Travel Trends

TripAdvisor has peaked. Big statement but I can’t shake it. The world’s largest travel “community” – 11 million members, 30 million reviews – may continue to grow but its reputation among frequent travelers and the industry is in terminal decline. This is crucial. It means the people who matter will move on, leaving it to the ignorant and the socially needy. No doubt it will remain a fantastic business that can make or break a hotel, but one without soul or genuine credibility, absolutely crucial criteria for any media business, old or new.

These thoughts have bubbled to the surface following the brouhaha that’s erupted in the UK over the latest top 10 dirtiest hotels list. Negativity has long been TripAdvisor’s stock PR tactic, generating masses of stories and links. The resulting industry shrieks of outrage are no surprise – they happen every time – but the general media is no longer simply swallowing and regurgitating the TripAdvisor press releases. Powerful old players like the Daily Mail newspaper are questioning the results and also the quality of reviews. European hoteliers are calling for legislation to govern review authenticity. More …

The cost of being gay used to be social now it's financial. But in a nice kind of way. Virgin Blue is running a special Gay and Lesbian Mardi Gras flight between Melbourne and Sydney on February 25 on which a one-way ticket  costs A$199 including "refreshments, goodie bags and 'very special' entertainment from 'Leave It To Diva'."

They better be good because DJ857 passengers will be paying A$104 more than those on other VJ flights leaving around the same time (on today's prices). You could buy a lot of, um, other Mardis Gras stuff for that kind of dosh but the flight's sure to be fun. PS: How bad is this Virgin Blue PR headline: 'Up Up and A Gay – We're Boeing to Mardi Gras'. It's for real.

Think you've got it bad. Spare a thought for Japanese tourism operators. Visitor arrivals to the Land of the Rising Sun fell 18.7% during 2009 due mainly to huge declines in the number of Korean and Taiwanese tourists, according to the Japan National Tourism Organisation.

However, there are signs of an inbound rebound with December arrivals up 22% over the previous year. Outbound Japanese tourism fell for the third consecutive year, this time by a relatively modest -3.4%.

AMID the concern surrounding Australian domestic and inbound tourism has emerged an interesting and overlooked fact. Latest stats from Tourism Research Australia show the number of international travellers under the age of 30 (backpackers) is growing and now represent 32% of all visitors to Australia, up from 29% in 2007 to 1.6m last year. Most are coming from New Zealand (14%), the United Kingdom (11%) Japan (10%), the USA and China (both 7%). Korea, Germany, Singapore, Malaysia, India and France are also well represented, while their average spend was A$5736. So why haven't we heard more about them? Perhaps if present growth trends continue, we will.

Funny story … search on Kayak.com for a one-way flight from Sydney to Los Angeles on September 22, 2010, and you'll find a fare from Oceanic Airlines, the fictional airline made famous by TV sci-fi drama 'Lost'. Try to buy a ticket you'll be redirected to the page on the Lost fan website for Oceanic Flight 815 which crash landed on a weird uncharted island on September 22, 2004, providing the opening to what is a very strange but successful series. Full story at CNET.

What goes up must come down – Twitter.com traffic is starting to decline after spectacular, unbelievable and, ultimately, unsustainable growth. According to Nielsen data published on eMarketer, Twitter.com traffic fell 27.8% between last September and October to a still very impressive 19m visitors. But the fall may not be as dire as first appears with analysts speculating that it may be due to users migrating to mobile or third-party platforms. Or it could be that the bubble has burst, which would represent perfect symmetry since Twitter was built to cater for society's increasing short attention span and disposable attitudes.

Thing of the past?

NO human interaction until a passenger boards the aircraft. It sounds like the antithesis of good service but low cost carrier Jetstar claims not and today announced it is aiming for 100% domestic “customer self service” by automating all check-in through its website, via a new SMS service and at double the current number of  airport boarding kiosks.

CEO Bruce Buchanan said: "This is an extremely positive and exciting step that will greatly enhance customer service levels … empowering Jetstar flyers to use technology to take control of the airport experience.” Jetstar said around 50% of its check-in was now handled by machines, er, technology. Meanwhile, the International Air Transport Association claims 2009 was the "worst ever" for airlines.

THE United States hotel industry is a basket case with revenue per available room collapsing by -16.7% to just US$53.71 during 2009. STR Global research also shows average US occupancy fell 8.7% to 55.1% while average daily rate fell 8.8% to US$97.51.  "Good riddance to 2009, a year which we believe will go down as the worst in the modern hotel industry," said Mark Lomanno, president at STR. "I look for a significant improvement in 2010." But it's a long road back, highlighted by the fact STR was "encouraged" by weak December figures – occupancy 44.2%, REVpar US$41.46 – the apparent logic that the falls weren't as dramatic as they had been. Everything is relative.

Google, the world's biggest travel advertising company, has just announced another massive result driven almost entirely by plain old AdWords and AdSense. The official announcement focused on 2009 fourth quarter revenue – US$6.67 billion, up 17% on 2008 … 66% of which came from Google-owned sites and 31% from networked ads; 53% of revenues were generated outside the US. Average cost per click is up 5% year-on-year while the company has hoarded an extra US$10bn in cash with some US$25bn in the bank at Dec 31 compared with US$15bn the previous year. Staff numbers were also down – 19,835 compared with 20,123 due to measures such as closing its Melbourne office in Australia, which cost 15 jobs.

Sydney Airport

Travel businesses don't get any better than Sydney Airport which has just revealed it made almost A$2m a day in 2009, the monopoly cash cow posting a 5.6% gross profit of A$690.2 million. Wow! Wonder how airlines feel feel about an increase in aeronautical revenues of 8.2% to A$343m despite "modest traffic declines" in the first half.

I'm guessing that boost would have to result from higher landing and servicing  fees while Sydney Airport 's airline customers are discounting to fill aircraft. Hmmm. Highlight was final quarter passenger growth of  7.3% over 2008. Retail was flat but should bounce soon as the redevelopment of Terminal 1 concludes. Sydney Airport is majority owned by MAp Airports.

Graham Turner, Flight Centre

Multi-national retailer Flight Centre reports that travel has rebounded in many markets with air ticket sales numbers up by 20% in some of its businesses although yields remain low due to discounting. MD Graham Turner said Australia had rebounded strongly while its UK, Canada, South Africa and New Zealand businesses are profitable.

He said the US is still trading at a loss but should break even this financial year. Corporate travel customers remain cautious but FLT has been able to increase market share. Turner upgraded FLT forecasts for the 09/10 financial year and now expects a pre-tax profit of between A$160m and A$180m, well up on the preceding result of A$99.8m.

Read ‘em and weep. According to the financial press, Travelport, which owns the Galileo and Worldspan GDS, 48% of online retailer Orbitz plus wholesaler GTA, is carrying debt well in excess of its actual market value, which will be tested in an upcoming float on the on the London Stock Exchange. Majority-owner Blackstone Group will attempt to sell most of Travelport for GPB1.2 billion in a raising that, if successful, will value the company at GBP1.8 billion. Dow Jones reports that Travelport has debts of around GPB2.2 billion. Its businesses have been struggling for some time with overall revenue down 10% for the September quarter. Blackstone and its co-investors paid US$4.3 billion for Travelport in 2006, spinning out part of Orbirtz, a major US Online Travel Agency, in an unsuccessful float on the New York Stock Exchange in 2007. Orbitz shares, valued at US$15 in the IPO, are now worth just under US$7. Let’s hope Travelport investors have more luck.

Cleverly branded campervan hire company Jucy Rentals has defied the flat domestic tourism market with spectacular growth over the past 18 months, growing its domestic fleet to 300 vans from just 10 of the bright green* vehicles. The company, founded in New Zealand during 2002, now claims $21m in annual revenue and plans to add another 200 vans to its Australian fleet. Co-founder Tim Alpe told the Daily Telegraph: "Our growth rate has been been fast but based solely on demand. We initially focused on the eastern seaboard but we'll now look at Western Australia." Alpe said a drop in international visitors to Australia had been balanced by rising domestic demand. *(What is it with bright green and branding – Wotif also uses the colour very successfully).

UPDATE 19/1/10: The Tiger Airways float has been oversubscribed with shares sold at S$1.50… Earlier Story: Will it fly? That's the question many in the industry are asking about the imminent float of Tiger Airways on the Singapore Stock Exchange. The low cost carrier is hoping to raise S$246.8m with shares priced at a maximum of S$1.65. It remains a tough time for aviation and there is scant investment industry support for the float which, if successful, will give two of the original investors (the Ryan family and Indigo Partners) an immediate exit with no escrow on their holdings. Some think that's cheeky. The money raised will be used to buy new aircraft, pay down debt and potentially fund expansion. The offer closes on Monday and the shares are due to list January 22. Tiger lost S$50.8m in the 12 months to March 31.

'Red Faced'

Brace yourself, but having a group on Facebook of 40,000 members is not a social strategy. Either is 3,000 followers on Twitter. You may in fact be doing more damage than good. Do you actually know how your social networking is impacting your bottom line? Well you should. You also need to accept that your brand online is increasingly, only as strong or as weak, as the community it supports. This is something Simon Cowell (pictured) discovered with the X Factor vs. the the 'rage against machine community' in the race for the UK Christmas number-one slot. The community chose the top song in protest, leaving the X Factor/Cowell team red faced. So if this year you are to thrive you must have a comprehensive social media strategy. Full Story.

DOMESTIC tourism will come under more pressure with the Aussie dollar – once dubbed the 'Pacific Peso' - tipped to reach parity with the US dollar due to strong local and regional economies plus rising interest rates. National Australia Bank economist John Kyriakopoulous believes parity will be reached by the end of March for the first time since 1982.

JP Morgan senior economist Helen Kavans expects the Aussie dollar will reach $US1.02, representing a double-edged sword for the local travel industry. Outbound will continue to power ahead at the expense of domestic tourism while inbound will become an increasingly harder sell. This demand dampener may also put the put the brakes on a hotel rates revival. Meanwhile, Tourism Queensland is spending $7m to stimulate tourism. Most is going to the domestic market with China ($1m) and New Zealand ($700,000) the main international targets.

While you were away… Amadeus, which provides the reservations and booking technology for many major airlines, has had an up down festive season. In late December Amadeus was named the World's Leading CRS/GDS at the World Travel Awards. Five days later Amadeus resolved its long-standing dispute with Lufthansa, signing a full content agreement that enables travel agents to access all Lufthansa and Swiss airlines inventory without having to pay a surcharge previously imposed by the carriers.  But 2010 got off to a rocky start when its Altea reservations system employed by Qantas crashed on January 3, following an earlier outage in November, causing chaos at airports around Australia. A rare hiccup from an industry powerhouse that's been going from strength to strength. No official word yet on what caused the drama.

In other news, agency giant Flight Centre confirmed it has re-resigned with Galileo, Qantas claimed it has gained one million new Frequent Flyer members thanks to a reciprocal loyalty agreement with retailer Woolworths; Qantas now has 6.75m Frequent Flyers and aims to have 7m by June. Qantas also quit the Association of Asia-Pacific Airlines, saying it would prefer to deal directly with potential partner carriers such as AirAsia, which has just entered into an operational alliance with low-cost Qantas subsidiary Jetstar forecast to save the partners A$300m through bulk buying initiatives combined with the sharing of some services.

Thanks for all your support through the year. I'll be out of the office for the next couple of weeks, back posting stories in early January, 2010, though occasionally checking emails. The program is pretty much sorted for No Vacancy and will be posted the week beginning January 11. Have a great holiday and New Year.

FLIGHT Centre, which has hundreds of retail outlets, remains Australia's most popular travel agent, although online force Wotif.com, which has no street presence, is gaining on its rival, according to the latest Travel Agent Report from Roy Morgan Research. Consumers were asked which agency they had used to book travel in the past 12 months. Flight Centre was steady at 10% followed by Wotif.com at 7.1%, up from 6.6% the previous year. 

Other top brands included Qantas Holiday (3.1%), Harvey World Travel (3%), Virgin Blue Holidays (2.8%) and Lastminute.com (2.7%). Jane Ianniello, Director of Tourism, Travel and Leisure at Roy Morgan, said Flight Centre's performance is impressive given the trend to online bookings. She said just 13% of domestic trips are now 'booked in person'.

The trouble-plagued Boeing 787 Dreamliner finally took off on its maiden test flight yesterday after a two year delay. The Dreamliner is a breakthrough commuter plane capable of flying long-haul routes using 20% less fuel than current aircraft. However, it's taken much longer to develop than originally thought. The 787 Dreamliner is due to start flying commercially in late 2010 with All Nippon Airways. Jetstar and Qantas are scheduled to receive initial delivery of the aircraft in 2013 after negotiating a new deal with Boeing following repeated delays.