The Travel Monthly- March
Happy April Fools’ Day, folks- watch out for yourself so you don’t get fooled!
Not that we haven’t been already… with Facebook leaking out personal data, MyFitnessPal’s hacking revealing people’s health habits and Expedia-owned Orbitz suffering from a major data breach exposing booking & payment data, who’s to argue we aren’t getting fooled already?
Let’s stay positive though and move on to greener pastures- in March, Singapore Airlines got a shiny new jet, Expedia Group has a new logo and a new name (just slightly tweaked), Kayak introduced branded fares, SkyScanner announced Trip by SkyScanner and Hipmunk added a meeting function right on its flight results. Exciting new stuff. For more on these and others including this month’s featured story- China, read on.
Featured story
China’s HNA Group sold its stake in Hilton Grand Vacations for $1.1b. A year and a half ago, HNA acquired HGV as part of becoming a majority shareholder in Hilton Worldwide Holdings from Blackstone Group in a deal valued at $5.6b. Back then The HGV stake was priced around $600m alone, so a nice little profit for HNA Group. The larger story is that HNA is urgently trying to sell its most liquid assets in order to raise cash and pay off debtors- a storyline potentially not unlike what is happening with Angbang Insurance Group. Just in March, HNA also sold an office building in Sydney and announced intentions to sell its stake in Hilton’s spin-off, Park Hotels & Resorts for $1.4b.
China’s Angbang is bailed-out by the Chinese government. The insurance conglomerate is the owner of the historic Waldorf Astoria New York hotel which it acquired in 2014 for $2b and 16 more iconic properties bought in 2016 for $5.7b- Hotel del Coronado near San Diego, the Westin St. Francis in San Francisco, several Four Seasons resorts, and Manhattan’s JW Marriott Essex House hotel), etc. Perhaps most famously though the conglomerate went into a bidding war with Marriott trying to acquire Starwood in March 2016. Technically, Angbang won the bidding as Marriott refused to match Angbang’s latest bid for $14 billion, however, the Chinese memorably backtracked citing “market conditions” leaving Marriott as the only bidder and having to spent $1.4 billion more than it originally bid.
And China’s biggest player in travel, Ctrip, had a bit of hard time in March as well. The travel giant’s Q4 earnings disappointed and it’s growth forecast for 2018 underwhelmed investors. Curiously, one reason for the disappointing earnings report was backlash against the conglomerate in Chinese social media. In one instance, toddlers were being hit and fed wasabi in a Ctrip daycare facility causing outrage against the travel giant despite the facility being operated by an independent company. In another instance, Ctrip customers noticed that logged-in users were being charged higher prices compared to new users leading to more anger on social media.
Travel Tech
Kayak got a new design- homepage is now a lot more orangish accenting on Kayak’s brand as opposed to the previous travel inspiration theme. The main new feature though is flight results boasting branded fares and a prominently-displayed baggage fee calculator at the top. Showing additional information about a flight is good for consumers but even more importantly, full-service carriers like the lessened focus on price alone. Separately, the meta also introduced a chatbot integrated directly into Google’s newly released Hangout chat.
Similar to Kayak, Hipmunk incorporated baggage & amenities information sourced through RouteHappy & IATA’s NDC. The corporate travel focused meta introduced a meeting function on its flight results.
HotelsCombined is to roll-out an improved affiliate solution targeting the corporate sector. The company is not leaving behind its consumer brand and hired, Park Seo Joon, a Korean celebrity for some TV campaigns in its strongest market- South Korea.
SkyScanner launched Trip by SkyScanner platform for accommodation and on the ground trip activities. An immediate development post the Trip.com acquisition in November 2017.
Expedia slightly tweaked its legal name renaming itself from Expedia Inc to Expedia Group emphasising group’s wide brand portfolio and global presence. The name change comes exactly a month after Expedia’s chief rival, Priceline Group rebranded itself to Booking Holdings.
Trivago to start advertising on Google Hotels. A meta advertising on Google’s meta product is a first in the industry and may seem counterintuitive especially with all the talk about technology shortening the value chain between the supplier and the traveler a.k.a. disintermediation. Trivago continues to be in a tough spot with its stock slide continuing in March- it lost 12% and finished the month under $7. While March traffic figures are yet to be released, the February SimilarWeb numbers show Booking.com pulling out of Trivago even further. It’s not unlikely that with the much publicised pull-out of Booking.com, the hotel meta is looking for new allies to stand-up to the mighty Booking Holdings.
TripAdvisor and Expedia among others pulled off their TV advertising from conservative TV show on Fox News. The show’s host, Laura Ingraham, made some inappropriate comments towards one of the survivors of the recent high-school shooting in Florida prompting the high-schooler to publicly plead on Twitter for companies to stop showing their ads on the TV program. The TV program was the 4th most watched television show in the United States in February 2018 (latest data available).
Australia’s largest retail travel outlet, Flight Centre, signed partnership with Amadeus to leverage the GDS’s content for its Asia and EMEA operations.
Morgan Stanley speculated that Amazon might (once again) try and enter the travel industry. Online travel has been one of the few verticals Amazon has been unsuccessful with. Travel is also a big vertical, so there is a natural fit for the largest online retailer in the world to be present in travel. More speculations along the same lines on SeekingAlpha too.
Airlines
The ultra long-hauls are coming. The first ever non-stop Australia to Europe flight happened on 24th March. As mentioned in previous monthlies, this is a trend to stay as the Boeing 787–9 Dreamliner’s extended range enables some truly long trips. With Qantas no longer having to hop on and then off via either Singapore or Dubai, the carrier better have some good in-flight entertainment! At the same time, Qantas is not forgetting about Singapore. The carrier signed partnership with Singapore’s Tourism Board and Changi Airport to use Singapore’s airport for its flights to Europe (the ones which are not non-stop).
Talking of Singapore and Dreamliners, Singapore Airlines is the launch customer of Boeing’s latest variant of the aircraft, 787–10. The first two destinations are Perth in Australia and Osaka in Japan with the flights scheduled for May. SQ is getting 48 more of these beauties as they go to replace SQ’s current fleet of Airbus 330–300, an aircraft that made its debut all the way back in 1994.
Indian government is selling its loss-making national carrier, Air India. Bidders presumably include local players like Jet Airways and IndiGo as well as global ones- Delta, Air France-KLM, and Qatar Airways.
Winning bid to be announced end of May. Meanwhile, Qatar Airways didn’t sit still and bought 25% of Moscow’s Vnukovo Airport, a deal that likely has geopolitical implications in addition to the pure business side of things.
Travelport and Air France-KLM signed a distribution partnership under which the airline’s content would be available on the GDS without the carriers famous GDS surcharge. Presumably, Sabre is also looking to get a deal with the European carrier. The big name missing here is of course Amadeus, the dominant GDS in Europe whose influence Air France-KLM wants to diminish.
Hoteliers
In early March, IHG announced it is close to acquiring a luxury brand. Skift speculated it might be Mandarin Oriental… or Four Seasons… or Shangri-La… or Kempinski. At the end, it turned out to be none of them and rather it was Taiwan-based Regent Hotels- IHG bought 51% of it for $39m in cash.
Accor reportedly has no plans to follow Marriott’s example and cut group commissions while Hilton decided to follow suit and is cutting them from 10% down to 7%. Marriott announced the cut in January.
Hyatt extends its loyalty program to cover home sharing. The hotelier owns Oasis Collection, an Airbnb-like provider for alternative accommodation. Hyatt also signed five luxury European hotels to The Unbound Collection, its boutique luxury collection brand.
Class-action lawsuit is brewing up against major hotel chains for not bidding on one another’s brand keywords. The current US administration is famously “pro-business” and not necessarily worried about collusion, so, interesting to see if that lawsuit plays out at all.
EY announced its annual hospitality report on trends in the Middle East. With the exception of Egypt and Kuwait, RevPAR is falling across the region with Dubai posting a -6.2% and Abu Dhabi with -2.6% YoY. Despite the recent trends, Dubai remained the number one market in the region in terms of both RevPAR and occupancy rate. A separate report by Knight Frank focusing on luxury real estate indicated rent might be falling faster in Abu Dhabi than in Dubai or in Riyadh.
Airbnb published an open letter to boutique hotels and B&B owners. A yet another clear statement by the alternative accommodation giant that it is looking to enter the hotel space and compete directly against Booking and Expedia.
Booking Holdings elaborated on Google as a significant competitive threat in its 10-K filing. In total, Google was mentioned 63 times in the filing including this particular portion:
Changes by Google in how it presents travel search results, including its promotion of its travel meta-search services, or the manner in which it conducts the auction for placement among search results, may be competitively disadvantageous to us and may impact our ability to efficiently generate traffic to our websites, which in turn would have an adverse effect on our business, market share and results of operations.
More Travel
Saudi Arabia to open it’s airspace for India-Israel flights. Tensions between Israel and the muslim world are well-know and have led to hundreds of thousands of casualties over the past decades. Opening the air space might be a symbolic gesture indicating a warming-up of diplomatic relations from Saudi Arabia’s side. There are certainly many signs that times might be changing in the kingdom- vision-wise, investment-wise, infrastructurally, and culturally.
March is the month of Nowruz, or the Persian new year. Nowruz is well-known for its travel peak in Iran and this year it left Tehran, country’s eight million capital city, almost deserted with fuel prices surging.
In Russia, tourist arrivals from China have doubled from 2012 to 2017, yet revenue from tourism revenue hasn’t seen much of an increase. An interesting report from Jing Travel on China’s popular zero travel tours.
Tourism in the US is down 4% in Q1-Q3 2017 while international tourism arrivals are up 7% worldwide. Widely labeled as “Trump slump”, US tourism was also negatively impacted by exchange rates.
Skift published an article on how Google Hotel Ads obscures the cheapest hotel ad from its result set. And Koddi had another good blog write-up on Google’s recent product enhancements to its mobile web hotel search- imagery has much more real estate, pricing is more noticeable, search form is minimised on top.
Facebook launched Trip Consideration Ads.
TripActions raised $51m of Series B funding.
Hotelbeds sold its destination services to TUI for $110m. Hotelbeds Group is now squarely focused on its core bedbank business which it has been consolidating in recently- the company bought GTA in April 2017 and Tourico Holidays a couple of months earlier.
Cathay Pacific to end its skirts-only rule for female flight attendants. Devil is in the details though. The rule change is tied to CX coming up with a new set of uniforms which can take as many as three years.
HR:
- Trivago re-organized its senior management structure. The company will now have three managing directors: CEO Rolf Schroemgens, Chief Revenue Officer Johannes Thomas, and CFO Axel Hefer. Co-founders Malte Siewert (Chief Commercial Officer) and PeterVinnemeier (CTO), to transition into advisory roles going forward. (SEC filing)
- Airbnb lured the head of Amazon Prime, Greg Greeley, to oversee its core Homes business including the recently announced Airbnb Plus.
- Sabre’s long-tenured executive, Roshan Mendis has been promoted to CCO role at Sabre Travel Network.
- Former CEO of Abacus, Robert Bailey, is now Travelport’s Chief Strategy Officer.
Crypto:
March was not a good month in the wild world of crypto to say the least. Total market cap decreased by 40% in March alone erasing 180 billion USD of capitalisation. Ouch! Still, crypto start-ups in travel kept going trying to disrupt the world of travel as we know it:
- Bulgaria-based hotel marketplace, Lockchain, has its alpha product out. The company boasts having 100,000 hotel properties on its platform and has recently added private accommodations as well.
- WindingTree completed its ICO raising a total of 16k ETH or the equivalent of 16mil USD at the time of the token sale. As of this writing, the dollar-equivalent of the raised capital is down to 6mil USD due to the sharp decrease in the price of Ethereum.
- Travel payment gateway, Travelkoin was scheduled to have its ICO in April, however, canceled it opting to do an airdrop if and when it chooses.
- Russian TravelChain completed its ICO collecting 1.3mil USD out of planned 10.6mil. In March, it also launched a Chrome browser extension that collects users’ search data with the purpose of monetising it later.
- India’s budget hotel chain, OYO Rooms, announced its launching its own OYO Smart Coin. Eventually, turned out to be just an April’s Fools Day prank.
- Concierge, a travel booking service based out of Vietnam, is having its token sale. Or rather had as it apparently sold out in just three hours. The company also released the alpha version of its product in March. As of this writing, a quick hotel search for Singapore returns only properties in Vietnam. Product still has a thing or two to be worked on.
Cool thing of the month: Earth’s wonders as seen from space through super sharp cameras.
