A Ghost Town Near Chernobyl Has Become a Spectacle for Tourists

Efrem Lukatsky  / Associated Press

Tourists are visiting the ghost town of Pripyat not far from the Chernobyl nuclear power plant in Ukraine. This photo from April 5 shows a decaying school gymnasium in the town.
Efrem Lukatsky / Associated Press

Skift Take: As long as there are disasters, there will be tourists who want to gape at the aftermath.

— Hannah Sampson

A bulletin board in the Ukrainian town of Pripyat still bears an edition of the Sovietsky Patriot newspaper, dated three days before the nuclear explosion that turned the city into one of the world’s most baleful ghost towns.

Once home to some 50,000 people whose lives were connected to the Chernobyl nuclear power plant, Pripyat was hastily evacuated one day after a reactor at the plant 3 kilometers (2 miles) away exploded on April 26, 1986. The explosion and the subsequent fire spewed a radioactive plume over much of northern Europe.

Once a model Soviet workers’ town — neat high-rise apartment buildings and streets converging on a plaza that housed a hotel and a cultural center — Pripyat is now a model of technology gone catastrophically wrong. As such, it’s become a tourist destination, alluring to those whose bucket-list includes a taste of danger.

Tourist companies offer day trips to Pripyat and the area around the plant, where radiation levels have receded enough to make brief visits tolerable. The levels are still high enough that no one is allowed to reside permanently within a 30-kilometer (18-mile radius) of the plant.

Every year, nature takes back a little more of Pripyat. The buildings’ roofs sprout small trees, their floors and walls deteriorate slowly from rain, snow and changing temperatures.

Most of the buildings are in such decay that visitors are advised not to enter them, a caution that many ignore.

 

This article was from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Marriott CEO Urges Response to Political Isolationism and 5 Other Hospitality Trends This Week

World Travel & Tourism Council  / Flickr

Travelers’ voices cannot be ignored, said Marriott CEO Arne Sorenson this week. Pictured is Sorenson speaking at the World Travel & Tourism Council Global Summit in Bangkok on April 26. World Travel & Tourism Council / Flickr

Skift Take: These are the hospitality trends we were talking about this week.

— Sarah Enelow

Throughout the week we post dozens of original stories, connecting the dots across the travel industry, and every weekend we sum it all up. This weekend roundup examines hospitality.

For all of our weekend roundups, go here.

>>Has “Millennial mindset” just become a euphemism for “smart” and “decent” these days? Holiday Inn’s New Look Was Designed for the Millennial Mindset

>>Everyone, including Starwood founder Barry Sternlicht, it seems, is seeing the tremendous value of investing in the extended stay space: Starwood Founder Launches New Extended Stay Brand Uptown Suites

>>Mr & Mrs Smith has carved out a unique space in the market, and its evolution over the last decade speaks to the radical changes in the ways we discover, book, and return to hotels: Video: Mr & Mrs Smith and Bridging the Gap Between Content and Booking

>>For an industry that’s historically averse to conflict, Sorenson’s advice may be hard to put into action. But the industry will be complacent at its own peril: Marriott CEO: Travel Industry Must Respond to Growing Political Isolationism

>>Wyndham might not have 30 hotel brands like Marriott, but it does have the world’s largest timeshare business and a pretty robust vacation rental business, too. Leveraging the power of all three of its businesses just makes us wonder: Why haven’t they tried to do this before? Wyndham Is Finally Harnessing Its Global Scale Via Loyalty

>>Hilton’s Honors Loyalty program just got bit more powerful with new functionality that allows for pooling of points among parties of 11: Hilton Launches Points Pooling for Its Honors Loyalty Program

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Cathay Pacific’s New CEO Outlines Three-Year Business Transformation Program

Cathay Pacific

A view from first class. The Hong Kong flag carrier is changing CEOs in a planned succession, after having reported its first annual loss in eight years.
Cathay Pacific

Skift Take: Cathay urgently must cut management costs and must compete more effectively against budget carriers. Qantas has proven that legacy airlines can be reformed. But Cathay’s new CEO must display some fresh thinking — and fast.

— Sean O’Neill

Friends and executives clinked their champagne flutes for Rupert Hogg late last week at a sky lounge offering a view of Hong Kong’s Victoria Harbour, wishing him success as he assumes the CEO role on May 1 at Cathay Pacific Airways.

A can of Red Bull might have been more appropriate.

The 55-year-old veteran executive with the Swire Group, the Hong Kong conglomerate and Cathay’s largest shareholder, is about to take on one of the toughest turnaround jobs in Asian commercial aviation.

Once a dominant player in Asia’s premium air travel market with few serious rivals, Hong Kong’s marquee carrier has hit an air pocket, despite the booming travel demand in the region.

Last month, the airline reported its first loss in eight years, in part from a fuel hedging bet gone bad. That was a one-off misstep, but far bigger challenges loom, including intensifying competition from budget carriers and deep-pocketed, state-owned Chinese carriers for cost-conscious passengers and incursions into Asia from Mideast rivals such as Emirates Airline and Etihad Airways PJSC for the business traveler.

In recent years, Cathay has had to sell tickets below cost to keep its planes full and its operating costs are higher than most rivals. Sales per employee at Cathay in the latest fiscal year was about $352,614, while it was $473,268 at Delta Air Lines Inc. and $414,610 at Qantas Airways Ltd. Cathay’s stock has tumbled 25 percent since the incumbent CEO Ivan Chu took over on March 14, 2014, while analysts tracked by Bloomberg currently have zero buy ratings on the company.

Into the breach enters Hogg, who joined the Swire Group in 1986 and steadily rose through the ranks with overseas stints in Southeast Asia and Britain, before being tagged as Cathay’s chief operating officer in 2014. As part of the senior management team under Chu, Hogg helped pull together a restructuring plan announced earlier this year to help cut as much as $514 million in costs over three years — a strategy he intends to stay with now that he’s boss.

“We’ve got a plan,” Hogg said at the event on April 21. “It’s the three-year business transformation program. We’ll work through this.”

Hogg, considered by many employees as charismatic and approachable, is a consummate Swire insider with a strong track record, but some analysts wonder if Cathay might be better off with an outsider at the helm who’s less beholden to established ways and more willing to engage in some shock therapy to get the carrier back on track. 

Hogg and three of his immediate predecessors — Chu, John Slosar and Tony Tyler — worked as the chief operating officer of the airline just before taking up the top job. The worry is that Swire group think contributed to the strategic mess Cathay now finds itself in and may hamper the kind of bold thinking needed to adjust to the changing competitive landscape in the region.

“All the guys are from the University of Swire Group,” said Maybank Investment Bank Bhd. analyst Mohshin Aziz. “They graduate with honors, meaning, they are identical to each other. The way they think, the way they do things. It’s different faces, but it’s the same content. It’s way overdue for someone from outside to come in.”

To read David Fickling’s piece on Cathay’s leadership, click here.

The counter-argument is that the business cultures of Swire and Cathay are so intertwined and unique that only an insider can navigate them, according to Singapore-based independent aviation analyst Corrine Png.

“Cathay’s corporate culture is so strong, it may actually be difficult for someone from outside to integrate and to work well with the existing management team and also the middle managers and the staff,” said Png, the CEO of Crucial Perspective.

Manila Bar

American Roy Farrell and Australian Sydney Hugh de Kantzow founded Cathay Pacific Airways in 1946. Initially based in Shanghai, the two men eventually moved to Hong Kong and established the airline. Farrell and a group of foreign correspondents thought up the airline’s name in the bar at the Manila Hotel, according to Cathay’s website. Now, it is one of the nine carriers in the world with a 5-Star Airline Rating by Skytrax, which measures cabin service, staff and product offerings both at the airport and aboard the aircraft for the top grade.

Swire and Air China Ltd., Cathay’s two largest shareholders with a combined stake of 75 percent, provide the airline the financial flexibility to map out long-term strategy, said Will Horton, a Hong Kong-based senior analyst at CAPA Centre for Aviation.

“Cathay’s shareholding structure allows it to focus on the long term, which is what’s dictated by the cyclical nature of aviation with too many external factors,” Horton said. “There’s no need to focus on quarterly improvements like the way North American and European airlines have to.”

The Swire Group started out in Liverpool in 1816, when John Swire set up an export-import business focused on textiles between the U.K. and the U.S, an entity that his sons advanced over the years. As the outbreak of the American Civil War disrupted American cotton imports,

John’s son set up a business in Shanghai in 1866 and later expanded to Hong Kong.

Cathay Stake

Shipping, sugar refinery, ship repair and aircraft engineering businesses followed and the entity was one of Hong Kong’s biggest employers. The group then bought a controlling stake in Cathay in 1948 while the exiting of sugar and dockyard businesses gave Swire the land to become a property developer in Hong Kong.

With losses looming, Hogg and Chu put in motion the HK$4 billion ($514 million) three-year cost reduction plan. Half of that will be executed this year itself, according to Xiao Feng, the chief financial officer of Air China, which holds 30 percent of Cathay.

“These are challenging times and we are up for that challenge,” Hogg told the gathering. “Obviously we’ll be listening closely to our customers. We’ve always been and we always will. We have the customer right at the center of everything we do.”

Booming Demand

Asia Pacific is seeing robust growth in air passenger traffic, helped by a rash of budget airlines that started in the past two decades offering cheap fares and connectivity that has lured the train and bus travelers. Much of that booming demand bypassed Hong Kong, which has few budget airlines that call the city home. So Cathay had to rely on business travel and inter-continental traffic that fed into Chinese cities.

After years of benefiting from China’s growth, Cathay is being hurt by its strong ties to the mainland. Travelers are bypassing Cathay and flying directly between Chinese cities and the U.S. or Europe. The city has also been slow to see the trend and a new runway aimed at easing airport congestion is still years out.

Cathay has played a role in promoting Hong Kong as a global tourism destination in the past, but the city is going through an identity crisis, said John Carroll, a professor in history at the University of Hong Kong.

“Between government and the industry, nobody has really figured out a good way to sell Hong Kong,” Carroll said. The economic rise of the mainland makes the distinction with Hong Kong hard to tell. “Why invest in Hong Kong when you can invest directly to the mainland?”

The restructuring Hogg will oversee won’t be easy, but others have shown that a large-scale transformation is possible. In 2008, Qantas named the then head of its discount unit Alan Joyce as the CEO of the airline and he successfully steered the carrier out of trouble through a restructuring plan, that included job cuts and deferral of aircraft purchases.

“The global precedent suggests a tough transition period, but as Qantas showed, it can be done,” said Joshua Crabb, head of Asian equities at a unit of Old Mutual Plc.

–Bloomberg News. With assistance from Sam Nagarajan and Daniela Wei

©2017 Bloomberg L.P.

This article was written by Bloomberg News from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Disastrous Fyre Festival in Bahamas Shows Event-Planning Isn’t for Amateurs

Fyre Festival

Fyre Festival promised to arrange ticket-buyers’ complimentary flights but the entire event turned into a fiasco. Fyre Festival

Skift Take: If you promote it, they will come. But you DO have to build it, and the Fyre Festival obviously didn’t.

— Dennis Schaal

What ticket holders thought would be a weekend in paradise turned into a nightmare when a super-exclusive music festival in the Bahamas became a disorganized disaster, stranding attendees who in some cases paid tens of thousands of dollars.

Hyped by glossy ads featuring supermodels including Kendall Jenner, Emily Ratajkowski, and Gigi Hadid, the Fyre Festival promised “the culture experience of the decade” in a tropical wonderland of yachts, villas, and gourmet cuisine. Ticket prices went into five-figures for special VIP treatment, though general admission packages were available starting from $1,200.

When they arrived at the festival site in Exuma, guests said they found a dire, unfinished campsite. They described their “luxury” accommodations as disaster relief tents, many still un-built. Baggage arrived in a shipping container. For dinner, they were served bread, cold cuts, cheese slices, and a side salad in a styrofoam box.

Marquee names such as Pusha T, Major Lazer, Disclosure, and Migos were scheduled to play. Blink 182 canceled just before the event, citing concerns the band wouldn’t “have what we need” to give a quality performance. In the weeks leading up to the festival date, organizers allegedly missed payment deadlines to artists and were scrambling to pay the acts in full, according to a report from the Wall Street Journal [subscription].

The event was organized by rapper Ja Rule and entrepreneur Billy McFarland, who is also the founder and chief executive of Magnises, a social club for “elite” millennials. According to a report by Business Insider, some members of that enterprise claimed last-minute trip cancellations, scheduling failures, and unwanted charges on their cards.

The festival’s namesake is Fyre Media, a talent booking startup founded by the Ja Rule and McFarland in 2015. “We didn’t just want to be a tech company that was a pure enterprise with no consumer awareness,” McFarland said in a recent Vanity Fair interview. “So a festival was a great way to go and do that and beyond people who are attending.”

Things apparently didn’t turn out as planned, though it remains unclear exactly what went wrong. Festival organizers said Friday they are “working tirelessly” to get attendees home safely.

“Due to circumstances out of our control, the physical infrastructure was not in place on time and we are unable to fulfill on that vision safely and enjoyably for our guests,” the organizers said in a statement. “The festival is being postponed until we can further assess if and when we are able to create the high-quality experience we envisioned.”

The event’s implosion was so calamitous it prompted a Bahamian government agency to issue a statement on the matter. “We are extremely disappointed in the way the events unfolded yesterday with the Fyre Festival. We offer a heartfelt apology to all who traveled to our country for this event,” the Ministry of Tourism said Friday. The U.S. embassy in the Bahamas didn’t respond to a request for comment.

While the official policy stated on the Fyre Festival’s website said no refunds would be issued, following an outcry on social media, the company said they would provide refund information. This is probably a smart move, given what could follow: “It sounds like a clear breach of contract case,” said Randall Kessler, a Georgia-based attorney. “They didn’t deliver what they promised.”

According to Dylan Caccamesi, who paid about $1,200 to attend, organizers asked those seeking refunds to write their names, email addresses, and phone numbers on pieces of computer paper. He signed the paper in the hope that it would help guarantee a refund. “I’m not sure what the intent was,” the 22-year-old from New Jersey said in a phone interview from the Bahamas. “We still have to get a hold of them.”

Caccamesi said an email was also sent by the festival promising a refund, citing unforeseen circumstances, but detailed information has yet to be provided.

“I haven’t been on a vacation in a while. I was like, ‘I’ll be living luxurious!’ It was supposed to be good for like, high class youth. A higher expectations festival,” he said.

If he doesn’t receive a refund, Caccamesi doesn’t anticipate he’ll go the legal route. Instead, he plans to lobby his banking provider to issue a chargeback. However, he added that among the well-heeled festival attendees, “there has been talk of a class action.”

In the meantime Caccamesi is trying to make the best of a bad situation. “We have no idea what’s going on,” he said. “We’re just sitting on the beach getting wasted.”

©2017 Bloomberg L.P.

This article was written by Kim Bhasin and Polly Mosendz from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Spirit Air CEO: ‘For a Very Long Period of Time We Didn’t Run a Good Airline’

Spirit Airlines

Spirit is still a no-frills airlines that charges extra for everything. But it’s trying to perceive how customers perceive it. Spirit Airlines

Skift Take: Focusing on reliability and customer satisfaction is the right move for Spirit, provided it can do it without increasing costs significantly. The airline’s brand is not in strong shape, and it needs to be rehabilitated.

— Brian Sumers

Until recently, few airlines seemed to care so little about satisfying customers as Spirit Airlines. Its flights were on-time far less than the industry average, and passengers complained about Spirit considerably more than other carriers.

Previous management didn’t appear to mind. Spirit was almost always less expensive than the competition — often far cheaper — and enough customers kept returning for deals. But over time, legacy airlines started matching Spirit’s prices, or at least came close to them, and Spirit, while still profitable, began to stumble slightly. It began discounting significantly — even more than before — to fill planes.

It was at about this time, in early 2016, when Spirit replaced CEO Ben Baldanza with Bob Fornaro, former CEO of AirTran Airways. Fornaro promised to build a kinder, more gentle airline. It would still focus obsessively on costs, but it would be reliable and friendly — more like AirTran before Southwest Airlines acquired it in 2010. On Spirit, legroom remains tight, seats sdon’t recline, and passengers still pay for drinks and overhead bin space, but Fornaro has vowed that customers will have more pleasant interactions with ground staff and flight attendants.

Fornaro is more than a year into his turnaround effort, and he told analysts last week the carrier is making progress. Some numbers suggest he’s right. For February 2017, the U.S. Department of Transportation said it received 3.42 complaints per 100,000 Spirit passengers. That was still the second-highest rate in the U.S. industry — and ten times worse than Southwest Airlines —  but it was far fewer than the 11.56 complaints per 100,000 passengers the government received about Spirit in February 2016.

Spirit isn’t tweaking its model because of altruism. Fornaro told analysts he expects Spirit will make more money if it stops consistently irritating customers. He’s not the first CEO of a no-frills carrier to make this determination. Ryanair has been spending the past couple of years improving its product, and changing how it communicates with customers.

“There tend to be some benefits no matter where you are in the food chain to delivering a good product well in a city,” he said last week on Spirit’s first quarter earnings call. “If you do that job well, the word gets around. You don’t do it well, [and] it can happen in reverse.”

Last week, Fornaro updated investment analysts on some of the airline’s recent progress. Here are some highlights.

Service Training

Fornaro admitted that Spirit’s 2,500 flight attendants have never received any real service training. That’s will change, he said, though he told analysts it may take a year and a half to train everyone. “That takes time,” he said. He promised staff will soon provide “friendly service” to customers.

Better on-time performance

In the first quarter, Fornaro said Spirit’s on-time rate was 75.5 percent, a rate that made it competitive, more or less, with other airlines. It was an increase of more than 10 percentage points compared to the first three months of 2016, when customers could hardly count on the airline to deliver them promptly to their destinations.

Spirit wants to raise its on-time performance even more — but not by too much. Running the most on-time operation is expensive for an airline, he said.

“If you can run within that pack within a few points, you’re running a pretty good airline,” Fornaro said. “I’m very convinced that customer doesn’t see the difference between 81 percent and 84 percent or 80 percent and 78 percent. ”

Improving the brand

Fornaro is focused on improving Spirit’s brand so it stands for more than cheap fares and crummy service.

He said customer service training and improved on-time performance will help, but he and other executives warned customer perception will not change quickly. “Improving the brand will take much longer than improving the service levels,” Fonaro said.

Customers have long memories, he said, and Fornaro said he suspects some prospective passengers are now avoiding Spirit because of past experiences, or media coverage.

“For a very long period of time, we didn’t run a good airline,” Fornaro said. “We had a lot of complaints, and complaints live forever out there and you build a reputation.”

Matt Klein, Spirit’s chief commericial officer, admitted that “brands and logos of brands evoke emotion,” and said Spirit has work to do to persuade customers to give it another chance.

“It takes time to make sure that we can get the word out and that people listen to our message,” Klein said “And as we pivot and refresh on a consistent basis how we speak to customers, we expect as our messaging can become more and more positive, that will evoke the right kind of emotions.”

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Royal Caribbean Sees a China Slowdown But Other Markets Are Thriving

Royal Caribbean International

Royal Caribbean Cruises said business in Asia has been struggling due to tensions between China and Korea. In this photo, Ovation of the Seas — one of the Royal Caribbean International ships that sails from China — is shown in Singapore. Royal Caribbean International

Skift Take: As cruise executives often say, having ships all over the world means some areas boom while others struggle. At the moment, China-Korea tensions are hurting Royal Caribbean’s business in Asia, but other regions are strong.

— Hannah Sampson

Royal Caribbean’s China strategy ran into some rough waters as the operator dropped South Korean ports amid tensions between the two nations — but the cruise company has seeing business in other parts the world perk up.

In a first-quarter earnings call Friday, executives with Royal Caribbean Cruises said demand for China sailings declined when the operator made itinerary changes swapping in Japanese ports for stops in Korea.

The changes, which prompted “a bit of turmoil and uncertainty,” came in mid-March as the relationship between the countries grew strained over the deployment of a U.S. anti-missile system in South Korea. Demand has been returning to normal levels, executives said.

“There was a slowdown and there was a little bit of confusion in the market because everything had to be adjusted and itineraries had to be changed,” said Michael Bayley, president and CEO of Royal Caribbean International. “The fortunate thing is that Japan is very popular with Chinese consumers; we actually started to see some demand coming in because of changes that had been made.”

Sailings in China are more fully booked than they were last year at this time, but Chief Financial Officer Jason Liberty would not say how prices were holding up compared to 2016. He also didn’t venture a guess about how long the cruise company would stay away from Korean ports with ships that sail from China.

“Talking about how long do we think the disruption is going to last, that requires a crystal ball that we don’t own,” Liberty said. Bayley said some observers are hopeful that the situation will be resolved following the presidential election in South Korea in May.

Royal Caribbean’s decade-long stretch in the China market has included several hiccups, including disruptions due to a dispute with Japan, natural disasters, and illness outbreaks.

“I think we just have to adapt and I believe that we’re kind of getting used to these curveballs when they come at us,” Bayley said.

Richard Fain, chairman and CEO of the parent company, said he still believes in the long-term potential of China.

“It’s such a large and growing market, and when you see the thing I like to quote — which is that there will be more middle-class Chinese than the population of either the United States or of all of Europe — you simply say, ‘Yes, we wil have bumps in the road and sometimes those bumps will be big bumps,’” he said. “But it’s still part of an onward, upward trajectory, so that’s the way I think  we’re looking at this.”

The company announced earlier this week that it is sending another giant new ship to the Asia-Pacific region — it will sail in Australia, Singapore, and China — in 2019.

“Obviously making the decision to put…a brand new ship in the market talks about our confidence in China,” Liberty said.

Morningstar analyst Jaime Katz wrote in a note to investors that the company can always pivot if declines in demand warrant a change.

“At this time, we believe the company has positioned its deployments to maximize its revenue opportunities given the current economic environment,” she wrote. “But we would expect it to act nimbly, reallocating hardware if waning demand began to surface in any of its key deployment markets ahead, as we don’t expect economic expansion to be perpetual.”

Other Markets

The Caribbean and Europe more than offset any slump in China for the quarter, executives said.

Liberty said bookings for both regions were ahead of the same time last year in both occupancy and pricing. North American demand for European cruises has been particularly robust, he said — a contrast to early 2016, when Americans were more hesitant about crossing the Atlantic following terror attacks. The company likes to get more Americans on Mediterranean sailings because they book earlier and spend more than European passengers.

Overall, Royal Caribbean had a standout first quarter. Profits rose from $99 million last year to $214.7 million this year as revenues increased from $1.9 billion to $2 billion and costs fell more than 4 percent.

Yields, or the revenue generated per berth per day, were up 6 percent. The company increased its forecast for the rest of the year.

Shares rose 6 percent to $106.60.

The results prompted Fain to invoke the image “of a duck gliding calmly through the water” and the unseen efforts that power that action.

“As we look at the scene from the shore, all we see is an elegant duck gliding serenely across the pond,” he said. “But under the surface, there is a lot of fierce activity with a lot of energetic paddling.”

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Etihad Lends Its Support to Air Berlin Despite Mounting Losses

Andreas Wiese  / Air Berlin

An Air Berlin aircraft. The carrier has reported increased losses. Andreas Wiese / Air Berlin

Skift Take: For the moment shareholder Etihad is sticking by the struggling carrier. It will be hoping that Air Berlin can turn things around and not go the same way as Alitalia.

— Patrick Whyte

Etihad Airways PJSC plans to stand by Air Berlin Plc even after its German partner reported soaring operating losses as a strategic overhaul struggled to gain traction.

Germany’s second-largest carrier is shedding tourism and point-to-point operations, shrinking its fleet by half to transform itself into a network airline. The process contributed to pushing the operating loss to 667 million euros ($739 million) last year, more than twice the 2015 level. This year hasn’t got off to a strong start, with the first-quarter loss widening 58 percent to 272 million euros, Air Berlin said in a statement.

Air Berlin’s mounting losses highlights the urgency for Etihad, which has backed several bailouts. The Abu Dhabi-based carrier also faces the collapse of Italian partner Alitalia SpA, leaving its strategy of building bridgeheads in Europe in tatters. Alitalia has informed Italian authorities that it plans to start the process of naming an administrator. A shareholders meeting is planned for May 2.

Etihad, which owns 49 percent of Alitalia and just under 30 percent of Air Berlin, insisted that German airline was on the right track.

“We are seeing the first structural changes that are necessary to create a sustainable future for Air Berlin,” Etihad Chief Executive Officer James Hogan said in a statement, adding that the current strategy is “the right one.”

Air Berlin has supplied 35 aircraft and crew flying point-to-point routes to German rival Deutsche Lufthansa AG as part of a lease agreement that covers a total of 38 planes. An additional 35 airliners serving leisure routes were transferred to its Austrian Niki arm, which it is selling to Etihad to combine with TUI AG’s German aviation unit.

Still, questions remain whether the strategy will ultimately stabilize Air Berlin. Focus magazine reported Friday that Lufthansa CEO Carsten Spohr will travel to the Persian Gulf next week to discuss with Etihad how to finance a possible takeover of Air Berlin. The magazine didn’t say how it got the information. Lufthansa confirmed Spohr will be on a trip accompanying Chancellor Angela Merkel in the region, declining to comment further.

Air Berlin will publish its 2016 annual report on May 2 and release full first-quarter details by May 19.

©2017 Bloomberg L.P.

 

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Airbnb Settles Race Discrimination Complaint in California

Airbnb

Airbnb and the California Department of Fair Employment and Housing have signed a voluntary agreement to work toward curb racial discrimination on the Airbnb platform. Airbnb

Skift Take: Whatever can be done to prevent discrimination and bias on the Airbnb platform is a good thing. Let’s just hope this plan works toward that goal.

— Deanna Ting

Nearly a year after a California government agency filed a complaint alleging that Airbnb failed to prevent discrimination against African-American guests using its short-term rental platform, the company is making an attempt to work with government regulators to police and improve upon its non-discrimination policy.

On April 27, Airbnb and the California Department of Fair Employment and Housing (DFEH) announced that both parties had signed an agreement on April 19 whereby Airbnb would, for at least the next two years, voluntarily agree to take specific actions that address racial bias and discrimination on its platform.

These actions include, but are not limited to, regularly scheduled reports to be submitted to the DFEH about the company’s ability to curb discrimination, as well as fair housing testing by the DFEH on Airbnb hosts with three or more listings in California who have been the subject of one or more discrimination complaints.

“We will continue to work collaboratively with Airbnb to prevent racial discrimination by its hosts,” said DFEH Director Kevin Kish in a press statement. “California is committed to removing all discriminatory barriers in housing, including in new platforms and marketplaces. Fair housing testing is an important and powerful tool in enforcing fair housing laws.”

In a statement published on Airbnb’s blog, Airbnb General Counsel Rob Chesnut said, “Fighting discrimination is fundamental to our mission and we are committed to creating a community that is open to everyone. Our work with the State of California builds on our ongoing efforts to fight bias and we look forward to continuing to work with state leaders to ensure the Airbnb community is fair for everyone.”

Airbnb has long battled allegations that the design of its short-term rental platform does little to prevent bias or discrimination, either on the part of its hosts or its guests. Those complaints, which stretch as far back as 2015, came to boiling point last year when the hashtag #AirbnbWhileBlack brought international media attention to the problem and a class-action lawsuit followed.

In response, Airbnb launched a review of its policies, led by civil rights leader and longtime American Civil Liberties Union (ACLU) executive Laura W. Murphy and former U.S. Attorney General Eric J. Holder. That review, in turn, resulted in a revised nondiscrimination policy that was announced on Sept. 8, 2016 and further clarified on Nov. 1 with new updated terms of service for all users.

The Bigger Question: Was This Agreement Absolutely Necessary?

While Airbnb has made concerted efforts to show it is actively fighting discrimination and bias on its platform — including achieving its goal of having at least 1 million of its more than 3 million listings instantly bookable by January 2017 — a bigger question lingers.

Namely, why did the DFEH feel it was necessary to accept this agreement from Airbnb? And vice versa: Why did Airbnb agree to it?

In a release issued by the DFEH, it noted the agreement was reached after “more than ten months of investigation and collaborative work between DFEH and the company.” DFEH Director Kevin Kish originally filed complaints against Airbnb on June 7, 2016, alleging that the company “may have engaged in acts of discrimination in violation of Government Code, section 12955 and the Unruh Act, Civil Code, section 51,” according to court documents relating to the agreement (attached below).

Essentially, the DFEH’s complaints said Airbnb may have violated the Fair Employment and Housing Act (FEHA) and the Unruh Act because it failed to prevent discrimination from taking place on its platform, whether intentionally or unintentionally. The Unruh Act says it is illegal for a business establishment of any kind to intentionally fail to prevent discrimination.

However, as noted in the court documents, Airbnb maintains it is exempt from any liability under the FEHA and Unruh Act because of its favorite federal law: Section 230 of the Communications Decency Act (CDA). The CDA is a federal law that basically says websites can’t be held responsible for the actions of the people who use those sites.

This is the same law Airbnb has used to make its case in various legal battles over short-term regulation, both in New York City and San Francisco. Airbnb’s CDA argument helped the company “win” its case in New York City by placing all legal liability on the company’s hosts, instead of Airbnb itself.

Airbnb’s CDA argument is noted in the court documents, but the DFEH does not explicitly say that this CDA argument is valid. However, the agreement does note that the DFEH will not file any discrimination-related complaints against Airbnb for at least two years.

Ben Edelman, the Harvard researcher whose work is cited as evidence for Airbnb’s violations of the FEHA and Unruh Acts in the same court documents, said he’s baffled by the DFEH’s decision to accept this agreement by Airbnb.

“The fact that they have to settle to get the right to ‘test’ Airbnb is incredibly ironic,” Edelman said. “Imagine if a police officer needed a settlement from me to check if he can use his radar gun to check my speeding. That’s basically what’s happened here. To test Airbnb for discrimination, they [DFEH] have to promise not to sue Airbnb for 18 months. Regulators shouldn’t have to ask permission to examine a product or service that they’re regulating. The settlement wasn’t totally clear as to why the DFEH felt it needed to ask permission. Did the DFEH feel constrained by Airbnb’s terms of service that don’t allow fake accounts and testing?”

Edelman said that in the course of his research into discrimination and bias on the Airbnb platform that Airbnb “blocked” him from creating fake accounts to do testing.

“If the state of California needs its help in order to test Airbnb’s service I think that portends badly for independent oversight of tech companies,” Edelman added. “It makes it harder to get regulators informed about what’s going on and what work needs to be done. It seems, to me, quite alarming. I didn’t like that as a bargaining chip. That, to me, is table stakes. If you want your service to be technically legal in the state of California, the regulator needs to be able to protect it.”

On the other hand, Eric Goldman, a professor at Santa Clara University School of Law and an expert on legal issues relating to websites, said it was prudent for the DFEH to be able to “test” the platform in this manner.

“Does the government need an agreement to gather that information to assess discriminatory behavior on the Airbnb site? The short answer is, ‘Yes.’ If the government wants to do that they have to create fictional listings and engage in fictional activity. That’s against Airbnb’s rules and that would create a lot of chaos in their system.”

Goldman also thinks that, in comparison to many other tech companies, Airbnb is investing much more into fighting discrimination than most.

“Airbnb has gone way above industry standard behavior for paying attention to discriminatory issues,” he said. “We don’t see Internet companies investing these kinds of resources that Airbnb is investing here. Whether you call it ‘voluntary’ or ‘coerced,’ the fact that Airbnb is doing this without being legally required to do so shows that they took this issue seriously.”

Goldman added that while he’s not familiar with legal procedures related to this particular government agency, he thinks the complaints would have led to some sort of litigation had Airbnb and the DFEH had not come to an agreement.

“If this had gone to court, Airbnb would have invoked Section 230 [of the CDA] and other defenses,” he explained. “The court may have said the department completely overreached. Both parties had some uncertainty over what would happen. So, they came up with an agreement that was helpful to both sides.”

A Closer Look at the Agreement

Within the agreement itself, there are references to a few different actions Airbnb may (or in some cases, may not) take in an effort to prevent discrimination and bias, many of which were originally cited in Murphy’s September report.

This includes making the revised non-discrimination agreement more prominent and visible on Airbnb’s website and mobile, and if Airbnb makes any changes to the policy it has to notify DFEH. Airbnb will also explore “the availability of alternatives to the current use of guest photos and names.” The displaying of people’s names and photos is something Edelman and other critics have pointed out as one of the biggest deterrents to establishing a discrimination- and bias-free platform. Airbnb will also focus on increasing the number of listings it has that are instantly bookable, and regularly inform the DFEH about its actions.

Interestingly, the agreement with the DFEH also says “Airbnb shall consider developing a feature” that would hold hosts who reject a request on “claimed unavailability.” In Murphy’s report, however, Airbnb said that it would develop a feature that would address this very issue within the first half of 2017. So, if a guest is informed by a host that his requested dates are unavailable — even though the dates were advertised as being vacant — Airbnb would automatically block out those dates for any other requests that come up for those same dates, ensuring the host cannot make the listing available to other guests of a different race, etc. Judging from the DFEH agreement, it’s unclear whether that feature is set to be completed or implemented anytime soon.

Another interesting product feature mentioned in the agreement is the addition of a “gallery” in the host’s profile that would collect information on all the guests who were rejected by a host. This gallery would only be seen by the host and, internally, Airbnb, “for the purpose of identifying, monitoring, and preventing discrimination.” Airbnb is expected to make a decision about this new feature within the next three months and if it ultimately decides not to proceed with the “gallery feature,” it will have to inform the DFEH as to why.

Edelman, for one, doesn’t think the gallery tool will be an effective way to combat discrimination or bias, however. “The gallery feature embodies Airbnb’s vision of hosts being responsible for making these decisions,” he explained. “Airbnb would have California look at an individual host and an individual host’s decision about whom to accept and whom to reject. That’s all well and good but that puts aside the fact that Airbnb designs the platform in the first place. Why are the pics even there? Why are names even included in a reservation request? The gallery puts the focus away from those fundamental questions and it’s a very narrow view of the individual actions of an individual host.”

Edelman also wondered why Airbnb would only create a gallery of all the people whom a single host has declined, without also creating a gallery of all the guests whom that host has accepted.

Additionally, Airbnb has agreed to offer anti-discrimination and bias-awareness training to all of its California-based employees, including customer support employees, and it will also make available unconscious bias training for hosts with listings in California. Airbnb’s Tax & Legal department will provide a report at least every six months to the General Counsel of Airbnb and DFEH, and the DFEH has right to review and copy non-privileged records upon request. The company also said it has a full-time product team devoted to advancing “belonging and inclusion and to root out bias.”

If Airbnb doesn’t show “statistically significant and operationally meaningful improvement in the relative acceptance rate” for “Caucasian, African American, Hispanic, and Asian American guests” within 18 months of the agreement going into effect, the terms of the voluntary agreement will be extended for one more year, and Airbnb will have to come up with a new plan for increasing the relative acceptance rate.

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Meetings and Events Are a Big Part of Vegas’ Latest Winning Streak

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Las Vegas has rebounded following a shift away from generating gambling revenue. The Las Vegas strip is pictured here. Thomas Hawk / Flickr

Skift Take: With gambling revenue in steady decline, meetings and events have become extremely important for Las Vegas resorts.

— Andrew Sheivachman

After the recession hit, companies and tourists shunned the country’s largest gambling hub. Now Las Vegas is on a winning streak.

MGM Resorts International’s stock surged to a eight-year high Thursday after the casino giant showed resurgent sales growth in its home market, lifting earnings above Wall Street estimates. The results followed strong reports from Las Vegas Sands Corp. and Wynn Resorts Ltd., suggesting Vegas’s comeback is here to stay — with some help from non-bettors.

Big conventions have returned and tourists are flocking to the Strip’s new nightclubs and restaurants, as hotel operators rebrand and refresh old Vegas landmarks to attract new cash-paying crowds.

While the number of new casinos and hotels under construction remains well below historical norms, the city continues to invest in non-gambling attractions, underscored by the planned move of the Oakland Raiders football team to Las Vegas.

“Entertainment continues to be a key driver for our company and the primary reason people visit our resorts,” MGM Chief Executive Officer James Murren said on a conference call Thursday. He pointed to the year-old T-Mobile Arena, which will soon host the city’s first professional hockey team, and a new theater being built for esports.

Sands Chairman Sheldon Adelson said his Las Vegas casinos reported their highest quarterly profit since 2008. Wynn founder Steve Wynn said his hotel rooms in the city generated the best revenue in the history of his company, with the 75-year-old executive announcing plans to spend $400 million to $500 million building a lake and meeting center behind his Las Vegas casinos.

“This town is a real safe bet,” Wynn told investors.

Executives have also learned to operate their businesses more efficiently. Wynn Resorts has rejiggered its casino floor, putting higher-yielding games in more prominent positions and moving destination games like craps into secondary locations. MGM is benefiting from a multi-year efficiency push that has all its Las Vegas hotels working together to book conventions and meetings.

But with Easter falling later this year, MGM expects fewer conventions, leading to flat second-quarter revenue on the Las Vegas Strip, Murren said. Full-year revenue should still rise in low to mid-single-digit percentages.

Vegas tourism, at 42.9 million visitors in 2016, has been setting records for the past three years. Convention attendance was up 3.4 percent in the first quarter due to large events like the Conexpo in March, which drew 140,000 attendees from the construction industry. Hotel room rates rose 8.3 percent in the first quarter to an average of $140 a night, according to the Las Vegas Convention and Visitors Authority.

Gambling revenue on the Las Vegas Strip, a weak spot in recent years as casinos proliferate across the U.S., rose 5.5 percent in the first quarter to $1.68 billion. That result was largely driven by baccarat, a favorite game of Chinese tourists, resuming its growth, according to Brian Egger, a Bloomberg Intelligence analyst.

©2017 Bloomberg L.P.

This article was written by Christopher Palmeri from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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New York’s Metropolitan Museum Considers New Fees That Would Impact Tourists

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Tourists mill outside New York’s Metropolitan Museum of Art, which has offered free admission for over a century. Steven Pisano / Flickr

Skift Take: Tourists like transparency. They markedly do not like paying $100 to get their family into The Met, only to discover later that they could have paid nothing. Then again, MoMA charges a mandatory $25 and its galleries are packed, so maybe fees don’t turn people off as much as we think.

— Sarah Enelow

The Metropolitan Museum of New York and the city government are weighing charging admission for the first time in the museum’s nearly 125-year history.

The New York Times reports that Mayor Bill de Blasio endorsed the idea of having the Met charge admission for visitors from outside of New York City.

The museum, a taxpayer-supported institution established in 1893, currently has a “suggested” entrance fee of $25 for adult visitors. The museum had been in discussion with de Blasio’s administration on how to close the museum’s current budget deficit of $15 million.

Currently, 63 percent of the Met’s 7 million annual visitors come from outside New York state. Officials are still calculating how a fee might change the visiting habits of tourists.

The museum receives $26 million a year from the city, which owns the Met’s buildings.

This article was from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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