United Brings Back Hot Food on Some Routes — But Only in Economy Plus

United Airlines

A United Airlines business class meal. United is upping its game for premium customers on three coast-to-coast routes. United Airlines

Skift Take: United is making a sound business decision by rewarding its best customers. But in recent years, we’ve seen the chasm grow between the flying haves and have-nots. This will only further that trend.

— Brian Sumers

Months after Delta Air Lines and American Airlines said they would feed economy class customers on some lucrative coast-to-coast routes, United Airlines made a similar announcement, but with a twist. Unlike its competitors, United will only provide free food to passengers seated in its extra legroom economy class section called Economy Plus.

United said Wednesday it soon will give free hot and cold meals, depending on the time of day, to customers flying on three routes — Newark-Los Angeles, Newark-San Francisco, and Boston-San Francisco. Along with main course like roasted chicken with smoked barbecue sauce and butternut squash tortellini with sage cream sauce, they’ll also get free booze and a “pre-arrival refreshment.”

In some ways, United is treating customers better than Delta, which only serves cold food, like sandwiches and fruit plates, on those routes. But Delta also feeds everyone on the Boston and New York routes, including passengers on the cheapest fares, called Basic Economy. Delta also offers free food 12 cross-country routes, rather than three, so passengers on routes like Seattle to Fort Lauderdale and Boston to Los Angeles still get fed. Delta also gives free substantial snacks and free alcohol to its premium economy customers on most other routes.

American, meanwhile, only provides free meals on the New York-L.A. and New York-San Francisco routes, but like Delta, feeds everyone.

But in a message to employees, United said Wednesday that feeding all passengers makes no sense. Instead, the airline wants to reward elite frequent flyers called “premier members,” who sit in Economy Plus for free, as well as customers who pay extra for a seat with more legroom.

“Customers seated in Economy Plus tend to be some of our most loyal customers,” the airline told employees. “Many are Premier members and others paid extra to buy into this section. By offering a differentiated and improved dining service, we are adding more value to Economy Plus and ensuring that our investments continue to reward loyalty.”

United said it was also adding free meals on three routes, because they’re among the most important — and potentially profitable — in the airline’s system. Even routes like Washington, D.C. to L.A. and San Francisco don’t warrant the investment in special planes with extra amenities, the airline said.

Investments in Business Class

Also Wednesday, United said it would make improvements in business class on the three routes. Flights from New York to L.A. and San Francisco have long had flat-beds up front, but United now will also guarantee them from Boston to San Francisco. It’s a route JetBlue Airways also flies, with its Mint business class cabin, and United loyalists may have been tempted to try the competition.

United’s customers in domestic flatbed business class seats are already treated well, but they’ll now receive a Saks Fifth Avenue-branded duvet and pillow. They’ll also get a featured cocktail — a Moscow Mule with a candied ginger skewer and lime wedge — as well as new dessert choices, and pre-meal and pre-arrival hot towel service.

United said business class on these routes are usually filled by some of its “most valuable flyers,” who expect more than the typical first class product on flights that can be longer than six hours.

“These routes have a longer flying time than some international routes, so it makes sense that the experience should be similar to an international flight,” it said.

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Sharing Economy Tensions Lead to Torched Cars in Spain

Car2Go

Car2go, a car-sharing fleet in Madrid owned by Daimler AG, has suffered attacks on 70 of its cars over the last 18 months. Pictured is a Car2Go 4-door Mercedes Benz. Car2Go

Skift Take: These kinds of clashes will be almost inevitable until workers being displaced by new technologies get adequate retraining and employment opportunities to make a transition.

— Dennis Schaal

In a sign of the tensions stirred by Spain’s embrace of the so-called sharing economy, cars were set ablaze near Seville in May.

Nine drivers for the ride-hailing service Cabify had their vehicles torched at the start of May after pitching up in the Andalusian city to seek custom at its spring festival. Car2go, a car-sharing fleet in Madrid owned by Daimler AG, has suffered attacks on 70 of its cars over the last 18 months. And Spanish “taxistas” went on strike Tuesday in protest at competitors whom they say mimic their service without forking out for a cab license that in Madrid can cost as much as 130,000 euros ($145,496).

Spain with its still-high unemployment and reliance on mass tourism is proving fertile ground for companies such as Cabify, a home-grown rival to Uber Technologies Inc. The tensions being created by the new competitors in Spain are on display in other countries from the U.K. to France and Italy that have also seen protests.

“There’s no doubt it’s a source of tension,” said David Murillo, a lecturer on globalization and business ethics at ESADE business school in Barcelona. “Workers are concerned about their jobs becoming obsolete, national regulators get sidetracked and there are also tax loopholes.”

Temporarily Banned

Uber and Cabify, a service that counts Japan’s Rakuten Inc. and Telefonica SA’s pension fund among its backers, rely on clients using internet-based applications to hail a ride, budget a trip and pay. While Uber’s main and most popular service, UberPop, is temporarily banned by court order in Spain, it does have licensed-chauffeur services operating in the country, similar to those offered by Cabify.

“Current tensions are linked to the disproportionate increase of authorizations to chauffeur-driven vehicles,” Julio Sanz, president of CTAC, one of Spain’s largest taxi unions, said in an interview by phone. “They work as if they were a taxi even without a license to do so. That’s illegal, and for us it’s impossible to compete.”

Cab licenses can fetch high prices in the secondary market because some cities haven’t issued new ones for years, said Sanz. For instance, the last time the city of Madrid gave out the documents was in 1978. He says there are now more than 2,200 vehicles offering Uber and Cabify service in Madrid, compared with fewer than 600 in 2012. That number compares with about 15,700 licensed cabs now plying their trade in the Madrid metropolitan region.

Smashed Up

It’s not only ride-hailing services that have faced protests. Car2go, a car-sharing unit of Daimler AG that allows users to pick up cars and drop them off anywhere in Madrid, have been targeted for attack. In the worst incident in December 2015, 60 cars were smashed up.

“Tension is increasing in Spain because of the lack of legislative clarity when it comes to identifying services such as Uber or Cabify,” said Orazio Corva, manager in Madrid for the company, in a phone interview. “It’s time to change the law that regulates them.”

Spain’s public works ministry said it would keep working to ensure an “ordered equilibrium” between the taxi industry and services such as Cabify. In a statement on Tuesday’s taxi-drivers’ strike, Cabify said it wasn’t seeking to compete with them.

“The mission of the company since its foundation in Madrid in 2011 has been to substitute individual vehicles in cities to do away with urban traffic and contamination,” it said. “If this aim is achieved it would increase the demand for public services like ours and those of taxi drivers.”

Striking taxi drivers striking in Madrid didn’t buy that argument.

“We’re worried about our jobs,” said Ignacio Pico, who has been working as a taxi driver in the Valencia region for the past 13 years as he took part in a protest Tuesday outside the Spanish parliament in Madrid. “They’re cannibalizing our industry.”

–With assistance from Esteban Duarte

©2017 Bloomberg L.P.

This article was written by Thomas Gualtieri, Rodrigo Orihuela and Maria Tadeo from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Google Expands Waze Carpooling Across California

Pictured is the Waze app. Waze expanded its carpooling services throughout California.

Skift Take: Waze carpooling isn’t going to upend Google’s business model but it can provide Google with valuable data for targeted advertising, and future ride-sharing and driverless car services.

— Dennis Schaal

Google is expanding its paid carpool service throughout California, building on an effort to get more traffic-weary drivers to share their rides to work — and to collect data that could be useful for future transportation services.

The Wednesday move by Google’s Waze unit, best known for its navigation and traffic monitoring app, extends the year-old carpooling service outside its initial markets of northern California and Israel. Waze will now be pairing up drivers and passengers across a wider expanse that includes heavily congested highways in Los Angeles and other parts of southern California.

HOW IT WORKS

Waze connects drivers and riders with similar commutes based on their home and work addresses. Riders request carpool rides in advance, but aren’t guaranteed matches. Drivers can only pick up one rider; they also get to review the profiles of potential riders in advance and to select the ones they prefer. Riders can only request two rides a day.

The service is primarily focused on rush-hour commutes, when the odds of successfully matching drivers and riders are highest. Waze said tens of thousands of drivers and passengers have registered for carpooling in northern California. It won’t begin booking carpooling requests outside northern California until June 6 to give interested drivers and riders a chance to sign up for the program.

Since signing up for Waze’s carpooling service in February, Lesley Watson says she gets paid $3.50 to $5.50 every time she gives someone a ride on her morning commute from her home in Oakland to her job at an advertising agency in San Francisco. Sometimes, she also picks up a passenger on her evening commute home, although she usually drives solo on her return trip.

“It has helped me offset my commute costs for gas, tolls and parking,” Watson, 28, says. It also has given her a chance to make new friends among the five or six people she regularly picks up through the Waze app.

WAZE VS. UBER

Although the expansion could pose a threat to Uber and Lyft, most people who use ride-hailing services don’t rely on them to get to work, according to survey data. Instead, most people use Uber and Lyft for recreational or social reasons, particularly between 10 p.m. and 4 a.m. when public transit shuts down in many places.

That’s according to a survey of 4,500 people conducted last year by the Shared-Use Mobility Center, a group that focuses on public transit and ways to reduce the number of cars on the road. Only 21 percent of the respondents summoned a raid-hailing service to commute to work, and then did so sporadically, the study found.

Cost could easily be a factor. For instance, commuting to downtown San Francisco from the suburb of Lafayette via Uber could cost between $30 and $40 each way using the service’s own carpool option, according to Uber’s fare estimator . On Waze, that 22-mile (35-kilometer) ride would cost no more than $12.42.

WHAT GOOGLE GETS

Unlike ride-hailing services, Waze’s carpooling service isn’t designed to provide drivers with a major source of income. It tries to calculate a price that’s most likely to encourage two people to carpool instead of driving separately. At most, drivers are paid 54 cents per mile — the rate that Internal Revenue Service allows to account for gasoline, insurance and maintenance for a vehicle used on business.

“We want the ride to be affordable enough for riders so they use it frequently and we want drivers to be rewarded for taking a detour to fill an extra seat,” said Josh Fried, head of business development for the carpooling service.

The service also doesn’t make much money for Google, which derives most of its income from digital advertising. But the company will be amassing data on commuters and their travel habits. That could be useful to Google for a variety of purposes, including targeted advertising and planning potential future transport services, including any involving the self-driving cars one of its spinoffs, Waymo, is currently testing.

CARPOOLING AS BUSINESS

While carpooling has been around for decades, it’s never been particularly popular. “People don’t want to get tied to something that requires them to ride with the same people and be in a certain place at a certain time,” said Sharon Feigon, executive director for the Shared-Use Mobility Center.

Using technology to match drivers and passengers on days they want to participate in a carpool offers more flexibility that may get more people to try it out, and discover they like it, Feigon said.

But it’s not an easy business. Lyft ended its carpool service nine months ago, citing a shortage of drivers willing to meet the demand. It’s currently experimenting with another commute-hour option called Shuttle that makes designated stops on routes in two test markets — San Francisco and Chicago.

The expansion makes it more likely that Waze will offer carpooling in other urban regions, although Fried declined to comment on that possibility. So far, the only other market that Waze has confirmed is Brazil, where the carpooling service will begin operating later this year.

This article was written by Michael Liedtke 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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Hilton’s New Design Brings the Gym to the Guest Room

Hilton

Hilton’s new Five Feet to Fitness room design for full-service hotel brands brings the gym into the guest room. Hilton

Skift Take: This is especially ideal for guests who (1) don’t want their colleagues (or the general public) to see their sweaty selves in the hotel gym and (2) those rare souls who want to work out 24/7 as if no one is watching.

— Deanna Ting

Hilton has designed a new room category for its full-service brands that brings the fitness center into the guest room. Called Five Feet to Fitness, this new room type includes more than 11 pieces of fitness equipment and accessories that make it easier for travelers to work out privately in their own guest rooms.

Hilton isn’t the first hotel company to include fitness equipment in the guest room. Even Hotels from InterContinental Hotels Group (IHG), for example, has had this feature, gym equipment in guest rooms, as a brand standard across all rooms from its start in 2012.

However, the types of fitness equipment Hilton is placing in the room, and the way it’s being utilized in a standard room setting is unique, said Ryan Crabbe, senior director of global wellness for Hilton.

“This room is a really different offering,” Crabbe said. “Five Feet to Fitness is a purpose-built environment. It’s easy to deliver or just place a piece of fitness equipment or accessory into a room, but it’s harder to transform the room so that it actually becomes a credible space for that activity. We could have just thrown everything into a room and placed a cardio bike on a carpeted guest room floor. But we ripped out the carpet and put down performance flooring that you’d find in the world’s best fitness centers.”

Equipment in the room includes an indoor bike from Wattbike and a training station called Gym Rax that lets guests do strength, core, suspension, and high-intensity interval training-style exercises. Embedded into the Gym Rax apparatus is a digital Fitness Kiosk, a touchscreen display where guests can watch equipment tutorials and more than 200  workouts that include cardio, cycling, endurance, strength, high-intensity intervals, yoga, stretch, and recovery. There’s also a meditation chair and blackout shades provided in these rooms.

Amenities include Biofreeze to ease achy muscles, and protein and hydration drinks. Phase two of this room category will also include Atmos air filters to purify the air, while phase three may include a brand partnership related to a better sleep experience.

The ROI of In-Room Fitness

To book one of these new room types, Hilton generally adds $45 to its best available room rate, and that rate depends on floor level, view, and market. Currently, Five to Fitness rooms are available for booking at the Parc 55 San Francisco and Hilton McLean Tysons Corner. Hilton expects to soon add more of these rooms to hotels in Atlanta, Austin, Chicago, Las Vegas, New York, and San Diego.

Are hotel guests willing to pay a bit more for these rooms? And what about the costs for hotel owners?

Crabbe said that Hilton began testing an in-room fitness concept three years ago at its McLean property and that the “rooms went over exceptionally well.” What Hilton found, however, was that people “wanted more options;” just having yoga equipment or just cardio equipment was too limiting.

“They wanted everything to sit under one big roof and more opportunities to engage in different types of movement,” he said. “That was a big lesson for us.”

Crabbe noted that in doing customer research, Hilton also found that 28 percent of its guests across all segments, not just full-service hotels, said they were interested in pursuing in-room fitness. He said the company also took note of a recent Cornell University Center for Hospitality Research study which showed that 46 percent of guests intend to work out during their hotel stay, but only 22 percent actually wind up using the hotel fitness center.

“That gap, for us, confirmed there was a significant opportunity to enable fitness for our customers so they could stay well on the road,” said Crabbe. He also said the growing popularity of boutique and studio fitness classes, as well as digital fitness experiences, were further proof that a guest room like this could be successful.

For hotel and property owners, Crabbe said they usually see a return on investment for these rooms within a year, while also “driving incremental rate and revenue.” Owners must commit to converting at least three of their guest rooms to the new room category, although Hilton suggests they convert five. The room design is also meant for standard rooms, not larger suites or room categories.

The cost for an owner to build one of these Five Feet to Fitness guest rooms ranges from $9,000 for a Streamline Bay Gym Rax and $10,500 for a Full Bay Gym Rax to $12,000 for an Extended Bay Gym Rax. The difference among the different Gym Rax models relates to size and the ability to do suspension training, and have more pull-up grips.

Hilton hopes to have at least 100 of these rooms available for booking throughout the U.S. by year’s end, and Crabbe said the company is also looking at taking this concept and modifying it for other brands within the Hilton family, including its all-suite, select-service, and extended stay hotels.

The Future of In-Room, On-Demand Hotel Fitness

Wellness, which encompasses fitness, is a big business today, and that’s a fact not lost on Hilton or its peers. According to the Global Wellness Institute, the global wellness industry overall was worth $3.7 trillion in 2015, and wellness tourism accounted for $563 billion.

“The global wellness movement — people who are tuned into health and better living — is larger than it’s ever been,” said Crabbe. “The phenomenon, to me, totally transcends demographics and segments, and the fact that you’re seeing wellness activity across a number of brands and a number of segments is a really positive sign. The hospitality industry is actually catching up and leaning into a trend that has been with us for a long time, and we’re all sensing an opportunity for travelers to feel more looked after and have their wellness routines more enabled on the road.”

A king guest room at the EVEN Hotels Brooklyn features a variety of fitness equipment. Photo: InterContinental Hotels Group

In-room fitness equipment has been part of Even Hotels since the brand was being developed, and all of the its guest rooms have an in-room training zone that includes a foam roller, yoga mat, yoga block, core exercise ball, and the Even Hotels Trainer, a mounted fitness wall that includes resistance bands. Guests can also choose from 19 fitness videos and there’s an in-room training guide for the in-room equipment, and all videos/guides are also available for viewing on the Even Hotels YouTube channel.

Jason Moskal, vice president of lifestyle brands for IHG said, “The No. 1 insight we’ve learned from guests when we were developing Even Hotels was that they didn’t have access to equipment or classes that meet their needs when they travel. There’s nothing more disappointing when you head down to the fitness center with a limited amount of time and you find dated machines or lines to use the equipment. Guests really want flexibility and have responded positively to the fact that they now have the ability to choose whether they take a class, strength train, do cardio or yoga in their room or in the Athletic Studio. We provide the options they need to fit their lifestyle and schedule.”

He also noted, “Our female travelers have expressed how refreshing it is that they don’t have to visit a hotel gym to continue their fitness routine. They really enjoy the privacy of working out in their room.

Moskal said Even Hotels doesn’t have plans to install additional in-room fitness features at this time.

In April, Westin debuted its new partnership with boutique cycling company Peloton at 31 of its hotels throughout the U.S. At participating properties, guests book a WestinWORKOUT guest room that includes the Peloton Pro bike and do live and/or on-demand Peloton cycling classes from the privacy of their own rooms. The Peloton Pro bike is also available for use in some of the hotel’s fitness centers.

WestinWORKOUT guest rooms feature Peloton Pro bikes for guests to use in their own rooms. Photo: Westin Hotels & Resorts

Another hospitality company enabling on-demand fitness is luxury alternative accommodations platform onefinestay. On May 1, the company launched a partnership with fitness expert Tracy Anderson enabling onefinestay guests to access three of Anderson’s online video workouts from tracyandeerson.com during their stays. The workouts are designed for at-home use.

“We’re honored to have had Tracy [Anderson] stay with us many times, and know that many of our guests are fans of her method,” said Jason McGrath, vice president, U.S., for onefinestay. “It’s a huge thrill to have her as the face of this new and exclusive fitness amenity for our guests; it’s a truly special layer to the onefinestay service and experience that our guests love.”

 

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JetBlue to Test Facial Recognition for Boarding Without Passports

KLM

A customer uses facial recognition software to board a KLM flight in Amsterdam. JetBlue soon will become the first U.S. airline with a similar program. KLM

Skift Take: Even as tests go, this is a tiny one. But it shows what’s possible with biometrics. Wouldn’t it be nice to be able to go through the airport without showing a boarding pass or passport?

— Brian Sumers

In a first for a U.S. airline, JetBlue Airways in June will allow passengers to board some international flights in Boston by submitting to a facial scan at the gate, rendering passports and boarding passes unnecessary.

It’s a small test, with JetBlue only planning to use the optional program on flights from Boston to Aruba. And it might not save passengers much time since they’ll still need to show identification and boarding passes elsewhere, including in the airport lobby, and at security screening. But if it goes well during the 45 to 90 day test, JetBlue said it might look to expand the program.

Airlines outside the United States, including Air New Zealand, British Airways and KLM, have implemented biometrics-based boarding at some gates, and Delta recently said it would test using facial scans to authenticate some passengers in the Minneapolis airport lobby, including for baggage drop-offs.

But no carrier in North America has tried using scans to facilitate boarding. JetBlue is calculating facial recognition will make boarding easier for passengers while freeing airline employees for tasks other than scanning boarding passes and checking documents. Eventually, JetBlue is hopeful it can use biometrics throughout the journey so travelers wouldn’t need to show their boarding passes or documents anywhere.

“You could in theory literally walk through the entire process without taking out your boarding pass,” said Joanna Geraghty, JetBlue’s executive vice president for customer experience. “This is obviously just one small test as part of the overall travel experience. But we think there is a real potential here, long term, to create what everyone wants, which is seamless and easy air travel.”

‘Like a Selfie’

Starting June 12, JetBlue will rely on passenger data supplied by U.S. Customs and Border Protection for the test. At boarding, travelers who participate will have their picture taken, and the camera will transmit images to authorities. “It’s like a selfie,” Geraghty said.

Both U.S. citizens and non-citizens may participate, and the system will take five to seven seconds to process, said Sean Farrell, head of Portfolio management at SITA, the technology company that is helping organize the test. Then, it will return an answer — board, or do not board.

“It certainly will be as fast or even faster than the other methods available to board,” Farrell said.

Since customers won’t have boarding passes to display, Geraghty said some may forget where they’re sitting, so JetBlue will have tablet-holding agents at the gate. Rather than repeatedly scanning boarding passes, they’ll remind passengers where to go, and answer other questions about travel.

“We think the opportunity is freeing our crew members to do meaningful activities,” Geraghty said.

Biometrics a priority for U.S. Customs

While the test is the first of its kind for U.S. airlines, it’s not for U.S. Customs, which has for several years been trying strategies to track visitors using biometrics.

Last summer, it worked with Delta Air Lines to monitor customers on one daily flight from Atlanta to Tokyo. At the time, the government said it wanted to determine whether it could successfully compare an image of a customer taken at departure to a previous image of the same traveler.

This is part of a priority for customs to develop biometrics strategies so it can track visitors and know definitively when they leave the country. More than a decade ago, the 9/11 commission recommended the United States use biometrics to learn when visitors departed. 

The government is finally taking more interest in tracking exits, Neville Pattinson, senior vice president of government sales for Gemalto, a company that creates biometrics solutions, said in a recent interview. And as the government invests in the technology required, he said, airlines may decide they want to use biometrics as well.

“This is the tipping point,’” he said. “[Airlines will say] ‘OK, if the government is requiring it, how can we take advantage of it.’”

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Don’t Look for Trivago to Jump on the Metasearch Buying Spree

Trivago

Trivago CFO Axel Hefer thinks huge acquisitions would be too much of a distraction for the company at this juncture. Trivago

Skift Take: Trivago is hotel-only and is focused on growing its own brand without the headaches of trying to figure out what to do with an additional brand. Trivago isn’t talking about it, but would gladly leave it to Kayak to try to determine what to do with multiple brands such as Momondo and Cheapflights.

— Dennis Schaal

Trivago is very content with its own brand and despite having $240 million in cash on hand, the hotel-search site isn’t planning on making big acquisitions anytime soon.

That’s the word from Trivago Chief Financial Officer Axel Hefer, who told Skift that the company’s leadership discussed merger and acquisition strategy after Ctrip acquired Skyscanner last year and earlier this year after the Priceline Group entered into an agreement to buy the Momondo Group.

“So from our perspective one of the key reasons for our success is that we are extremely focused,” Hefer said, adding that a large acquisition might dilute the company’s focus. There are other drawbacks as well, he said.

What would you get?

“What would you really get?” he asked rhetorically during an interview at Skift’s offices in New York City last week. “We would get or we would buy a competitor: We would get a brand that we don’t want because we [already] have a brand and we like the brand. You would get a technology that is different and probably not as good and focused as ours has been, and the third one is we would get a second location which we don’t really like.”

Trivago has developers in Amsterdam, the Netherlands; Leipzig, Germany, and Palma de Mallorca, Spain. By “second location,” he was talking about the disadvantages of adding a tech team in some far-flung geography.

“To have a really entrepreneurial environment where you do a lot of tests and then take risks and optimize very quickly, for that, communication, of course, is very crucial,” Hefer said. “So that you have an overview of who’s actually doing what and how to move fast. So as a consequence, it’s very hard to imagine that there is an acquisition that could make sense and could justify such a distraction to then move from our very clear and focused model into a more complex model, and then integrate it or not integrate it.”

Hefer didn’t mention it, but Trivago need look only as far as Expedia to appreciate the complications that come with acquisitions. Expedia stumbled in 2016 when it directed a ton of resources into integrating its 2015 acquisition of Orbitz Worldwide.

Trivago went public last year and although Expedia still controls Trivago, the hotel-metasearch company still operates fairly independently from its parent.

Trivago Has Made Technology Acquisitions

Hefer said Trivago isn’t against doing acquisitions when they would speed things up on the technology front. In fact, in 2015 Trivago acquired a 52.3 percent stake in property management system Base7booking for about $2.3 million.

“So we’ve acquired the technology that we would love to develop ourselves but by acquiring it we can just accelerate our organic growth rather than decelerate because we get distracted,” Hefer said. “So that is very much our thinking there. If we can find technology that is on our roadmap anyway and we can get it much cheaper but faster — I think faster is the key motivation — then we would consider that.”

So that’s the strategy for now: Trivago will do smallish, tack-on technology acquisitions, but don’t look for huge buys of metasearch competitors to spur growth because they would be too complicated.

Besides, with a 68 percent revenue jump in the first quarter of 2017, Trivago’s top line — responding to its bevy of TV advertising — is expanding at a very nice clip anyway.

Note: Check Skift later this week for an in-depth interview with Hefer on the company’s TV strategy, quest to personalize hotel shopping, and road to profitability.

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Thomas Cook Is Cautiously Optimistic About its China Business

Thomas Cook Group

Thomas Cook Group has seen positive results from China so far but doesn’t plan to abandon its core European business. Pictured is Thomas Cook Group CEO Peter Fankhauser at the group’s Shanghai office. Thomas Cook Group

Skift Take: Thomas Cook has hit the ground running in China but it’s not running away from its core business in Europe. The group doesn’t want to be too aggressive in China before its made more of a name for itself in the market and sees how consumers respond.

— Dan Peltier

Less than a year after kicking off operations in China, European tour operator Thomas Cook Group is looking to a key partnership, sports tourism, and underserved travelers as it tries to avoid the missteps that many other Western travel brands made in the country.

The group, headquartered in the UK, is going after both the Chinese outbound market, with its 130 million travelers, and inbound travelers in a variety of ways.

In an interview with Skift at the World Travel & Tourism Council’s Global Summit in Bangkok last month, CEO Peter Fankhauser detailed those approaches and explained why its Chinese business is becoming more relevant to the group’s story.

To help it succeed, Thomas Cook China is relying on partnerships with European and Chinese brands and sports teams, for example.

The company is targeting many Chinese travelers’ love of European football to grow its outbound Chinese business, Fankhauser said. Thomas Cook has partnered with European football teams such as Manchester United to promote inbound and outbound Chinese travel and act as an incoming agent for European football clubs touring China for summer pre-season tournaments.

Thomas Cook China’s outbound, long-haul itineraries for Europe, Africa and Americas focus on sports travel packages while its short-haul packages for Southeast Asia are marketed to sun and beach lovers.

The company is still learning which products will resonate in the Chinese market, but it has already noticed a trend towards individual travel in China.

Group tours still account for the majority of the outbound market, Fankhauser said, but it’s seeing increased volume with Chinese travelers wanting to go without a group.

“That is probably the biggest opportunity for us in China,” he said. “More Chinese consumers are turning away from these big groups where they go with other tour operators in Europe through different cities.”

Fankhauser believes individual Chinese travel is a niche that hasn’t been sufficiently addressed by competitors. “For example, almost 50 percent of our arrivals in the Maldives are individual Chinese couples,” he said. “It’s massive but they have nothing to do with the expectations we have of Chinese tourists coming to Europe.”

The company’s outbound Chinese market is projected to grow 15 to 20 percent each year during the next five to 10 years. Thomas Cook began booking Chinese itineraries in September 2016 and has already booked more travelers during the first five months of this year than the September to December 2016 period, a representative said.

Bringing Europeans to China

With inbound Chinese itineraries, the company initially plans to send about 2,500 to 3,000 European travelers to China per year, much smaller than other long-haul destinations such as Australia or Thailand. Product offerings in China include hotel packages, sporting events and show tickets.

Since September, Thomas Cook’s inbound Chinese itineraries — mainly bringing Europeans to China — have generated most of its China business’ revenues and cash flows, Fankhauser said.

While the operator increasingly views China as important to the group’s growth — Fankhauser said it is already the company’s fastest growing market “by a long way” — it’s not certain if that market will become one of Thomas Cook’s long-term, core growth opportunities.

For one, Thomas Cook doesn’t want to divert attention from its mainstay European business. Of its 16 source markets, most are in Europe.

And strong growth aside, China still represents a new and uncertain market for the group. Many Western travel brands have overpromised on China’s potential and later pulled out or cut back. Thomas Cook’s executive team, though pleased with China thus far and excited about the potential, acknowledges that it is still relatively unknown there.

A Long (and Recent) History

Even though Thomas Cook only started operating in China in September, its history there is longer — and somewhat complex. Sir Thomas Cook, the company’s founder, originally visited China in the mid-1800s and spent 250 days traveling throughout the country. The company’s more recent Chinese business dates to October 2015 when it opened offices in Shanghai and Bejing.

But China ties were formed before even before those offices were established. In March 2015, Fosun, a Chinese conglomerate, took a five percent stake in Thomas Cook Group; it has since upped its ownership to 11 percent. Before the deal with Thomas Cook, Fosun had just acquired all-inclusive resort company Club Med in February 2015 in a separate transaction.

In November 2016, Fosun folded its Thomas Cook and Club Med assets into a combined tourism entity called Fosun Tourism and Culture Group.

Thomas Cook China works with Club Med in China to promote and distribute Club Med resorts through Alibaba’s Fliggy platform and China’s Spring Airlines. “I have to say without Fosun, we would have never been so fast in getting all the applications and licenses,” said Fankhauser. “You need a lot of licenses in China.”

Thomas Cook is counting on Fliggy and Spring to help the brand become more familiar to Chinese consumers. A spokesperson said the operator also attributes the early growth in its outbound Chinese business to its work with Fliggy and Spring.

“We expect this part of the business to be the key driver of growth for China in the future,” the spokesperson said.

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Skift New Luxury Newsletter: Vacation Rentals for the One Percent

Oasis Collections

A home in Santiago, Chile that is available through luxury home-rental site Oasis Collections. Oasis Collections

Skift Take: Luxury travelers like vacation rentals, too. They just want to make sure they’re well taken care of along the way.

— Jason Clampet

The Skift New Luxury newsletter is our weekly newsletter focused on the business of selling luxury travel, the people and companies creating and selling experiences, emerging trends, and the changing consumer habits around the sector.

We’ll keep in mind the needs of the specialist travel agents who sell these products as well as the sophisticated consumers who shop for them.

Today we look at four different areas where consumers are welcome to change.

In Miami we talk to the new East hotel about its Hong Kong origins and how it is approaching the U.S. market. Not everyone wants to stay in hotels all the time, so we also talk to both Inspirato and Oasis Collection about what consumers really want from vacation rentals.

On the passenger experience front, American Airlines has a new product for its most valuable passengers: decent airport food. And we also tell you something you may already know: Men spend a lot on luxury goods, too (actually, even more). — Jason Clampet, Editor-in-Chief

4 Luxury Looks

Men spend more on luxury goods than women do, says a new study.

Men Are Spending More in the Luxury Sector Than Women, Research Shows

Women are commonly considered the decision makers in the travel industry, however, a recent report from the Shullman Research Center (link opens PDF) shows that men spent more, more frequently, and for other people more often than women.

Based on reported purchases of 1,690 participants across the United States, an estimated 67 million adults bought one or more luxury item last year. The majority, 58 percent or 39 million, are men while 42 percent or 28 million, are women. The median number of luxury purchases was about the same – 2.9 for men and 2.8 for women – suggesting that men spend more than women per purchase.

What Wealthy Travelers Look for in Their Vacation Rentals

Whether the wealthy are looking for multi-million dollar beachfront villas or penthouses soaring into the Manhattan skyline, the options for finding such ritzy accommodations are increasing in number.

But it’s not just home sweet home that the luxury market is seeking, according to Jeff Hartman, senior vice president of marketing and communications for Inspirato. The wealthy want their rental homes to come with “seamless service, certainty, and a guarantee of excellence.”

Interview: Swire Group Brings Its Brand of Luxury to the U.S.

Swire isn’t a household name for most of the world. But for those in the know, they own Cathay Pacific, and also some of the most remarkable hotel properties around.

It’s no secret I am a huge fan of their flagship property, Upper House, in Hong Kong, and also Opposite House in Beijing and Temple House in Chengdu. The brand is also known for a series of high-end real estate developments around Hong Kong, notably Pacific Place near Star Street.

American’s Flagship Dining experience started running at JFK in late May.

American Airlines Launches Flagship Airport Dining for Top-Tier Fliers

Flying on American Airlines for the 1% just got a little bit nicer.

Last week, American Airlines launched a new airport dining experience at New York JFK for its international first class customers. The so-called “Flagship Dining experience is built as a free, in-airport, sit down dining service for premium travelers to supplement the onboard experience. Attached to the airline’s Flagship lounges, which are effectively supercharged Admiral’s Clubs, it effectively delivers free restaurant service to passengers who can avoid the headache of the crowded terminal — or in some cases, the often-middling airplane food.

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5 Takeaways on the Future of Travel Search and Booking

Skift

From left, Momondo Group’s Hugo Burge, Trivago’s Johannes Thomas, Kayak’s Steve Hafner and Skyscanner’s Gareth Williams. Skift

Skift Take: If you think metasearch revolutionized the act of shopping for travel, wait until these sites truly harness all the data out there.

— Sarah Enelow

Why search for travel on one site when you can search a bunch all at once? That’s the concept behind travel metasearch companies, which take your query for a hotel in Paris, for example, and give you the chance to book it across multiple sites.

Skift had the leaders of several metasearch companies speak in April at Skift Forum Europe in London. They included Trivago managing director Johannes Thomas, Kayak co-founder and CEO Steve Hafner, Momondo Group CEO Hugo Burge, and Skyscanner co-founder and CEO Gareth Williams.

Each of those executives also sat down with News Editor and podcast host Hannah Sampson behind the scenes in the Skift Take Studio.

The companies all had newsy developments recently: Trivago went public late last year, Kayak parent company Priceline Group announced plans to buy Momondo Group earlier this year, and Chinese travel firm Ctrip acquired Skyscanner at the end of 2016 for more than $1.7 billion dollars.

Our discussions were wide-ranging and touched on advertising strategies, competition in the metasearch space, evolving customer behavior, the emergence of natural language and voice search, and how to get users to love the product.

This mini-episode is one of several conversations we’re bringing you from backstage at Skift Forum Europe.

Here are five takeaways from the conversation:

Trivago TV Advertising Strategy Based on Data

In its earliest days, Trivago, which was founded in 2005, was 90 percent dependent on Google for organic traffic and wanted to diversify to put less reliance on a single outlet. Today, the hotel-search site focuses a lot on TV advertising and also does digital marketing. The company selects their Trivago guys and women actors to match the local market. In Japan, for example, the Trivago woman is of European descent and speaks fluent Japanese.

It is easy to track performance in digital marketing but Trivago also does lots of testing of TV advertising and has used data to fine-tune its approach in each market.

“From the beginning, we have been extremely data driven [in] how we do things because you could be easily spending a hundred million on TV,” said Thomas. “The big question is, how much is coming back? Is 20 cents a euro coming back? 40 cents?”

“If you remember the first spots about that Trivago guy, it was low-budget on all ends basically. It still turned out to work very well. We had very good response. I think the format we changed, our spots became less emotional, but more explanatory, educational,” said Thomas. “We build everything in-house. We buy media in-house. We produce our spots in-house.”

That being said, putting a spokesperson on TV isn’t for everyone.

“We don’t employ a spokesperson, which I think is the right way to go,” said Kayak’s Hafner. “It allows us to customize our marketing by market. God forbid that guy ever does something he shouldn’t be doing. It would impact the Trivago brand… We spend a tremendous amount of money on marketing. Not Trivago-like levels, but very close to it.”

“Their strategy is much more about marketing and advertising. Ours starts with building a great product first,” said Hafner.

Momondo’s Burge echoed that sentiment: “UX (user experience) is at the core of what we do. We really focus on making a beautiful user experience and put advertising and forms of monetization second.”

Qualitative data on users and hotels is golden

Being able to personalize hotels to users, who can be leisure travelings taking a trip with family at one moment and a business traveler heading solo to an important meeting another day is a key problem that no one has solved yet.

Using qualitative data to pinpoint the best hotel for each traveler is the elusive holy grail. There might be just a brief moment in which to make the right hotel suggestion to capture that customer.

Trivago, for example, analyzes and profiles hotels and users as much as possible to refine its search results.

“When you ask your bot, your voice search, ‘Trivago, find me a hotel in London close to Piccadilly Circus and I would love to have great breakfast,’ or whatever,” said Thomas, citing one scenario. “Converting this into meaningful results, in terms of showing you the right hotel, you only have very little space to show. We need to give you the right hotel in this moment,” said Thomas.

Rival TripAdvisor likewise touts its abilities in this area. TripAdvisor’s current tagline is: “Find the lowest price on the right hotel for you.”

Metasearch is all about streamlining

The whole purpose of metasearch is to lift the burden of comparison shopping by having one website sort through a mass of information scattered across the Internet. But if the metasearch site doesn’t present its tailored findings in an easy-to-skim manner, the effort is wasted.

“The first thing is you have to present the consumer a comprehensive list of options, right?” said Kayak’s Hafner. “You have to actually do the work to go search everything. You have to make sure that it’s comprehensive, it’s accurate, and it’s available to book.

“The second thing you have to do is you have to present the goods to the consumer… Your store itself has to be well-organized, well-designed. You don’t want to walk into a mall and see everything. It’s overwhelming.”

Burge of Momondo, which would become part of the Priceline Group and Kayak if regulators approve the deal, said comprehensiveness is vital.

“The beauty of metasearch is that it gives the most comprehensive view possible of the marketplace. One of the first things that we do is put value proposition first. We make sure that we work with the broadest range of providers and offer the broadest range of content,” said Burge.

there’s still room for differentiation

The growing quantity of travel metasearch sites can be seen just by looking around the room at Skift Global Forum. But metasearch is also now a standard method of shopping, so these sites must find their niches, and those niches do exist.

“A lot of what is differentiating is which markets you focus on. I think if you try to focus on markets with our other big players, I think it’s much harder,” said Burge. “Momondo showed us that there are overlooked markets in the Nordics and Scandinavia that, while small individually, could add up to be a very material business.”

Last summer Momondo released a viral marketing video to carve out their unique personality and help travelers emotionally connect with the brand.

“What blew us away was that over 200 million people watched a five-minute video,” said Burge. “It was shared in enormous amounts. I think it really did resonate. I think it’s a powerful message, but it’s an even more powerful message in the face of disturbing populism, and antagonism, and heated political debate around division… we were really proud of the fact that we were able to create that out of a time of uncertainty and discord,” said Burge. “Purpose-driven companies are the way forward.”

Voice Recognition Is Doable But Better Data Needed

Voice recognition is available today, but there’s a big difference between a device understanding spoken words and a device making lots of accurate, instant, useful calculations.

“The technology’s there now to definitely do it. There’s no question that you can do a pretty good job, a very good job, of interpreting travel queries,” said Skyscanner’s Williams.

“The difficulty is, do you have the data in the format that’s needed to answer the question? If I say ‘a holiday somewhere hot,’ you can’t drill down by country. North of France is cold and South of France is hot. You have to be able to drill, partition the data in a way that makes sense to the query. I think that will be the main source of the challenge.”

Hafner agreed that we’re still a few steps away from voice search being fully embraced. He said a customer might might “to find a cheap flight to Paris for less than $300 from Nice,” and then might she or he might keep adding details “with a spoken voice.”

“That takes a lot of computing power to actually figure out the right answer for you. That’s why more data helps,” said Hafner.

And then there are some really futuristic ideas that go beyond voice recognition into something that feels like sci-fi.

“I read something in the paper that are temporary tattoos with electronics built in, so that you could make gestures on your forearm to control a computing interface,” said Williams.

Start listening to the Skift Podcast, today. Subscribe via iTunesSoundcloud or RSS.

Listen to all the Skift podcasts here.

 

 

 

 

 

 

 

 

 

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The Business of Loyalty: The Millennial Problem

Hilton Worldwide

Hilton’s app allows loyalty members to use keyless entry at some properties. Hilton Worldwide

Skift Take: For now, the industry’s biggest task it to make sure that Millennials don’t completely disengage and abandon loyalty altogether.

— Jason Clampet

Editor’s Note: Skift’s Business Traveler newsletter is now the Business of Loyalty newsletter.

In this weekly missive, we’ll bring you the same insight into what matters most to the people who travel for a living, but now with an added focus on how airlines, hotels, and credit card programs battle for their attention and their business — a points geek with a Ph.D. of sorts. 

While we are still looking at how these moves impact the consumer, the focus is on what the industry is doing to win their loyalty. The newsletter is being written by Grant Martin, who you’ve come to know as the author of our Business Traveler newsletter over the last three years. He’ll be able to take advantage of contributions from Skift editors including Brian Sumers (airlines) and Deanna Ting (hotels) in order to better explain what’s happening with loyalty right now. We hope you’ll stick with it, and we promise to never devalue your reading experience.

“Loyalty is dead. Long live loyalty,” was the first response to news that Skift was launching a loyalty newsletter last week.

It’s a fair statement for a large part of the traveling population — particularly those who focus on budget travel. The last three years have brought great dilution to loyalty programs in the travel industry, which has evolved to focus more on revenue than actual time spent on an airplane or in a hotel.

For higher spend travelers that may be okay, but for others, including those who are forced to buy the least expensive fare by the travel desk or those simply traveling for pleasure, the perks of loyalty are now harder to find. And millennials, who are now just maturing into management and traveling in a larger segment, are getting the shortest end of the stick.

Indeed, for most younger travelers it often does make little sense to aim for elite status — much less top tier elite status — in an airline or hotel loyalty program. Nearly halfway through the year, business travel on my favorite carrier, American Airlines, has me at 67,000 out of 100,000 miles for top tier Executive Platinum status but only at $5,300 out of $12,000 spend — and that’s with several business trips to Asia already in the books and a very unhappy fianceé.

While I’m sure that I’ll reach top tier status this year, others have completely given up. This past week, Matt Kepnes, who runs the Nomadic Matt blog, wrote 1,600 scathing words on why he’s no longer loyal to American. The comment section of that post is full of similar reports. Aviation reporter Brian Sumers doesn’t even bother and insanely flies Frontier everywhere.

Skift’s Portrait of the Millennial Traveler 2016 backs this up. While a small segment of Millennial travelers like myself are finding success in travel loyalty programs, most are adrift, focused on just getting from point A to point B.

This tectonic change is what’s causing many loyalty programs to change the way they approach younger travelers. Knowing that most Millennials aren’t interested in saving up for grand scale rewards or top-tier status, programs are now looking more towards smaller-scale rewards and experiential redemptions in which younger, points-poor travelers can participate.

Hilton has perhaps done this best with its new Honors loyalty program, allowing travelers to pay for rooms in part with points or pool balances rather than saving up for full scale rewards.

Other programs, especially in the airline space, seem to be going in the other direction. Back at American Airlines, the AAdvantage program has taken serious heat in the last months for tightening up award space and jacking up prices for mileage tickets. Flush with cash from a strong few years for the industry, it seems that airlines have little need for loyalty programs these days.

Even so, if airlines and hotels can keep the attention of the Millennial segment, there are still deals to uncover. Alaska Airlines, through either the marketing or the customer retention department (see: its merger with Virgin America) is currently racking up awards for having the best airline loyalty program in the country. And despite the Starwood – Marriott merger, travelers still seem to love both loyalty programs.

Given a relatively strong travel economy, it may be a few years until the industry comes crawling back to younger travelers in full force.

The Big News

For our latest report we go really deep on hotel loyalty to better understand where hospitality brands are at right now.

New Research Report: The State of Loyalty in Hospitality 2017
New Research Report: The State of Loyalty in Hospitality 2017

For today’s hospitality brands, loyalty programs are as much about repeat customers as they are about controlling distribution costs. Often times that means strategy at the property level, rather than at the brand level.

Skift Stories and More Expert Insight

Alaska Airlines Adds Finnair as a Loyalty Program Partner
Alaska Airlines Adds Finnair as a Loyalty Program Partner

Alaska took one step closer to the Oneworld alliance by kicking off a partnership with Finnair this week. It already has a strong relationship with American, another Oneworld partner, as relations with Delta continue to cool.

UBS Will Challenge Chase and AMEX With New Travel-Focused Credit Card

Some of the perks are impressive, but UBS may have some trouble challenging Chase and American Express. Both competitors offer serious value to cardholders seeking free travel. And each has been in the high-end business longer than UBS. Plus, Chase and Amex have lots of airline partners.

The Direct Booking War Is a Myth, at Least in Europe
The Direct Booking War Is a Myth, at Least in Europe

Sometimes it’s easy to forget that the U.S. isn’t shorthand for the whole world. The fragmented market in Europe and elsewhere makes it much harder for hotels to try and increase direct bookings.

AP: Elite Traveler Saved Time and Was Fed While Non-Elite Dawdled and Got Middle Seat

A BMW X3 SUV or a Toyota Corolla? OK, airline travel and related perks, such as those for car rentals, just aren’t fair. But leisure travelers aren’t storming the barricades anytime soon.

The Points Guy: Amex Is Surprising Platinum Cardholders With Another Gift
The Points Guy: Amex Is Surprising Platinum Cardholders With Another Gift

AmEx is giving free Blade (helicopter service) gift cards to some lucky Platinum cardholders. No dice so far for Skift’s Loyalty team.

View From the Wing: Aeroplan Hates Their Customers?

Air Canada and its loyalty program are not on the best of terms right now.

One Mile at a Time: JetBue Is Offering Up To 6K Bonus Points For Flights To/From NYC This Summer

Incentives for transcontinental travel keep heating up.

American Airlines Launches Flagship Airport Dining for Top-Tier Fliers
American Airlines Launches Flagship Airport Dining for Top-Tier Fliers

American Airlines has a new lounge for ultra-premium passengers at JFK. Good luck getting in though.

Subscribe to the Business of Loyalty Newsletter

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