Video: Travelsify and Almundo.com CEOs on Trust and Transparency in Travel Search

Skift Take: In this video from Skift Forum Europe, Travelsify CEO & Co-Founder Bruno Chauvat and Almundo.com CEO Juan Pablo Lafosse discuss the evolution of personalization and why trust is the new currency in travel.

— Matt Heidkamp

Travelsify CEO & Co-Founder Bruno Chauvat wants to evolve the the idea of personalization in the travel industry.

Speaking on a sponsored panel with Almundo.com CEO Juan Pablo Lafosse at Skift Forum Europe at Tobacco Dock in London, Chauvat told SkiftX Editor Greg Oates that that travel brands should think of personalization as a two-sided coin of traveler data and the product experience. Most important to the equation is creating a foundation of trust with customers.

“Personalization is about trust,” Chauvat sad. “You cannot keep customers if they don’t trust you and it’s of paramount importance that trust is delivered through at least two elements: transparency and an explanation about why recommendations are made.”

Chauvat envisions a more multidimensional search experience where customers can find what’s interesting to them based on specific attributes, which he calls “travel DNA.” Rather than relying on recommendations made by booking sites, consumers should be able to find a match for exactly what they’re looking for based on experiences defined by like-minded travelers, taking mood and design sensibility into account.

 

You can watch the full discussion below.

Note: Initial planning is in full-swing for our flagship event Skift Global Forum, which will be held September 26-27 in New York City. We wanted to make sure our most loyal Skift readers were able to purchase their tickets early and were rewarded for doing so. That’s why we’ve re-opened up our previously sold out early bird discount for an additional 35 tickets. Attendees can now save $800 per ticket on the largest creative business conference in travel.

Read more coverage of Skift Forum Europe 2017.

At this year’s inaugural Skift Forum Europe in London, travel leaders from around the world gathered for a days of inspiration, information, and conversation on the future of travel.

Visit our Skift Global Forum site for more details about 2017 events, including our New York City event September 26-27.

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Why a Seamless Payment Strategy is Key to Selling More Ancillary Services

Skift Take: Travel providers who want to provide customers with a seamless travel experience should no longer think of the payment process as an afterthought.

— Jeremy Vargas

Online payments have advanced significantly in recent years, making it easier than ever for consumers to buy online. The travel industry has lagged behind other industries when it comes to making the online payment experience as seamless as possible––but this shortcoming can also be seen as an opportunity for travel companies that are ready to put payments at the heart of their customer strategy.

Worldpay recently examined how travel companies can set themselves apart from the competition using a frictionless payment process in its report, “The Seamless Travel Experience.” Here are some solutions Worldpay offers:

Optimize the online payment journey: Companies often assume that the payment page is the only time when a customer considers how they’ll pay for their trip––but this is far from the truth. It’s vital to reassure customers that their preferred payment will be accepted from the moment they land on a website, in addition to optimizing shopping basket recovery methods if something goes wrong, providing stellar customer service, and ensuring customers that payments are secure. A browser only becomes a customer when they make a payment, which means travel companies need to avoid neglecting this step of the booking process.

Take a mobile-first approach: Many travel companies are behind when it comes to the mobile experience they offer their consumers. With mobile bookings making up an increasing part of overall travel bookings each year worldwide, travel companies can no longer afford to ignore the role mobile plays throughout the travel journey. Payment pages should be designed with mobile user experience in mind, should allow for easy input of personal information, and avoid redirections to third-party providers.

Work with a payment provider that’s specialized in the travel sector: Travel companies face unique challenges when it comes to online payments compared to other industries. By working with a provider that’s well-versed in the travel space, companies will have more control of the payment process and, in-turn, be able to better connect with their customers and increase sales.

Provide more additional services directly, without redirecting to third parties: Offering customers ancillary services throughout their travel journey via a seamless payment process has become a major revenue driver for many travel providers. In 2016, ancillary services contributed more than $50 billion in revenue for the global airline industry, according to a report from L.E.K. Consulting.

At the same time, many providers still fall behind when it comes to making these additional offerings as easy to purchase as possible. Airlines and hotels are especially suited to take advantage of this opportunity––for example, allowing customers to store their payment and personal information for in-flight purchases or offering spa services for purchase while checking into a hotel via smartphone.

To learn more about why a frictionless payment process is so important to the travel journey, download Worldpay’s report, “The Seamless Travel Experience.”

This content was created collaboratively by Worldpay and Skift’s branded content studio SkiftX.

© Worldpay 2017 and © Skift 2017. All rights reserved. This document and its content are proprietary to Worldpay and Skift and may not be reproduced, published or resold. The information is provided on an “AS IS” basis for information purposes only and neither Worldpay nor Skift makes any warranties of any kind including in relation to the content or sustainability. Terms and Conditions apply to all Worldplay services. Worldpay (UK) Limited (Company No. 07316500 / FCA No. 530923), Worldpay Limited (Company No. 03424752 / FCA No. 504504), Worldpay AP Limited (Company No. 5593466 / FCA No. 502597). Registered Office: The Walbrook Building, 25 Walbrook, London EC4N 8AF and authorised by the Financial Conduct Authority under the Payment Service Regulations 2009 for the provision of payment services. Worldpay (UK) Limited is authorised and regulated by the Financial Conduct Authority for consumer credit activities Worldpay, the logo and any associated brand names are all trade marks of the Worldpay group of companies.

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Skift Backstage Podcast: InterContinental CEO on Guests Who Want It All

Skift Take: Tune in to hear insight from a leading hotel executive about the quest to get customers in the door — and understand them better.

— Hannah Sampson

With 5,200 hotels around the globe, InterContinental Hotels Group works with a lot of customers. And the UK-based hotel company is fixated on what those guests want. But there’s one problem, the CEO told us: They want everything.

Figuring out how to deliver on a customer wish list that includes just about everything is a priority for IHG, one of the largest hotel companies in the world. One thing that isn’t as important? Growing just for the sake of getting bigger.

Richard Solomons, the CEO of IHG, was a speaker recently at the inaugural Skift Forum Europe in London. He also spoke to News Editor and podcast host Hannah Sampson behind the scenes in the Skift Take Studio.

He told us how IHG is trying to cater to both millennials and baby boomers, the way the company is keeping well-known brands relevant but comfortably familiar, the reason he isn’t really worried about Airbnb, and the company’s plans to expand the boutique Kimpton brand.

Though we didn’t know it at the time of the conversation in April, Solomons won’t be doing many more interviews as CEO. In early May, he announced that he is stepping down from the role on June 30.

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

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

Listen to all the Skift podcasts here.

 

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Choice Hotels CEO to Trump: Travel Rhetoric Is ‘Offensive’ and ‘Incongruent’

Tony Powell  / Choice Hotels

Choice Hotels CEO Stephen P. Joyce has a lot to say about the Trump Administration’s proposed travel and infrastructure policies. Tony Powell / Choice Hotels

Skift Take: Count Stephen P. Joyce as yet another hotel CEO determined to make travel and tourism a priority for the Trump Administration.

— Deanna Ting

When the Trump Administration announced its first travel ban in January, most hotel companies remained silent on the matter, deferring to the industry’s trade association, the American Hotel & Lodging Association to speak for them collectively.

Choice Hotels, however, was a lone exception, and its CEO, Stephen P. Joyce, recently reiterated his thoughts about the Trump Administration’s various stances on travel, including trying to reinstate yet another travel ban and cutting funding for Brand USA, the organization tasked with promoting tourism to the U.S.

Joyce spoke to Skift on June 6 at the NYU Hospitality Industry Investment Conference in New York City. We began by asking him for his thoughts on Loews Hotels CEO Jonathan Tisch’s opening remarks at the conference, calling on the travel industry to work together to prevent another “lost decade” of travel from taking place.

Skift Editor’s Note: Joyce’s comments have been lightly edited for clarity.

“I was chairman of the U.S. Travel Association when all that [backlash against meetings] happened [in 2009], and I went and met with Obama, and we got him to reverse his position, and then Larry Summers [the American economist and former director of the National Economic Council for President Obama from 2009 to 2010] realized that, if we want to correct the trading imbalance, that travel is a pretty easy way to do it,” Joyce said.

He continued, “We shut down the borders after 9/11. We lost one-third of our international travel market share, just as international travel exploded. That’s millions of jobs, billions and billions of tax revenues that were lost.”

“The administration needs to understand [that] their desire for the health of the country, for putting people back to work, for correcting trade imbalances, [that] one of the best ways for them to do that is travel. There is no one arguing that we should open the borders and make them insecure, but there’s a difference between that and making sure that people feel wanted, welcome, and respected in this country.

“The travel ban that he [Trump] wants doesn’t matter from the standpoint from those countries. It’s not like we get a lot of customers from there anyway, but he’s telling the rest of the world, ‘We don’t want you here.’ Not only do I find that offensive, I find it incongruent with his stated objectives.

“We were the first and the only [hotel company] to write a letter to him about that, and our legislative vice president is very close to several people in the administration. We will be having several very high-level dialogues and try to respectfully point out the ability for them to accomplish the goals that they want and, at the same time, strengthen the travel business and our attractiveness to international travelers, because what people are doing is they’re going to go where they’re wanted.

“We’re getting crushed by Europe because Europe, in spite of the fact that they wore more of the brunt of terrorism than anyone else in the world, they are welcoming those travelers and they are making it easy to get a visa. They are having more friendly border crossings. That’s where this country needs to go.

“It doesn’t do us any good to improve the infrastructure and the airports if there’s not people coming into them. International travelers come and spend $5,000 in this country, on average. If you want to correct the trade imbalance, that’s the quickest and best way to do it.

“We’re going to have dialogues around that. We’re going to try to convince the administration of a balanced, but travel-positive environment.

“The last administration started out anti-travel and was the strongest travel proponent that we’ve ever had in the present. They had a travel policy. [Obama] had a travel agenda. He personally attended lots of different events around it. … [Hillary] Clinton was always a big travel supporter, but she led the charge in the State Department, because in the State Department there was the issue around the visas. We also worked with the TSA and Roger Dow and his organization [the U.S. Travel Association] not to change the level of security but to make it friendly. We did things like we had Disney teach the TSA how to do queues, and we need to continue to do that. … I just don’t think he’s [Trump] hearing it from the right people yet.”

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The Highest Paid Travel CEOs in Europe in 2016

Skift

InterContinental Hotels Group CEO Richard Solomons at Skift Forum Europe on April 4, 2017. Skift

Skift Take: Chief executive pay at Europe’s biggest publicly traded travel companies appears to have converged in 2016 with few bumper deals compared with previous years. It could just be a coincidence or might have something to do with the deteriorating economic climate and geopolitical issues.

— Patrick Whyte

Outgoing InterContinental Hotels Group chief executive Richard Solomons was the highest paid European travel CEO in 2016 from among 12 publicly traded companies that Skift reviewed.

Solomons’ total compensation increased by 7.9 percent in 2016 to $4.5 million (see chart below) mainly because of the increase in the company’s share price under his watch. Under the company’s long-term incentive plan, Solomons was handed shares worth $1.7 million. The award is also based on growth in net rooms’ supply and revenue per available room  – a popular hotel industry metric – against competitors including Marriott International and AccorHotels. At the end of June, Solomons will step down from the role and will be replaced by chief commercial officer Keith Barr.

The pay packets of the chief executives of both Merlin Entertainments and Hostelworld Group, who both saw their total compensation more than double, overshadowed the relatively modest rise of Solomons’ pay.

Merlin handed Nick Varney $2.48 million in 2016, an increase of 162.6 percent, due mainly to long-term incentives worth $1.5 million. Varney’s bumper pay deal came in the same year that UK health and safety regulators fined Merlin $6.5 million following a crash at its Alton Towers park the year before that left 16 people injured, a number of them seriously.

Another big riser was Hostelworld’s Feargal Mooney, who saw his compensation more than triple to $1.46 million. Mooney’s figure was swollen by a “discretionary bonus” of just less than $1 million, which was handed to him following the company’s stock market floatation.

CEO / Company (2016) Total Compensation 2016* % Change Net Profit/(loss) % change
Sébastien Bazin, AccorHotels $3.18 million -28.6 $335.2 million 10.3
Jean-Marc Janaillac, Air France-KLM $0.62 million† n/a $887.8 million 523.6
Carolyn McCall, EasyJet $1.89 million -76.5 $551.1 million -22.1
Feargal Mooney, Hostelworld $1.46 million 228.8 $0.88 million -99‡
Willie Walsh, IAG $3.41 million -65.7 $2.2 billion 28.8
Richard Solomns, IHG $4.45 million 7.9 $417 million -65.9
Carsten Spohr, Lufthansa $3.5 million 16.7 $2 billion -16.4
Nick Varney, Merlin Entertainments $2.48 million 162.6 $272.4 million 24.1
Bjorn Kjos, Norwegian Air $0.25 million -6.3 $133.9 million 361.1å
Michael O’Leary, Ryanair $3.61 million 33.3 $1.75 billion 79.9
Peter Fankhauser, Thomas Cook $1.56 million -71.9 $11.6 million -52.6
Fritz Joussen, TUI Group $3.42 million -74.4 $1.3 billion 203.5

*Conversions from original currencies to dollars was made on June 7
†Replaced previous Chief Executive during financial year
‡Profit in 2015 was inflated by a significant write-off of shareholder loans totalling $117 million

Falling Pay

Half of the chief executives at the companies surveyed saw big decreases in their overall compensation after enjoying bumper pay days in in the prior year. TUI Group’s Fritz Joussen and Thomas Cook’s Peter Fankhauser both took home less in 2016, mainly due to long-term incentives being paid out in 2015. Fankhauser’s potential pay deal in the current financial year has also come under scrutiny, as shareholders forced the company to scrap its bonus scheme.

IAG’s chief executive Willie Walsh suffered a similar fate but also missed out on a bigger bonus after “various external headwinds” meant the company failed to hit all its targets with operating profit below the threshold level. IAG is the parent of British Airways and Iberia.

In 2016, EasyJet suffered its first drop in annual profit since 2009 on the back of a tumultuous year that saw terrorist attacks and the Brexit vote impact its performance.
Carolyn McCall’s bonus fell by 79.4 percent to $0.24 million after “challenging business conditions during the 2016 financial year meant that performance in the year declined from the results achieved in 2015,” the airline said. McCall’s big drop can also be explained by a large long-term incentive award handed down in 2015.

CEO / Company Total Compensation 2014 Total Compensation 2015 Total Compensation 2016
Sébastien Bazin, AccorHotels $4.43 million $4.45 million $3.18 million
Jean-Marc Janaillac, Air France-KLM n/a n/a $0.62 million
Carolyn McCall, EasyJet $11.9 million $8.06 million $1.89 million
Feargal Mooney, Hostelworld $0.46 million $0.44 million $1.46 million
Willie Walsh, IAG $8.86 million $9.95 millon $3.41 million
Richard Solomons, IHG $8.53 million $4.12 million $4.45 million
Carsten Spohr, Lufthansa $2.32 million $3 million $3.5 million
Nick Varney, Merlin Entertainments $2.04 million $0.95 million $2.48 million
Bjorn Kjos, Norwegian Air $0.36 million $0.27 million $0.25 million
Michael O’Leary, Ryanair $2.03 million $2.71 million $3.61 million
Peter Fankhauser, Thomas Cook n/a $5.55 million $1.56 million
Fritz Joussen, TUI Group $4.39 million $13.38 million $3.42 million

Source: Public filings

The outlier

What is interesting about the pay packets of the chief executives of 12 big European travel companies is that they fell within a fairly narrow range – apart from one.

According to the accounts for Norwegian Air, chief executive Bjorn Kjos took home $250,000 in 2016, more than $1 million less than the next lowest paid boss.
In fact, the total amount paid to Norwegian’s 14-strong executive team was only $2.9 million.

“The total compensation level should be competitive, however, not market leading compared to similar organizations,” Norwegian said in its annual report.

It went on to say: “The remuneration of the Board and the Executive management must not have negative effects on the Group, nor damage the reputation and standing of the Group in the public eye,” and: “The CEO does not receive compensation in form of performance-based salary or bonuses, except for options in the stock option plan. The Executive management can on an individual level be awarded with a special compensation for profit enhancing projects.”

It’s not all bad news for Kjos. As well as being chief executive, he is the also the majority owner of HBK Invest AS, which, with a 24.6 percent stake, is the largest shareholder of Norwegian.

(The selection of companies was arbitrary among public companies in Europe and does not include those already covered in previous chief executive pay stories here and here.)

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Contiki’s Western Europe Tours Are Popular But Eastern Europe Is on the Rise

mikekanyo  / Flickr

Contiki has seen a rise in bookings for Eastern European tour itineraries. Pictured is a Contiki tour to Greece and Turkey. mikekanyo / Flickr

Skift Take: Contiki doesn’t think millennials, which tend to be an open-minded demographic, are too concerned about sporadic terrorism incidents in Europe but we’ll let the data speak for itself later this year.

— Dan Peltier

Contiki, a 55-year-old tour operator, is seeing new interest in regions such as Eastern Europe and continued strong demand in Western Europe.

That’s the assessment of  Casper Urhammer, the company’s CEO. The tour operator led 2,500 departures for 18 to 35-year-old travelers in 2016 in Europe, Latin America, Asia, Australia and the U.S.

Urhammer argues that terrorism has not caused its European business to suffer during the past two years.

And, Melissa da Silva, Contiki’s president, thinks bragging rights may be part of the reason that younger travelers are looking more keenly at Eastern Europe.

Social media, perhaps more than terrorism, also increasingly influences where millennials travel. “And I think that’s why Eastern Europe is probably more up and coming because everybody’s done Paris, right?” said da Silva. “I think they’re looking at going to these new places, obviously they’re not new, but they want to go where their friends maybe haven’t been and showing them just how adventurous and exotic they are.”

In particular, Balkan countries, the Adriatic region and Iceland have seen a surge in tour bookings for Contiki during the past year.

Millennial travelers are incredibly resilient and some have saved for many years to take a trip, said Urhammer. “Nothing’s going to change that,” he said. “So, I think millennials understand that the world is an interesting place and the world as a whole, not just as a certain part, faces the same challenges.”

Travelers have recently been inundated with headlines about terrorist attacks across Europe that have, in multiple cases, targeted popular tourist areas. But the way travelers perceive safety comes down to the individual and how they follow and absorb the news, said Urhammer.

Plenty of things cause people not to travel, but — at least long term — the memory of isolated terrorism incidents seems to fade. “I think people are mindful of what has happened in recent years but also understand that the world is what it is and we move on and Europe is still fantastic,” he said.

Anaheim, California-based Contiki has always had some demand for Eastern Europe but not as acute as in the past year, said Urhammer. “We’ve consistently had trips going through Eastern Europe and the Adriatic but dedicated trips to the extent that we have now with the new itineraries to Croatia, for example, that’s based on new demand,” he said.

Although Australia is Contiki’s top source market, the company is paying close attention to U.S. travelers — who have a stronger dollar to use to their advantage — and their demand for Europe.

Some 85 percent of Contiki’s U.S. customers are traveling abroad for the first time, said da Silva. Western European destinations are usually top choices for first-time trips, she said, and travelers go further afield to Eastern Europe, for example, on subsequent tours.

About 70 percent of Contiki’s customers are ages 18 to 24. “Our travelers are going to see what it is that they like and then when they come back with us a second time or a third time, that’s generally when they’re going to do the more in-depth experiences and they’re going to visit just one region or one country or maybe do something a little bit more off the beaten path from Europe so to speak,” she said.

Contiki has also seen a big influx in Ireland, Great Britain, Spain and Portugal. “We’re looking all the time at adding capacity in those regions,” she said.

Terrorism’s Impact?

The Travel Corporation, which owns Contiki, is also doing “very, very well in Europe” despite terrorism, said Urhammer. In fact, Europe remains the top region for many of The Travel Corporation’s 24 brands.

The Travel Corporation’s brands also include Trafalgar Tours, Uniworld and Evan Evans Tours, for example. “And the age demographic there is twice or three times that of ours depending on which brand we look at and there are more pieces than ever in Europe,” said Urhammer.

But the logistics of European tours have become more stressful. “We work with hotels and restaurants and it’s never been harder,” said Urhammer. “Hotel rooms are sparse, restaurants are busy and it’s as challenging as it ever was which is why people need someone like us because we can figure out how to organize that. But I’ll tell you, the demand is there.”

The European Travel Commission’s first quarter data show international tourist arrivals to countries such as Iceland, Malta, Bulgaria and Estonia grew by 54, 23, 19 and 13 percent, respectively, year-over-year for January through March.

The organization projects Central and Eastern Europe’s international arrivals will grow 5.1 percent this year compared to 2.2 percent growth for Western Europe. Albeit, Western Europe will still welcome more travelers than other regions and its slower growth is likely, in part, because it’s been the world’s top destination for decades.

The European summer travel season, now under way, will be more telling for what travel brands can expect for longer term trends once data is available later this year.

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The Future of Crowdsourced Group Learning — Meetings Innovation Report

Skift

The tiers of scaffold seating everywhere at C2 Montreal 2017 give the events a “Mad Max Beyond Thunderdome” vibe. Skift

Skift Take: There’s a big demand for event tech platforms that help conference attendees co-create their own educational and networking journeys. One company may have finally produced a matchmaking tool that actually delivers on that demand.

— Greg Oates

The Future of Meetings & Events

A lot of different event tech companies have been building matchmaking platforms to help conference attendees meet other like-minded people, but few of them are achieving any type of critical mass and widespread adoption.

Montreal-based E-180 is making a lot of right moves to perhaps become an industry standard. At C2 Montreal this year, it expanded on its individual Braindates meetup technology, and launched the online Group Braindates platform. Now, any conference attendee can organize a mini-workshop with four other C2 participants to discuss a subject of their choosing.

The beauty of the thing is that it actually works. More than 3,000 individual Braindates and 120 Group Braindates were scheduled, and there would have been more of the latter but E-180 simply ran out of space. Crowdsourced, collaborative learning is now a reality, although there were a few missteps with the Klik event app that hosted the Braindates tech, which need to be addressed.

—Greg Oates, meetings editor

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Social Quote of the Week

“The most and least productive cities in the U.S. on.mktw.net/2qCnNrS #RiseOfRest

@SteveCase on Twitter

Next Generation Meetings UX

Crowdsourced, Collaborative Learning at Conferences Is a Reality, Almost: The new Group Braindates at C2 Montreal this year were revolutionary in their ability to connect like-minded people, but the severe challenges with the web-based event app need to be ironed out to make the online networking opportunities more accessible. Read more at Skift

Online Festivals Hub Everfest Raises $3.6 Million: About 32 million people attend at least one festival in the U.S. each year, traveling an average of 900 miles to attend one. Everfest has a promising model to profit off this trade by offering exclusive discounts and creating a festival recommendation engine. Read more at Skift

Steve Wozniak’s Speech Caps Sixth Successful C2 Montreal Conference: While everyone agrees that the C2 Montreal conference has been highly successful showcasing the convergence of commerce and creativity, there’s a bubbling of criticism questioning the purpose of the event for traditional industries and the somewhat provincial selection of speakers. Read more at Montreal Gazette

Case Study: Capturing the Essence of Discussions @IMEX Future Leaders Forum: The IMEX-MPI-MCI Future Leaders Forum is a 2-day event during IMEX Frankfurt for about 100 students who plan to start a career in the meetings and events industry. At this year’s event, IMEX organizers employed the Slido audience participation platform to support crowdsourced learning. Read more at Slido

This is How Purpose and Innovation Came Together at the PSFK Conference: The goal of the PSFK event is to provide attendees with “lateral inspiration that gives them insight into how other people and industries approach innovation, and helps them to get outside of their bubbles.” Here are five companies at this year’s show that are delivering on that mission. Read more at AlleyWatch

How Intel Is Using VR To Try To Change Sports Viewing Now And Into The Future: Intel and Major League Baseball announced a three-year partnership to live-stream one baseball game a week in VR. That followed a similar pact between the NBA and NextVR that kicked off at the beginning of the 2016-2017 basketball season. Read more at Fast Company

How the Sunshine Act Affected Medical Meetings: A paradigm shift in the relationships between doctors and vendors is creating new approaches to learning, including a virtual education format for physicians modeled after online poker. According to Convene, “Fewer doctors are willing to go have dinner or be seen in public with representatives from pharmaceutical companies.” Read more at Convene

Facebook Tries to Woo Gamers with E3 Livestreaming: On average, games represent more than 15 percent of total time spent on Facebook, and more than 450 million people have followed or liked an official games page in the last month. So Facebook is expanding its presence at the Electronic Entertainment Expo (E3) with a new Facebook Live Studio and AR activations to drive social sharing. Read more at Venture Beat

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The Skift Meetings Innovation Report is curated by Skift editor Greg Oates [go@skift.com]. The newsletter is emailed every Wednesday.

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U.S. May Extend Laptop Ban to Flights From 71 More Airports

Bloomberg

The U.S. Department of Homeland Security is using the prospect of an expanded laptop ban on flights into the U.S. to pressure foreign airports to improve screening measures. Bloomberg

Skift Take: Travelers and corporations certainly detest uncertainty and the prolonged governmental announcements about the possibility of an expanded laptop ban — will we, won’t we? — contribute to business anxiety.

— Dennis Schaal

Homeland Security Secretary John Kelly said his agency is considering banning laptop computers from passenger cabins of flights to the U.S. from another 71 foreign airports, in an expansion of a policy announced in March.

Kelly didn’t name the airports under consideration during House testimony Wednesday and said no final decisions had been made. He said the number of airports may be reduced if they adopt electronics-screening procedures that the Homeland Security Department is developing.

The ban is necessary because of “a very, very real threat — a very sophisticated threat,” Kelly said at a House Homeland Security Committee hearing.

The agency on March 21 barred electronic devices larger than mobile phones from the cabins of flights from 10 airports in the Middle East and North Africa due to concern that terrorists could hide explosives in them. Passengers are required to store the devices in checked baggage.

The government is considering measures to protect against what it suspects is a growing capability by terrorist groups to hide explosives in smaller devices.

Kelly said U.S. officials have been in touch with counterparts in the European Union and elsewhere about crafting new standards for electronics searches.

©2017 Bloomberg L.P.

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

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Skift New Luxury Newsletter: High-End Retail Flies Higher

Skift

Passengers outside stores at Singapore’s Changi Airport. Skift

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.

Malls and retailers in the U.S. are currently suffering, but high-end immersive shopping at airports is thriving. Part of it is the locked-in, secluded nature of the experience – you’re traveling, so it can’t be bad, right? – but the bigger part is that smart operators are taking what they know about consumer habits and combining this with technology to deliver an experience shoppers don’t get with land-side retail.

On the experience front, media companies are increasingly turning to travel to create a sense of community among their readers as well as to fill big revenue holes that advertising once occupied. But no matter their focus between the covers, the brands are choosing luxury packages for their readers in order to deliver a focused experience that will take them beyond the yearly subscription. – Jason Clampet, Editor-in-Chief

5 Looks at Luxury

Luxury Brands Are Bullish on the Future of Airport Retail

Luxury airport retail is thriving, representing an opportunity for luxury retailers, airports, and marketers all seeking to capture the attention and spend of affluent global consumers.

Let’s start by looking at the numbers: Duty-free shopping is set to reach $64 billion in total revenue by 2020 and more than two-thirds of international travelers make purchases from duty-free stores. Approximately six percent of luxury shopping now takes place at airports, up four percent from last year.

Interview: Pioneering the Next Generation of Luxury Spa Spaces

For nearly two decades Cary Collier and Doug Chambers, the innovators behind international spa management and consultancy firm Blu Spas, Inc., have been involved with scores of spa projects for the likes of Four Seasons, Ritz-Carlton, Bulgari, Rosewood, and other luxury brands.

Nowadays, any resort worth its mineral salt has a spa on property. Collier and Chambers offer advice on how to develop a spa that will stand out from the crowd and bring in significant revenue at the same time.

Chinese Outbound Luxury Travelers Look to Smaller Hotel Chains

Among the biggest trends among China’s luxury travelers is the growing popularity of boutique hotels, according to new research presented by the Hurun Report’s Rupert Hoogewerf at ILTM Asia in Shanghai. With 60 percent of High Net Worth Individuals (HNWIs) reporting that they spend over 3,000 RMB (US$441) per night when they stay at hotels, the future looks bright for luxury hotels catering to China’s growing number of high-end travelers.

While large luxury chain hotels remain dominant on the list of HNWIs’ preferred accommodation providers, the report finds that HNWIs now increasingly favor boutique hotels—a clear significant shift from the trend just a few years ago.

Why The Nation and Other Magazines Look to Luxury Travel to Pay the Bills

Affinity travel is an under-recognized part of the luxury travel spectrum. Alumni associations, non-profit organizations and cultural institutions often sell travel as a way to cultivate donors and to raise money. Recently, affinity travel has been bleeding into the journalism arena, which itself has been bleeding cash for years.

Teresa Stack is the former president of The Nation and founder of the publication’s educational travel programs. “Publishing is struggling in general,” says Stack. “Frankly, we largely developed the tour program to support the journalism. It’s not our number one source of revenue, but it’s a growing source.”

Luxury Car Sales Soar as Brands Adapt to Electric, Connected Demands

Luxury vehicles are entering the “third wave” of connectivity in which manufacturers invest in cloud-based technologies, environmentally-friendly models and smarter marketing techniques to win the loyalty of affluent drivers. And they’re in a good position to do so.

Luxury cars remained the top-performing segment of the luxury goods markets in 2016, growing 8 percent, according 2016 Bain Luxury Study by Bain & Company. An even greater 15.9 percent increase in sales was reported by JATO Statistics, which also stated a record 28,500 super luxury cars were sold in 2016.

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Ryan Wolkov

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Author: Ryan Wolkov

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Interview: Marriott CEO on Politics, Technology and Loyalty

Mark McQueen  / NYUSPS

Arne Sorenson (right) was interviewed on stage by Rebecca Jarvis at the NYU Hospitality Industry Investment Conference on June 5. Mark McQueen / NYUSPS

Skift Take: Despite the challenges facing the industry, Sorenson remains optimistic and determined to make sure Marriott’s $13.3 billion bet on loyalty pays off.

— Deanna Ting

Arne Sorenson is not the kind of hotel CEO who likes to stay quiet about the most pressing issues impacting not only the hotel business, but travel overall.

Most recently, the Marriott International CEO penned a piece urging governments to implement smarter ways to deal with safety and security in travel. And before that, he also wrote an open letter to then President-Elect Trump.

Skift spoke to Sorenson while he attended the New York University Hospitality Industry Investment conference in New York on June 5 to ask him for his thoughts on the industry. What follows also includes excerpts from his conversation on stage with Rebecca Jarvis at the same conference.

Skift Editor’s Note: Sorenson’s quotes have been edited for clarity and length.

The Current Climate

“I think one of the challenges we’ve got today is when we look at the events in London or we look at the travel ban tweets this morning, or we look at some attributes of the world we live in, it could feel a little negative,” Sorenson said. “I actually think we’ve got to be careful about that because we’ve got significantly growing global travel. We’ve got [this], both in domestic travel in the United States and maybe in the markets surrounding it, and because of this move toward wanting experiences — including travel — because of this move of a growing mobile middle class, there is a lot about the future which is really positive.”

“The best thing we can do for laptops is if, in the entire world, we’ve got TSA-like security where people are looking at your bags, or going through every item, and it can be a burden in some airports and some countries, but it’s a burden that applies to everyone, and by and large it means that we’ve all as travelers learned to just put up with it,” he noted. “I think, similarly, in the laptop space, or other spaces around technology, the more these can be decisions that are made with other countries involved, I think the less unique impact it would have on the United States. So, if there was a laptop ban for inbound U.S. business only, it would simply be yet another reason why somebody might not continue to come to the United States. And that’s where it starts to have the possibility of hurting us.”

Investing in Experiences

Earlier this year, Marriott announced its investment in PlacePass, a tours-and-activities metasearch platform, and it’s clear that Marriott, like its peers, is seeing the increasing importance of playing a bigger role in the entire, end-to-end travel journey for customers.

“I think we [as a society] are broadly much more interested in collecting experiences than material things,” Sorenson said. “And that maybe could be said uniquely about Millennials but I truly think it could be said about people like me too, and it’s how do we how do we take a trip or how do we have a meal which is really memorable, and then we could share it.”

“Our entire business is experiences,” he added. “We’re in a really good place to be because all around the world we see people say ‘I want to go see Paris and New York or you know, the parks, or whatever, fill in the blank. And I want to do those things as a higher priority than 10 or 20 years ago.’ Now, in the PlacePass context, that is a little bit more finally focused, which is how do you make it easy for folks, given what broader experience of travel there is to find these unique activities that they can engage in when they’re traveling. PlacePass is a way of doing that with hundreds of thousands of options already.”

Shifts in Hotel Design

Sorenson said that although Marriott currently has 30 brands in its portfolio, each with very different styles and designs, he’s seen a few universal trends among each — and again, none of them is going away anytime soon.

“Some trends are really basic and obvious: big TVs. I toured a number of hotels last week, and every one of them they had 55-inch TVs. And if you were back just a few years ago, you know, you felt great if you got a 42-inch TV, because often you might get a 32- or a 37-inch and so you see that now … and with it you see the technology evolving. So, on that big TV we can watch through our own Netflix account or we can cast it on from our devices that we are carrying with us. And so that technology, particularly around entertainment, is pretty powerful for the guest experience and the way we’re designing hotels.”

“I think secondly, the hard-surface floor in the guest room is getting to be more and more standard,” Sorenson added. “I think that it will not be the case in every brand because that fact is it is getting more expensive on the front end.”

“The third thing I talk about is food and beverage,” Sorenson said. “I want to localize food/beverage experience. That might be a concept that we own and operate ourselves, it might be, let’s say a license that we have with a third party, or it might be an outsourced arrangement, but how do we get in the position where we’re bringing life back into the food and beverage offering, particularly at lunch and dinner? With breakfast, obviously, you’ve got a captive audience that you could sell breakfast to but pulling people in at dinner is what really demonstrates the power of the restaurant.

The Front Desk Will Be a Thing of the Past

Marriott’s app on iOS allows check-in and mobile keys, depending on properties.

While speaking on stage, Sorenson predicted the hotel front desk may soon be a thing of the past, thanks to the growth of services that can be facilitated via mobile devices. While keyless entry has seen wider adoption in recent years thanks first to Starwood, then to Marriott’s adoption of the technology, it has yet to go wide with consumers.

“Think about opening your guestroom door with your phone and not having to stop at the front desk,” he explained. “Think about that as having room service waiting in your room when you arrive. Think about that as being at the beach in front of the hotel and wanting lunch and being able to get on the app and have the lunch brought as opposed to waiting for the waiter who’s trudging through the sand to try and take orders as well as deliver orders. This collection of mobile services is available now but the penetration is growing dramatically. I would think within a very few number of years, overwhelmingly, when we’re on business travel, we’re going to have the ability and probable likelihood of bypassing the front desk.”

Merging Starwood and Marriott Through Technology

In May, discussing Marriott’s first quarter earnings, Sorenson said the biggest risk involved in the integration between Marriott and Starwood involved technology and at the NYU conference, he elaborated further.

“So far, all things evolving the integration are going great. We feel it’s going as well as we could’ve anticipated actually and even better. Technology is the thing that seems to take time, which is what I mentioned in the earliest call. Think about the property management system. There are a number of variants revolving to the next generation before we combine Starwood, so how do you get to the right number of property management systems to make sure they’re compatible? How do you make sure you have a functionality you need to have which is dealing with multiple currencies and cost effectiveness because you could have a super high-end luxury hotel that’s big or you could have a relatively small boutique hotel that really needs the efficiencies. So, we’ve gone through those depths. And similarly, as we’re looking at the property management systems, how do you take the two that were there which are both about technology and about people. Where are they located? How are they interacting with the customers? How are they interacting with the online booking?”

“And of course, then you’ve got the stuff that is yet to come around: automation and artificial intelligence,” he said. “A lot of that is going to be about getting to know our customers better and how do we without going too far we make sure that we’re using the information.”

A Loyalty Update

“I think the loyalty programs are enormously powerful and have been for many years the most powerful platform for us to have relationships with our customers. And I think, if anything, they’re getting more powerful not just for us but for everyone,” Sorenson said.

Sorenson also said one thing that surprised him was how passionate Starwood Preferred Guest (SPG) members were about their program. “I think early on, the thing we maybe didn’t appreciate quite as much as we should have was how rabid the SPG elite’s needs were about their program. Maybe that shouldn’t have been that surprising, but they were. They said, ‘Oh my God, what’s going to happen to our program? What are you going to do with my points?’ So we’ve engaged and entered into that conversation with them.”

He added, “[For the] legacy [Marriott] brand it’s worth well over 50 percent to 60 percent of our business which is rewards related. Starwood was a bit lower than that, but a piece of that was that the distribution was smaller, and another piece of that is also that the distributions can be a little bit more in non-business markets where your percentages are always going to be a little bit higher.”

“But you know I think so far so good. I think the connection of the two platforms from the beginning [with account linking], which we’ve talked about before, was absolutely huge and I think we still get great compliments from our customers who say I love the fact that I got the benefits of both programs from the beginning. Maybe it was not as simple as I’d like it to be in some point in time, but we’ll be moving now with a goal of fully integrating all three programs by the second half of 2018.”

He also noted, “I think a number of us in the industry are seeing that our loyalty penetration is nearing 60 percent today of all business, so it gives you a sense of how powerful these loyalty platforms are.”

Will There Be More Mergers and Acquisitions?

Having participated in what is arguably the largest acquisition in the hospitality industry in recent years with the tumultuous $13.3-billion purchase of Starwood Hotels & Resorts, Sorenson said he thinks another transaction of that magnitude may not be as likely going forward.

“The challenge on the M&A [mergers and acquisitions] side, in predicting it, is companies are not always for sale and the big advantage we have is that Starwood was first and so we could step in, which we did at the last minute, and be successful in buying the company,” he said. “But if Starwood hadn’t been for sale and we went and knocked on their door in Stamford, my guess is they would’ve said, or maybe not even answered the door, but they may have said, ‘We’re not interested in this.’”

“I do think, in the fullness of time, people understand that there are advantages around size and they’re about loyalty programs, they’re about investing in technology, they’re about distribution: who are you selling, how do you sell to them, and so I think we’ll see that [consolidation] continuing.”

On Direct Booking

The other big story dominating many conversations within the hospitality industry last year involved direct bookings, or the proliferation of member rates for customers who book direct with the hotel brands instead of booking through third parties like online travel agencies (OTAs) like Priceline and Expedia.

Sorenson said he expects a focus on direct bookings will continue this year.

“I think the direct booking thing will also continue to be a priority for the industry because the more we can have our business encapsulated within our loyalty program, there are customers coming to us directly therefore there’s less frictional cost associated, there’s real cost associated with it, we can know our customers better, provide better service — that’s a much better place for us to be,” he said.

When asked about a recent CBRE report that noted that the amount of commissions paid to third parties rose last year, Sorenson said, “Yes, that’s industry wide, and I think the OTAs are continuing to grow well. Obviously, their contribution is much higher with independents because they don’t have loyalty programming in their platforms. And those companies continue to do well, and by the way, even if we got to an ideal world, it doesn’t mean that there are no reservations coming to us from some of these other platforms, because they serve a customer that doesn’t travel that frequently. And we are not likely to know that customer, and but that’s okay, and they might continue to grow. But I think we will continue to see our loyalty penetration grow as well and that’s a long-term goal.”

On stage, following a luncheon where he sat at the same table as Expedia CEO Dara Khosrowshahi, Sorenson joked, “Well, there’s Dara sitting right there and we didn’t negotiate once during lunch. Neither of us [Marriott and Starwood] have experienced negotiations [with the OTAs] since we closed the deal … I think, if I remember right and I think, whether it’s with Expedia or with other online travel agents, we have each got areas where we want to grow our businesses and maybe a little bit to the exclusion of the other, and we each have areas where there’s work we can do together.”

He added, “Where the OTAs are most additive to us is with the occasional leisure traveler who’s not a member of our loyalty program, who may not know that much about hotel brands, who’s going to look not just for the kind of choice that we’ve got in our system but for even broader choice, someplace else. If we can sell rooms to those folks and obviously then try to press upon them through service and product, that they should be customers of ours, that’s a good thing for us.”

Ryan Wolkov

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Author: Ryan Wolkov

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