%, bus and rail 28% and accommodation 21%. The survey of 2200 people claimed 77% of all trips booked in Australia now involve internet research. Google is also telling the industry that the use of traditional media and suppliers by consumers to find travel info has slumped dramatically, while just 2% of web-enabled travellers used the travel section of a web portal such as ninemsn or Yahoo! when planning their last trip. Travel Trends: June 3, 2009

Roshan Mendis has been appointed  President of Zuji and Regional Vice President of Travelocity Asia Pacific. Mendis has been part  Zuji's Executive Team for the past three years, based in ZUJI's Singapore headquarters. He takes over from Scott Blume, who recently resigned, and was previously Director, Supplier Relationships and Partnerships. Roshan is a native of Sri Lanka and holds an MBA from Rice University, Houston. He completed his undergraduate work at Chaminade University in Honolulu, Hawaii and the University of Cambridge in England. Travel Trends: June 3, 2009

InterContinental Hotels Group has made up to 60 Australian call centre staff redundant.

Shocked employees were advised that IHG had shifted its local operations to Manila and were given the option of leaving immediately.

The mass redundancy occurred three weeks ago but has been kept under wraps by IHG, which had been planning it for some time.

In a statement, Senior VP Sales and Marketing Asia Pacific Gary Rosen (pictured left) said the Manila consolidation was part of a plan that’s been in the works for almost a decade.

IHG claimed it was “confident” the move would result in “current service levels” being exceeded. More …

By Martin Kelly, Editor, Travel Trends

Smart or dumb? Opinion is split on Singapore Airlines’ (SQ) decision to abandon Flight Centre, Australia’s largest travel agency group, as a distribution channel. Flight Centre, which has more than 600 local outlets, put a “stop sell” on SQ after the airline reportedly refused to pay overrides of up to 3% on its base 5% commission.

It’s a massive move by SQ, believed to derive 15% to 20% of its local revenue from Flight Centre, at a time when other big carriers are boosting agency commissions. SQ is talking tough, saying its customers are loyal and will instead book through its website or other travel agencies. Smart or dumb?

I’m leaning toward the second option.

GOOGLE, which takes more ad money from the travel industry than any other company in history, claims to be operating at a loss in Australia despite having 90% market share.

It’s one of several anomalies highlighted by in a report Julian Lee from the Sydney Morning Herald using Australian Securities and Investment Commission figures.

Anomaly 1: Google says it grossed just $A90m in Australia last year. Yet it has more than 90% share of the paid search market, which is estimated by leading industry figures to be worth $A870m in 2008. Do the math.
Anomaly 2: Google reported a loss of $A6.2m in Australia for 2008. It also lost money in 2007. Meanwhile the search market is going ballistic and everyone’s complaining about search inflation. Huh?
Anomaly 3: Google paid Australian tax to the Australian Government of $A3.9m in 2008 – less than some of its Australian clients would pay them each year for search advertising, and also less than its “travel and entertainment” bill of $A4.6m. More …

By Martin Kelly, Editor, Travel Trends

THE Mount Hotham dream has turned sour with up to 17 ‘pre-sold’ buyers refusing to settle on land they bought at boom time prices in the Victorian ski resort, while people who agreed to pay up to $7 million for luxury ‘Sky Homes’ have no idea when the project will proceed.

That’s because no-one does, including Mount Hotham Resort Management Board Chairman Geoff Provis, who this week admitted that the $500 million redevelopment proposed by the failed MFS Group was on indefinite hold.

“I have absolute confidence it will take place but I’m not sure when,” he said. “While we’re in the midst of the Global Financial Crisis, it’s going to be extremely difficult for anyone to raise the sort of funds required.”

Which means that investors who bought into Freehold 1775 for up to $808,000 and the luxury Bale Mt Hotham ‘Sky Homes’ developments appear to have been left stranded, financially committed to a vision that may never materialise. More …

By Martin Kelly, Editor, Travel Trends

FOR some of the starkest evidence yet of the pressure traditional wholesalers are under from the internet and changing consumer buying patterns, check out this set of numbers from state marketing body Tourism Tasmania.

Revenue from its traditional wholesale arm, Tas Temptations, has fallen 70% in the past five years. Tas Temptations revenue peaked at A$52.6m in 2004 and will be no greater than $16m in 2009. It was approximately A$40m in 2001 and growing.

Meanwhile visitations to Tasmania have gone in the other direction, increasing by an impressive 40% this decade, greatly aided by improved flight connections. In 2001 there were 531,500 visitors to Tasmania, a number which grew to 897,100 in 2008 (the last reported year). More …