Airbus Sold 705 Planes in 2 Weeks But Jumbos Are a Tough Proposition


A flurry of plane orders to end the year hasn’t camouflaged Airbus’ woes after a management shakeup and in light of its difficulties in selling wide-body jets. Bloomberg

Skift Take: Both Airbus and Boeing have experienced troubles in selling their largest wide-body planes, but Boeing has managed the issue more efficiently.

— Dennis Schaal

Airbus SE completed the year doing what it does best: selling its bread-and-butter narrow-body aircraft.

The European manufacturer late Thursday firmed up its biggest-ever order from Indigo Partners for 430 A320 aircraft — a contract that was previously announced — while also unveiling a new order for 50 re-engined versions of the same jet. All told, the flurry of activity during the past two weeks has totaled 705 single-aisle plane orders with a sticker price of $81.5 billion.

The A320’s success, coming in the final days of outgoing sales chief John Leahy’s two-decade tenure, provides some respite for Airbus following a tumultuous few weeks after the planemaker unveiled a top management shakeup. The orders for smaller jets also expose the flank that’s opened up at the other end of the manufacturer’s product line-up: wide-body and ultra large jumbos that are becoming increasingly hard to sell.

As if to hammer home that point, between orders during the night, Airbus confirmed an event scheduled for this week to mark the delivery to Qatar Airways Ltd. of its first A350-1000 would be delayed until early in 2018 as the plane undergoes final preparations. The move is the latest in a series of setbacks for the biggest A350 model after United Airlines and Cathay Pacific Airways Ltd. switched to the smaller -900 model, and adds a blemish to Airbus’s push to bring that jet to market.

Difficult Customer

The delay is also further evidence of Qatar Airway’s fickleness as a customer after past delays and outright refusals by the airline of deliveries of both narrow and wide-body jets, including a move earlier this year to scrap orders for four A350s. The carrier’s order backlog has come into focus amid the Saudi Arabia-led isolation of its home country that has forced it to scrap and divert routes.

At the same time, a much-needed follow-on order for Airbus of A380s from Emirates, the biggest customer for that aircraft, remains elusive, despite signals by the manufacturer just a few weeks ago that a deal could materialize before year-end. Toulouse based Airbus, which was widely expected to sign the A380 contract at the Dubai Air Show in November, needs the order to bulk up its backlog for the aircraft and keep the loss-making program alive.

Gaining clarity on the future of the A380 will be at the top of the to-do list for outgoing Chief Executive Officer Tom Enders, who revealed in December plans to step down in 2019, and his second in command Fabrice Bregier, who will be replaced in February by Guillaume Faury, CEO of the helicopters business.

Emirates Demands

Expressing disappointment that a deal with Emirates failed to materialize at the Dubai event, Bregier said in November he was confident Airbus could secure an order before the end of the year. The executive has since said that should an order come, Airbus would be willing to commit to keeping the program going for another decade. Emirates President Tim Clark has said talks derailed in part because of the airline’s concerns about the future of the model.

While U.S. rival Boeing Co. has had similar difficulties winning orders for its biggest wide-body jets, it has managed to sell the smallest version, the 787, and has committed to lifting production rates for the aircraft.


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Passenger Deadline Extended for New Driver’s License Requirements on U.S. Domestic Flights

Rpavich  / Flickr

Passengers go through a U.S. Transportation Security Administration checkpoint on July 6, 2014. Rpavich / Flickr

Skift Take: The heat is off. Passengers flying on U.S. domestic flights will have until 2020 to make sure they have hack-proof driver’s licenses to show as identification at airport security lanes.

— Dennis Schaal

If you’re worried about whether your driver’s license is compliant with new REAL ID requirements for domestic air travel, you can relax for now.

A grace period for meeting the new rules is set to expire Jan. 22. But licenses from 27 states plus Washington, D.C., are already compliant with federal REAL ID standards, according to the U.S. Department of Homeland Security.

Another 23 states have been granted extensions for meeting the new rules, according to DHS. That means you can continue to use noncompliant licenses from those states for domestic air travel for now.

Three of those states that received extensions have approvals pending for being certified as fully compliant with REAL ID requirements: Louisiana, New York and Michigan.

The federal government will stop accepting noncompliant licenses as ID for domestic flights on Oct. 1, 2020. The REAL ID licenses are designed to be counterfeit-resistant with secure features such as holograms.


Of course, U.S. passports and passport cards remain acceptable alternative documents for use instead of a driver’s license for air travel. Several other types of government-issued ID are also acceptable, such as Global Entry and other “trusted traveler cards.”


According to DHS, the Transportation Safety Administration “does not require children under 18 to provide identification when traveling with a companion within the United States,” though their companion needs acceptable ID.


Some states are now offering more than one type of noncommercial driver’s license. In New York, for example, three options are offered: a standard driver’s license that cannot be used as ID for air travel or border crossings; a REAL ID-compliant license for use on domestic flights; or an Enhanced license, which is acceptable for land or sea entry to the U.S. when crossing borders from Canada, Mexico or the Caribbean, as well as on domestic flights.

Some states do not yet offer REAL ID licenses. Minnesota, for example, expects to offer them later in 2018.

If your current license is not REAL ID-compliant and it is not due for renewal until after the Oct. 1, 2020 deadline, you may want to get one that meets the new rules ahead of your renewal date. Check your state government’s website for the latest information on renewal procedures and options.


Details on REAL ID:

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JetBlue Heading Toward Worst Year of On-Time Performance Since 2007 Fiasco


JetBlue livery makes a show of it on May 26, 2016. JetBlue’s on-time performance is worsening in 2017. JetBlue

Skift Take: JetBlue doesn’t fly the clear-blue skies of Hawaii but hunkers down in the snowy Northeast U.S., and that has impacted its on-time performance. Still, the drop-off in efficiency shows the airline needs to make improvements.

— Dennis Schaal

JetBlue Airways Corp. has little to show for its efforts to improve on-time performance.

This year through October, the airline’s on-time arrival rate of 70 percent trails the industry average of 79 percent, according to the U.S. Transportation Department. That puts the carrier on track for its worst showing since 2007.

Flight delays threaten two of JetBlue’s most important initiatives. Tardiness adds costs, undermining a corporate push to trim $300 million in expenses by 2020. Chronically late flights also weaken the airline’s efforts to woo more of the most-lucrative passengers, including those for its premium Mint offering.

“Even the first-class suites arrive late when the airplane is late,” said Bob Mann, president of aviation consulting firm R.W. Mann & Co. “I think some high-value customers have figured out that Delta is doing a better job.” Delta Air Lines Inc. is typically near the top of the pack.

Delays cost U.S. carriers $62.55 a minute on average in direct operating expenses last year, according to the trade group Airlines for America. Multiplied by JetBlue’s 4.95 million minutes of delays for the first 10 months of this year, the latest period for which information is available, that works out to $310 million.

JetBlue said it’s more vulnerable to delays than its competitors because about 70 percent of its flights stop at airports in the Northeast, which are especially prone to congestion and bad weather. More than 35 percent of its flights are at its base, John F. Kennedy International Airport in New York.

Less Padding

The carrier, which responded to questions by email, cited repair and renovation work that temporarily shut major runways at Kennedy and Boston’s Logan International Airport this year. JetBlue also said that it puts less extra time, or “padding,” in its schedule than rivals do, giving its flights less wiggle room to arrive when promised.

But the company’s on-time rate is on track for a third straight annual decline at its other “focus cities’’ of Long Beach, California; San Juan, Puerto Rico; and Fort Lauderdale and Orlando, Florida. JetBlue’s Flight 667 between Orlando and Ponce, Puerto Rico, is under review by the Transportation Department after five straight months of chronic delays, defined as flights delayed more than 30 minutes more than 50 percent of the time.

And the carrier was responsible for 8 percent of its delayed flights, according to the Transportation Department. That’s about the same as delays caused by problems like congestion and weather, and compares with an average of 5.1 percent for the dozen U.S. airlines tracked.

Boarding Procedures

JetBlue adjusted its boarding process early in 2017 as part of a multiyear effort to reduce delays. It also plans to increase the time between flights on the ground next year, hoping to avoid one plane’s problems from spilling over to another aircraft. And the carrier is working on initiatives to save time between flights, like getting cleaners on planes before all passengers exit.

The airline may get some help from the Federal Aviation Administration, which is studying measures to improve operations in the Northeast. The carrier also is a proponent of legislation that would shift air-traffic control to a nonprofit corporation, a move that proponents say would increase efficiency. The fate of that legislation is far from clear, however.

JetBlue Chief Executive Officer Robin Hayes told investors and analysts earlier this year that operating on time is “the most cost-effective way of running” an airline.

That’s likely to mean a sharper focus on improving schedule performance, said Savanthi Syth, an analyst at Raymond James Financial Inc.

“They’ve made this target of keeping costs under control,” she said. “A very important part of that is going to be operations.”

–With assistance from Alan Levin and Michael Sasso

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IAG to Buy Austria’s Niki Air for $24 Million

Niki Air

IAG plans to buy Niki Air, which had declared bankruptcy. Niki Air

Skift Take: All the pieces of bankrupt Air Berlin are now falling into place. The result may be diminished competition as the big airlines gather up the Air Berlin remnants.

— Dennis Schaal

International Airlines Group, the parent of British Airways and Iberia, says it’s acquiring much of bankrupt Air Berlin’s Niki division.

German news agency dpa reported that IAG said Friday it will pay 20 million euros ($24 million) for Austria-based Niki and inject another 16.5 million euros into the company. It will found a new Austria-based subsidiary of budget airline Vueling, taking on up to 15 Airbus A320 jets.

Germany’s Lufthansa withdrew a bid for Niki earlier this month as it sought European Union approval to acquire large parts of Air Berlin. That forced Niki, which continued flying after Air Berlin ended operations in October, to file for bankruptcy and ground its fleet.

Lufthansa then secured EU approval to take over some Air Berlin operations, while easyJet is acquiring another part.

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U.S. Airlines Add Cancun Flights in Bet That Travel Warning Memories Will Fade

Visit Cancun Riviera

Two tourists enjoy Cancun on December 4, 2017. U.S. airlines are increasing their flights to the Mexico city. Visit Cancun Riviera

Skift Take: Mexico is Southwest Airlines’ largest international market. Cancun is getting increased visitation as Southwest, Spirit and Delta ramp up flights, and the destination benefits from hurricane damage in other parts of the Caribbean.

— Dennis Schaal

U.S. airlines are wagering that American tourists will keep flocking to Cancun despite rising violence in Mexico and a warning from the State Department.

Southwest Airlines Co., Spirit Airlines Inc. and Delta Air Lines Inc. are adding flights to the resort. United Continental Holdings Inc. is using one of its biggest jets once a week to ply the Chicago-Cancun route.

The extra flights suggest stable growth in U.S. tourism even after the State Department said turf wars between crime gangs were fueling a surge in violence in two Mexican states, including the one where Cancun is located. Mexico’s top beach destination potentially could also pick up visitors from other Caribbean destinations that suffered severe hurricane damage.

“It’s quickly become our largest international market,” Steven Swan, Southwest’s director of international planning, said of Cancun. It’s common for traffic to rebound after briefly dipping on travel warnings, he said. “People tend to have a relatively short-term memory.”

From the airlines’ perspective, Cancun flights are good business because of their lower costs, high passenger counts and heavy sales of booze, said Mark Drusch, a consultant and former airline executive. American Airlines Group Inc. has more flights into Cancun than any other international destination, American spokeswoman Kristen Foster said.

Traffic Rising

International passenger traffic to Mexico’s largest resort has climbed since the U.S. State Department’s Aug. 22 travel warning. It rose 6.3 percent in November from a year earlier and has increased more than 8 percent this year, according to the regional airport’s operator.

Without a doubt, some of the news coming out of Mexican beach towns this year has been grim. Innocent bystanders in Quintana Roo, where Cancun is located, and some other Mexican destinations have been caught up in shooting battles between criminal gangs, the U.S. advisory noted. Five people died in January at a nightclub in Playa del Carmen near Cancun.

But such warnings are “not top of mind” for people just looking to relax, Drusch said. Quintana Roo receives about 10 million tourists a year and accounts for a third of Mexico’s international visitors.

Terrifying Incidents

With all the news about mass shootings and racial tension in the U.S. this year, Mexico’s neighbor to the north seems just as dangerous, said Vancouver resident Clark MacPherson. The golf pro was trying to decide between Cancun and Nashville or the Carolinas for his recent honeymoon. Because of all the “terrifying incidents” in the U.S. recently, Mexico “seemed like the safer option,” he said.

Carriers expanding flights to the region in recent months include Southwest, which in November announced two new seasonal routes to the Mexican resort town from Pittsburgh and Raleigh-Durham, North Carolina, and deep discounter Spirit, which is adding year-round service from Baltimore/Washington and Chicago. Delta this month added a third daily flight from New York’s John F. Kennedy International Airport to Cancun, and added another flight from Boston.

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Uber-SoftBank Deal Means Valuation Plummets to $48 Billion

Paul Sakuma  / Associated Press

Dara Khosrowshahi, the CEO of Uber, attended the Allen & Company Sun Valley Conference in Sun Valley, Idaho in 2017. He’s shoring up his control of the Uber board with the SoftBank deal. Paul Sakuma / Associated Press

Skift Take: The deal with SoftBank brings Uber’s valuation down to earth although it could soar again pending a 2019 IPO. Meanwhile, the deal enables Uber CEO Dara Khosrowshahi to consolidate board control and it blocks the return of former boss Travis Kalanick.

— Dennis Schaal

Technology billionaire Masayoshi Son just hitched a ride with Uber. But it’s the ride-hailing company that’s starting what it hopes is a new, less-bumpy journey.

Uber Technologies Inc. shareholders agreed to sell a sizable stake in the startup to a group led by SoftBank Group Corp., adding to the already huge investments Son’s company has made in the global ride-hailing business.

The deal announced Thursday will bring new cash to Uber, prevent arch U.S. rival Lyft Inc. from dealing with SoftBank, appease some early, antsy backers and pacify a previously warring management team and board, while solidifying the leadership of Chief Executive Officer Dara Khosrowshahi.

All of that comes at a price: SoftBank and investors including Dragoneer Investment Group, Tencent Holdings Ltd. and Sequoia Capital, are buying existing Uber stock at a valuation of about $48 billion — well below the last financing round at $69 billion. SoftBank is also purchasing $1.25 billion in new preferred stock at the higher valuation. The transaction is expected to close in January, SoftBank said.

“As an investor we are pretty supportive of the deal,” said Jay Kahn, a partner at Light Street Capital Management LLC, which owns Uber shares and didn’t tender any of its stake. “It really makes SoftBank financially and strategically motivated to support Uber in every capacity. If the transaction didn’t go through, they could have allocated a significant amount of capital to Lyft.”

A series of missteps and management turmoil distracted Uber this year while helping Lyft gain market share in the U.S., boost sales and get closer to profitability. In November, Son said SoftBank might walk away if he didn’t get a good deal and shift the investment to Lyft.

With SoftBank soon to own billions of dollars of Uber shares, Son is unlikely to invest in the company’s main rival. Son has backed competing ride-hailing companies in other parts of the world, but the race is so intense in the U.S. that a similar strategy would likely backfire, Kahn said. “The key here is to create incentives not to embolden a competitor,” he added.

The transaction also gives early Uber investors a chance to cash out. Venture capital firms typically don’t like to hold investments for more than a decade because that’s when they have to return money to their own backers. Uber has been around since early 2009, and isn’t expected to go public until at least 2019, so the time is right. Benchmark, one of Uber’s largest early backers, also clashed with former CEO Travis Kalanick over how the company was run, and was a prime proponent of the governance reforms attached to the deal.

Meanwhile, SoftBank will get two seats on the board and supports the new CEO, making it clearer who’s in charge. Rajeev Misra, head of SoftBank’s $93 billion tech investment fund and a likely new board member, expressed “tremendous confidence in Uber’s leadership” in a statement on Thursday.

“A realignment of goals and objectives with new shareholders who become the dominant voice will allow a clearer path to an ultimate IPO and greater harmony on decision making at the board level,” said Ken Sawyer, who invests in late-stage startups at Saints Capital. “This was as much about governance and a re-sorting of ownership and control — in some ways even more so than an IPO would have been.”

For Son, the deal makes him the leading investor in ride-hailing businesses across the globe, with stakes in the market leaders in China, India, Southeast Asia, Brazil and the U.S. That position may help Uber be an acquirer, rather than a target, in the consolidation that’s expected.

“By holding a key stake in the largest player he can consolidate more efficiently,” Kahn said.

©2017 Bloomberg L.P.

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Latin America Travel Unicorn Despegar Is Hunting but Could Be Hunted Too


Despegar listed on the New York Stock Exchanged, pictured, this autumn. The Argentine company is based in Buenos Aires, which is often described as the Silicon Valley of Latin America. Despegar

Skift Take: The biggest online travel story in Latin America in 2017 was Despegar’s IPO. The Expedia-backed booking site raised $332 million to fund its expansion. The company has hinted that it is likely to use some of the cash to make an acquisition in 2018.

— Sean O’Neill

Online travel agency Despegar raised $332 million this year, having listed on the New York stock exchange in September.

Along the way, the Argentine company became Latin America’s first unicorn, or start-up worth more than $1 billion, in online travel. As of Friday, the markets placed Despegar’s valuation at  $1.86 billion.

Despegar said it plans to use the $332 million it raised to fund its expansion.

Rather than pay a dividend to investors, the company’s executives said they plan to invest the cash in long-term growth opportunities by spending heavily on its marketing and technology platform.

In November, chief financial officer Mike Doyle told investment analysts on the third-quarter call that his company is “very interested in looking at potential mergers and acquisitions opportunities in the region,” though he said at the time that there were no active discussions to report.

Viajanet, Submarino Viagens, Viajala, Voopter, and other companies will be curious to see what moves the regional star makes.

In turn, Expedia has a 14 percent stake in Despegar, and is prohibited from purchasing more than 35 percent of Despegar’s shares within three years of the IPO unless Expedia makes a tender offer. Under the latter scenario, Expedia could acquire Despegar if Expedia agreed to purchase more than a 75 percent stake in the company.

Other big players could take a look at Despegar, as well.

Regional Dominance

Despegar is one of the leading online travel agencies in the region. In November, it reported its first quarterly results as a public company.

It had $1.12 billion in third quarter gross booking volume, up 32 percent, year over year. Its total transactions of $2.3 billion in the quarter represented a 25 percent jump. Net income, though, fell 22 percent to $11.2 million.

The company also said that its mobile travel app is the most downloaded online travel app in Latin America. More than half of the company’s traffic comes from mobile devices, the company said.

Despegar uses Expedia Inc. exclusively for its hotel inventory outside the continent. The U.S. giant bought a 16.4 percent stake in Despegar in 2015, which it has retained. With the IPO dilution, Expedia now owns 14 percent.

Despegar has a more substantial presence in South America than Expedia and its rivals Priceline Group and Ctrip, on average among the countries. Despegar has operated for18 years, building up local relationships. It now serves 20 Latin American countries.

That matters because South America is a continent with above-average growth prospects, given its low online penetration relative to other regions.

In Latin America, only $22 billion of travel is bought online today, which investment analysts at Citi believe is merely 34 percent of the potential if consumers switch away from bricks-and-mortar agencies. The 34 percent average is well below European and U.S. online travel penetration of 51 percent and 48 percent, respectively, according to Euromonitor estimates.

Despegar’s secret sauce is partnering with local banks to offer installment payment plans, which let credit card holders spread out the payments on a trip. In the first half of 2017, consumers paid for 54 percent of the company’s transactions in this way.

In comparison, foreign-based giants have little-to-no local installment or layaway plan options for consumers.

Positive Market Dynamics

In some developing markets, fierce price wars have broken out as local competitors use discounts to gain market share. But Despegar appears to have escaped that trap.

Despegar’s take rate — or its cut of gross bookings, a metric that investors watch closely — was 11.8 percent, or roughly $130 million. That take rate hews closely to the 12 percent average it had through 2016, making it competitive with the take rates of some of the larger online travel agencies, and comparably sized companies elsewhere, such as MakeMyTrip in India, which has a 13 percent take rate.

The first wave of travel startups in emerging markets also historically have focused on flight sales, which typically generate less profit than hotel sales. But since it ramped up hotels starting in 2009, Despegar has also dodged this dynamic over time.

This year, slightly more than half of the company’s sales were from hotels and vacation packages, while flights took up much of the rest.

What’s more, margin tends to be higher on airline tickets in Latin American than in other parts of the world, and Despegar has successfully trained consumers to accept a booking fee — a model not common in the U.S. or Europe, but one that helps keep margins steady.

The Outlook for 2018

Despegar does face risks. The biggest may be the political and financial instability of Brazil, a market representing about 41 percent of Despegar’s transactions.

But even accounting for the Brazil factor, Citi analyst Mark May forecasts the online travel market in Latin America to grow at least 10 percent a year for the foreseeable future.

The global brands will likely step up their fight to add inventory in Latin America. Despegar currently lists 300,000 hotels in the region but only has about 23,000 of those directly tied into its extranet instead of through a global distribution system connection.

Another risk: While the globals can scoop up hotel and vacation rental listings relatively quickly, they can’t compete at scale as easily with more nuanced products. For example, Despegar has been expanding sales of destination services, such as tour guides, and of travel insurance, partnering with local players.

Despegar generates about 7 percent of cash per dollar of sales from its core operations, compared to Expedia’s comparable 20 percent. Nau Securities analyst Alex Wright forecasts that Despegar will boost that metric in its core online travel business to about 15 percent by 2020.

Once the company is in line with Expedia’s level of performance, perhaps the U.S. giant or its competitors will want to absorb it, experts have speculated.

A third risk is avoiding discounting to gain market share. In 2017 the company selectively reduced air customer fees in certain markets, notably in Mexico and Colombia, to boost cross-selling of hotel stays and ancillary services.

That drove double-digit growth in transactions while keeping commissions stable, the company said. But the fee cuts could pose a challenge if done at scale.

Meanwhile, Despegar may be in a shopping mood in 2018. Expect an acquisition or merger in the New Year. Viajanet, Submarino Viagens, Viajala, Voopter, and other companies will be curious to see what moves the regional star makes.

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Vacasa CEO on Why a Recession Could Be Good for His Business


Vacasa CEO Eric Breon is pictured here. His business is more dependent on the availability of vacation rentals than consumer demand. Skift

Skift Take: Vacasa CEO Eric Breon doesn’t see Airbnb or big hotel companies as competition for his company, which specializes in managing traditional vacation home rentals. But he could use more homes to manage.

— Hannah Sampson

Editor’s Note: This is one of a series of video interviews from the Skift Take Studio, presented by KDS, that were filmed at this year’s Skift Global Forum.

During the 2017 Skift Global Forum in September in New York City, we heard from a host of the travel industry’s top leaders from across every sector.

And after first speaking to them on stage in front of an audience of more than 1,100, we took another few minutes with them to get more insight in our backstage Skift Take Studio.

In our behind-the-scenes conversation, Eric Breon, CEO of vacation rental management company Vacasa, shared his thoughts about Airbnb, the reason he doesn’t see hotels as competition, and why a recession would actually be good for his business.

“At Vacasa, we’re primarily constrained by supply, homes that we manage, rather then consumer demand,” he said. “Supply is much more readily available in a recession as people bought that house and now they’re not able to sell it. They’re under water, they’re going to look for other options, and we are one of those options where they could rent out the home they can’t afford.”

He added: “In a hot market like today, it’s a bit of a headwind. People are selling their home for 50 percent more, twice as much as they paid. Whereas if the market slows down, people would be stuck with those homes and then they’d be looking [at], ‘How can I monetize this home I’m not using?’”

Watch all the Skift Take Studio videos here.

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Tourism Board Engagement With Airbnb Is Not One-Size Fits All

Airbnb For Business

Tourism boards had a wide range of opinions on Airbnb in 2017. Airbnb For Business

Skift Take: Tourism boards are stuck between a rock and a hard place on a lot of issues and particularly with Airbnb. Destination marketers understand that many travelers prefer Airbnb while their hotel partners definitely do not. We’ll be watching to see how both sides attempt to bridge the gap in 2018.

— Dan Peltier

Tourism boards often find themselves in a complicated position when it comes to Airbnb and they’ve been less vocal about the sharing economy than the hotel industry.

Endorsing a platform like Airbnb would in many cases draw the ire of hotel partners; hotels pay taxes to municipalities while Airbnb still operates unregulated in many destinations.

But remaining silent about Airbnb sometimes finds destination marketers missing out on working with sharing economy platforms that many locals support.

Airbnb has signed memorandums of understanding with tourism boards such as Visit Denmark for data-sharing partnerships, which are sometimes tied to regulatory approval for the company in a city or locale. Airbnb has also agreed to limit the number of listings available in some of the cities that have entered into such partnerships.

The quandary for tourism boards is that many locals indeed oppose these platforms and feel they’re tearing at the fabric of their neighborhoods. Locals in places like Barcelona protested the sharing economy in 2017.

Some tourism boards have navigated the issues better than others. As 2017 wraps up, Skift reflected on conversations and interviews we had with tourism boards about the sharing economy during the past year, and what they had to say about how these platforms are impacting their destinations.

Residents’ Reactions in Bruges

Vist Bruges surveyed its local population in late 2016 for their thoughts on Airbnb’s impact on tourism in Bruges. About 60 and 70 percent of respondents from the inner and outer city, respectively, said they were neutral when asked if tourists who stay in an Airbnb rentals become more of a nuisance than other tourists.

Bruges only has about 400 Airbnb rentals, said Vincent Nijs, senior researcher and project manager at Visit Flanders. “The neutral category is so big because people don’t really know enough about Airbnb yet,” he said. “I’ve been talking to policymakers in Barcelona where there are more than 16,000 rentals on Airbnb and 7,000 of those don’t have a permit and aren’t legal.”

In Vienna, sharing economy platforms such as Airbnb haven’t triggered a backlash from residents — yet, said Michael Gigl, region manager for Vienna Tourist Board’s North America and Australia offices.

“There is a growing sensitivity on the sharing economy but it hasn’t reached a level where the city doesn’t know what to do with it,” said Gigl.

Airbnb’s Impact on Housing

Skift’s launched its first Skift Lens documentary,  “Barcelona and the Trials of 21st Century Tourism,” in August and one of the focus areas of the video was alternative accommodations’ effect on the city’s tourism growth and housing development.

Short-term rental platforms have been criticized for causing rent increases in popular tourist areas and limiting housing for permanent residents. “We calculated that there were approximately 500,000 tourist apartments throughout Cataluña that were not regulated,” said Marian Muro, former director general of Cataluña Tourism, in the documentary. “We didn’t know their characteristics, if they had the right requirements for tourists so we created a regulation and called homes with a touristic use HUT. There were tourist apartments and we established minimum requirements.”

“It was a very controversial regulation because the other accommodation sectors did not perceive it well, but it allowed us to regularize 250,000 places in Cataluña,” he said. “It was something that had not happened anywhere else. We created a regulation and were then very strict in its application.”

Getting Airbnb Data

Miguel Sanz, director of tourism for Tourism Madrid, said the city would like sharing economy platforms like Airbnb to share more data to help tourism officials manage visitor growth.

“Cities themselves are not going to do it alone,” said Sanz earlier this month at a World Travel & Tourism Council forum in Madrid. “These sharing economy platforms are working for their own interests, which is what they’re supposed to do. But as we’ve experienced, these platforms could improve.”

Madrid is in the middle of a regulatory battle with Airbnb,, and the city’s relationship with the platform has been rocky. “We need clearer directives on the housing and lodging situation,” said Sanz. “Current regulation makes many Airbnb properties illegal in Madrid and Airbnb and other platforms are part of the growth in tourism.”

On Price-Gouging

Airbnb rates often skyrocket during high-demand periods such as holidays and popular events, including this summer’s total solar eclipse in the U.S.

Visit Hopkinsville, the tourism board for Hopkinsville, Kentucky and site of the point of totality during the eclipse, listed short-term rental accommodations on its websites as a resource for visitors to help them find a reasonably priced accommodations.

“We let people pay a fee to get on our website with their listing and the rates weren’t outrageous like they were on other sites,” said Cheryl Cook, executive director of Visit Hopkinsville. “We were planning to do this anyway — and didn’t do it specifically because of sites like Airbnb — but we didn’t want visitors to get ripped off.” [

The average rate for an Airbnb rental in Hopkinsville for the weekend of August 19-21 was $261 per night, while the average hotel rate was $425.

Said Cook: “Some listings on our site were in line with hotels, some were reasonable, others were pricey.”

Mapping Approved Accommodations

Venice has long had a problem with overtourism and this year the city’s government and tourism officials launched a campaign with the United Nations World Tourism Organization to teach visitors how to properly behave.

One of the features of the campaign is a map of authorized accommodations that includes mostly hotels, although it’s not well-designed or user-friendly. While not directly mentioning Airbnb, the campaign is perhaps one indicator of how the city views short-term rentals.

Other tourism boards also include authorized accommodations on their websites that include both hotels and alternative accomodations.

On Attracting New Kinds of Travelers

Los Cabos, Mexico conducted research this year that found 15 percent of visitors to the destination stay in an alternative accommodation like Airbnb, and 85 percent stay in traditional hotels.

These percentages have remained steady for the past few years and hasn’t reduced hotel occupancy, said Rodrigo Esponda, managing director of Los Cabos Tourism Board. “Airbnb and other similar platforms have helped the destination by augmenting the destinations offer and accommodations,” he said. “Airbnb usually attracts millennials and tourists that don’t typically stay in hotels which in return, increases the number of travelers the destination is welcoming every year.”

Using Airbnb as a Marketing Platform

In May, Visit Sweden launched a marketing campaign on Airbnb to promote the entire country. Through the campaign, Airbnb was seeking to refine its abilities as a destination marketer.

Jenny Kaiser, president of Visit Sweden’s U.S. office, told Skift that the organization’s work with Airbnb is a branding campaign, not a booking campaign. Visit Sweden is more interested in getting travelers to perceive the country as a place of rich, natural landscapes than increasing the number of Airbnb bookings.

“Airbnb is the context where we can reach our target group and this is something that’s really connected with what Airbnb is doing,” said Kaiser. “Our joint initiative is really about spreading our message about Sweden. Visit Sweden has very high demands on delivering growth and we need to find new and effective ways to be able to reach our target groups.”

Kaiser said Visit Sweden’s Airbnb partnership was only the starting point. “We’ll do another initiative on another platform but the Airbnb partnership will continue,” she said. “Our future partnerships will depend on which is the best fit for our key markets like the UK, Germany or China.”

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

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Google Travel Feeling Intensified Antitrust Pressure


Pictured is a Google Hotels display on iPhone. A Wall Street Journal editorial on December 27 alleged that Google steers consumers to its own businesses to the detriment of competition. Skift

Skift Take: Might 2018 be the year U.S. regulators take a hard look anew at Google’s travel-business practices after declining to take action in 2012? We hope so, in the interests of fair play, although the Trump Administration has been keen to reduce government regulation of businesses, not increase it.

— Dennis Schaal

Google is not only feeling antitrust heat in Europe, where the European Union leveled a $2.7 billion fine against it in June over its shopping business, but now Google is feeling  regulatory pressure in the U.S. over its travel-business practices, as well.

A Wall Street Journal Editorial Board opinion piece Wednesday on what it termed the Google-Hotel Travelopy called on Google to compete fairly by giving free rein to smaller online travel agencies to use hotel trademarks in their Google ads and URLs, and to stop biasing search results in favor of Google’s own flight and hotel metasearch businesses to the detriment of competitors’ businesses.

“Google ought to compete on fair terms by opening its auctions to all players and stop favoring its meta-search,” the Wall Street Journal editorial concluded. “Otherwise, regulators may soon ask if the search giant is abusing its market power.”

Google didn’t immediately respond to a Skift request for comment.

The Wall Street Journal editorial cited a Skift Research article in June about the estimated size of Google’s travel business. “The search giant’s travel business is worth $100 billion and will generate $14 billion in revenue this year, according to Skift Research,” the Wall Street Journal said.

Skift Research’s just-published report, A Deep Dive in the Google Travel Ecosystem 2018, estimated that two online travel businesses alone — the Priceline Group and Expedia Inc. — shelled out more than $4 billion on Google advertising in 2016 while North America hotel chains chipped in $1 billion to $1.4 billion in 2017.

A spokesperson for the U.S. Department of Justice Antitrust Division told Skift Thursday that it doesn’t as standard practice confirm or deny the existence of investigations before the information is released to the public. A spokesperson for the Federal Trade Commission likewise declined to confirm or deny an investigation.

The Wall Street Journal’s call for Google to cease allegedly anticompetitive practices comes five years after the U.S. Federal Trade Commission probed Google’s advertising practices and decided not to take action. The FTC declined to sue Google in 2012, the Wall Street Journal reported at the time, despite the fact that key antitrust staffers wanted to sue after concluding that Google’s search and advertising practices harmed consumers and slowed innovation.

Preview and Purchase Skift Research’s A Deep Dive Into the Google Travel Ecosystem 2018

What It All Means

Before briefly looking at the Wall Street Journal’s arguments — some of which have been aired innumerable times before — it is important to point out that when the Wall Street Journal, a powerful force in U.S. business, takes Google to task over its advertising and travel-business practices, this puts these issues into the national spotlight and places more pressure on Google to make concessions.

The Wall Street Journal alleges that Google and major hotel chains have banded together to stifle competition from smaller online travel agencies to the detriment of consumers.

“The problem is that Google is working with hotels to stifle competition,” the Wall Street Journal alleges.

The editorial cites the fact that some hotel chains and major online travel agencies have contracts that prohibit the online travel agencies from bidding on and using the hotels’ trademarks in their advertisements on Google. The use of such trademarks used to be common practice to the chagrin of the big hotel chains. Skift Travel Tech Editor wrote about the issue here.

The Wall Street Journal claims that despite Google’s denials, the search giant has bowed to the wishes of large chains and clamped down on smaller online travel agencies that seek to use hotel trademarks in their Google advertising, and that this harms consumers by inflating hotel rates.

“A spokesperson for Google says the company doesn’t restrict keyword ad bids, but we’ve been told by a small OTA that Google applies rules in a way that restricts trademarks in their hotel ad titles and URLs,” the Wall Street Journal wrote.

The American Hotel & Lodging Association has long called on Google to restrict online travel agencies and their affiliates from using hotel trademarks in their Google advertising because some hoodwink consumers into thinking they are booking rooms directly with hotels when in reality they may be booking on dodgy and sometimes fraudulent websites.

So it’s unclear if there would be real consumer harm if Google is indeed restricting online travel agencies from using hotel trademarks.

Google’s Preferential Displays of Its Own Products

Where the Wall Street Journal arguments may have more merit is in the travel industry’s longstanding criticism that Google has buried organic search results in favor of paid advertisements, and the fact that Google biases search results to favor its own travel metasearch products, including Google Hotels and Google Flights, to the detriment of the competition and consumers.

For example, a Google search for “Philadelphia hotels” Thursday produced search results with paid ads from,, TripAdvisor and Kayak on top of the initial search results page. Underneath these Google AdWords placements was a prominent colored map of Philadelphia with hotel rates, and a boxy image of three hotel search results with rates, review scores, star ratings, hotel descriptions and photos, all leading after a click to Google’s hotel-metasearch business.

Free search results from online travel agencies or hotels aren’t visible on the first screen of the Google page on desktop or mobile. Companies that rely on such organic search results from Google are now hard-pressed to attract site visitors from the search engine.

In its defense, Google says that the hotels featured in the map and box are triggered organically. But clicking on the results bring users to a Google Hotels page, featuring advertisements from online travel agencies and hotels. Competitors get no such prominent display for their businesses.

Free search results aren’t visible on the first screen of the Google page on desktop or mobile.

The Wall Street Journal says that Google is thus unfairly steering consumers to its own businesses. “But competition and choice will decline if Google exploits its market dominance to squeeze rivals,” the Wall Street Journal said.

What’s Next?

It’s been widely reported that the European Union is examining Google’s travel practices after having slapped Google hard for the way it runs its comparative shopping business.

It’s unclear if the Trump Department of Justice or Federal Trade Commission would have an appetite to probe Google’s travel-business or advertising practices or to subject Google to new regulation when the President has issued an executive order to reduce government regulation and has made reduced government regulation as key talking point.

It’s true that Google and Silicon Valley in general haven’t been ardent Trump supporters so tearing into Google could be seen as fitting retribution, but Google knows how to play both sides of the Washington lobbying and regulatory game and has ample resources and friends in government.

For its part, the Department of Justice under Trump-appointed Attorney General Jeff Sessions has initiated just half of the antitrust cases in 2017 that the Obama-led Justice Department did in 2016.

Still, the Wall Street Journal editorial gives hope to many in the travel industry who have demanded that Google be taken down a notch in the interests of fair competition.

2018 could get more interesting on the Google regulatory front.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

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