Yotel Expands Into Branded Residences With an Extended Stay Element


A rendering of the YotelPad in Park City. Yotel is launching the new YotelPad as a brand that caters to extended stay travelers and people looking for vacation condominiums or branded residences. Yotel

Skift Take: We have our reservations (pun intended), but if the popularity of pod-like hotels is any indication, perhaps this might just work for YotelPad and its experiment in reviving the condo hotel concept.

— Deanna Ting

Yotel, the hotel company known for its compact rooms and its penchant for a high-tech guest experience, is bringing its expertise to a new sector: branded residences that will be marketed for extended stay travel.

Yotel CEO Hubert Viriot has long sought to create an entity such as YotelPad, which might be considered a hybrid of an Airbnb and an old-school hotel. He sees YotelPad as a solution for travelers who need a stay that’s longer than two or three nights.

“It’s a natural extension for our brand,” Viriot told Skift. “We’ve been very focused on very short stays for the past four years, with YotelAir at airports and with Yotel in cities. They specialize in two- to three-night stays maximum, and they’re designed for busy travelers looking for efficiency and being on the move, jumping form one city to the other.”

But Yotel realized that its current hotels might have lost customers who were looking for longer stays.

As the CEO of Raimon Land PLC, a Thailand-based real estate developer, from 2009 to 2013, Viriot helped develop ultra-luxury condominiums.

“I always thought we should do the same at a very affordable price,” Viriot said. “My super luxury customers hardly even used the facilities. What if I brought this to a younger generation that’s dynamic and wants to be in the right location, but can’t afford the big price of central London or New York City? I’m sure it would fly. The idea had been with me for years. When I was invited to take over Yotel, I thought, ‘I have to do this one day.’”

It was Yotel’s multiple developer partners who convinced Viriot and his team that this idea could indeed become a reality, taking the brand’s guiding design principles and applying it to condominiums.

The first property, a branded residence in Park City, Utah, is scheduled to open in December 2019, with four other residences in the works in Dubai, Miami, and Geneva Lake, Switzerland, where there will be two.

Condo Hotel, Extended Stay Hotel, or Branded Residences?

To be frank, the messaging around this newest Yotel brand is very confusing and muddled, making it difficult to define exactly what YotelPad is. All we can surmise is that it is, essentially, a condo hotel that accommodates extended stay guests.

When Skift spoke to Viriot by telephone, he said, “With the Park City YotelPad, it will be condos and some will come back into the rental pool. In other cases, it’s more traditional extended stay. We have both formulas available. The objective is the ability to achieve both.”

That statement suggests there will be some projects, such as the Park City YotelPad, that will be purely condominiums or branded residences, and other projects that would operate just as any other extended stay hotel brand would.

Additionally, the marketing materials Skift received with details about the new brand use the term “extended stay” and “longer stay” several times.

But in a later conversation with Yotel’s vice president of brand, Jo Harrington, she said the majority of the brand’s initial developments will primarily be condo hotels, or branded residences. That means that the individual units will be sold to owners, either individuals, corporations, or institutional investors, and then those owners have the option to put those units into the rental market on any platform they choose.

When they do book their units, these owners will also pay a commission to Yotel for servicing/managing their units. And in marketing those units, it appears that Yotel will be marketing these condominiums to an audience of extended stay guests.

Harrington said, “It’s not extended stay hotels. It’s for the extended stay market. It’s for anyone who wants a longer stay. The vast majority of the projects we’ll do are ones where you own an individual unit. There may be some pockets in the world where we don’t do that, however. The projects we’re working on now, like Park City and Miami, [are ones where] owners will be able to buy those units. The Miami project will be on top of the hotel [a Yotel hotel property, as part of a mixed-use development.] Where we have a hotel [and we have these types of units], we may brand them as YotelPads and they may not be individually owned.”

This concept, also known as the condo hotel, is not new to the accommodations industry.

“Extended stay and branded residences are not new,” said Mark Skinner, a partner in the Highland Group, a lodging consulting firm based in Atlanta. “It’s a condo hotel. It’s been done before. Because they are residential condos they have kitchens and they are capable of catering to an extended stay guest. It’s like an apartment, but it’s owned and put back into a rental pool. There’s nothing new about that. This trend peaked in 2006. There are examples of that all around the country and they are branded.”

For that reason, Skinner thinks the company could be taking a risk with this new brand.

“It’s a big jump in the positioning of the brand to go from what Yotel is known for and getting into extended stay and condo hotels,” he said. “The condo hotels have very much gone out of favor. To be successful they would have had to have worked both as a condo and as a hotel so a lot of them were developed on the basis that the sale of the condos would provide revenue for the hotel side and it didn’t always work. What happens if the condo sales don’t go as projected?”

Skinner said that if Yotel wants to give YotelPad a fair chance to succeed, it would be better to ensure that its individual YotelPad properties are either solely an extended stay hotel or a branded residence project.

“It’s easier to manage if they keep branded residences and extended stay separate and also, from a zoning standpoint, you could probably develop that on residential land if you only do branded residences,” Skinner said. “If you rent out rooms for less than 30 nights you may run into some zoning challenges in some areas.”

A rendering of the kitchenette area of a YotelPad in Park City. Source: Yotel

Thinking Small

There are, however, some features that make YotelPad a compelling brand to watch, whether you’re talking about extended stay or branded residences.

The first is the fact that YotelPad’s rooms are much smaller than typical branded residences and extended stay hotels. A standard “Pad” is approximately 215 square feet and goes up to about 570 square feet for some larger units to accommodate up to six people.

The tech-driven rooms, Viriot said, maximize the space with smart design and flexible, even mechanical furniture. This includes Yotel’s adjustable and foldable SmartBeds, en-suite bathrooms, fully equipped kitchenettes, a Technowall, and storage space. Communal areas include a 24/7 gym, bike and gear storage, Amazon lockers, laundry, a home cinema, library, and a Club Lounge for co-working, meetings, and entertaining guests.

“You can retract the beds and move furniture depending on what usage you need them for. The room can turn into a lounge area during the day. The dining space can become more of an office. The combination of an app, smart devices, and mechanical furniture allows us to move things around easily makes the Pads exceptionally multifunctional and very user friendly,” Viriot said.

Viriot and his Park City developer partner, Replay Resorts, don’t see the smaller rooms as being a hindrance.

Todd Patrick, director of marketing and sales for Replay Resorts, said he thinks there’s a desire for small but efficient homes like the ones Replay is building with Yotel because of “what’s happening in the prefab movement, or the tiny home movement.”

“Big homes are becoming things of the past,” Viriot said. “I’m exponentially confident about that. We see the same trend all around the world for exponential growth of micro homes, or the tiny home movement.”

Why is he so confident? Viriot said, “For various reasons, one being purely real estate and congestion of cities but also because of new generations who have very different lifestyles and prefer living in small places in good locations close to city centers. There’s now much more acceptance of smaller places. We’ve already seen it with the Yotel brand in hospitality and the same applies to longer stay accommodations now, too.”

Yotel isn’t the only brand to be experimenting with smaller rooms. Other brands doing the same include Pod Hotels, Marriott’s Moxy Hotels, and Ian Schrager’s Public Hotels.

Smaller living areas, Viriot said, benefit from good design and quality. “It needs to have that quality and experience element and that’s why I think we have such an opportunity with this brand, to apply what we’ve learned in the hotel business and bring it to extended stay.”

However, Skinner remains skeptical about how these smaller rooms will manage to appeal to extended stay guests. “You can’t get a kitchenette in a 250-square-foot room. You have to add on a little bit to that. Even the economy extended stay product out there is larger than that.”

Bringing Affordable Luxury to the Condo Hotel Market

The smaller unit sizes also impact another defining feature of YotelPad: its relative affordability. Launching YotelPad lets the company branch out into urban markets and even into resort destinations, as the first YotelPad in Park City demonstrates. And it’s in these more established leisure destinations where a brand like YotelPad can offer a more “affordable luxury” type of experience that’s in stark contrast to the multimillion-dollar branded residences that you might usually find.

“In some hotels, you can buy a condo and feed it back into a rental pool and that’s been around for a while, but it’s been privy to luxury condominiums,” Viriot said. “Why should it only be for the super-luxury hotels of the world — only for Four Seasons or St. Regis? Why can’t we bring this experience and bring the price down significantly lower to a much larger and younger crowd?”

The price range for a YotelPad unit in Park City, Patrick said, will likely range from $250,000 to $350,000, which can be half the price of other condominiums for sale in the area.

“I don’t know of anyone doing this type of extended stay hotel model at that economy price point that Yotel does,” Skinner said. “In extended stay, the majority of travelers are business travelers. Economy extended stay does very, very well in the U.S. for sure and elsewhere where it’s present. But there are not a lot of economy extended stay properties in urban areas because the development costs are too high to appeal to that traveler.”

When it comes to pricing, Viriot said it’s too early to state specific rack rates for the rentals, but that “The idea is to be very competitive with what you may find on Airbnb and being much more in line with that market segment than your typical serviced apartment. The projects are just being launched, so it’s premature for me to put a price on it.”

Viriot said he thinks the brand has cross-generational appeal, but will be attractive first to “younger generations who don’t see the need of having a very large apartment, or someone who values community more than the real estate.”

Tech-Driven Pads

Viriot said Yotel has spent quite a bit of time examining the guest experience for a YotelPad, ensuring that it stays true to the company’s overall brand DNA but also works for longer stays.

Controlling much of the guest/resident experience is the YotelPad app, which acts as a digital concierge, as well as a digital key. Yotel said guests can use the app to order amenities and food to go. But beyond the app, Yotel is also working on enhancing the technology behind the guest experience.

Viriot said the company is “also working closely with a number of tech companies to get our Pads ‘smart’ in so far as the utilization of lighting, temperature control, and sound.” He said, “We’re also looking at how we can connect and how we utilize voice control to control those Pads.”

One item to note is that YotelPad has no connection to Yotel founder Simon Woodrroffe’s Yo! Home, which boasts a similar emphasis on building space-saving homes that utilize mechanical furniture.

“We are not involved in Yo! Home and I think it’s very interesting,” Viriot said. “The only commonality is that the founder of Yo! Home is the former founder of Yotel. It’s a much more residential project, and it’s much more U.K.-focused rather than being a global brand [like YotelPad].”

The Next Big Disruption in Longer Stays?

Aside from expanding Yotel’s reach, this move helps the brand remain competitive. Viriot sees YotelPad serving as a disruptive — and needed — force in the traditional extended stay and branded residence markets. He added that Airbnb’s impact on the entire lodging industry is not lost on Yotel and the development of this new brand.

“Airbnb disruption is also one of the reasons why we decided to go into this segment. It’s a source of inspiration to some extent,” Viriot said. “With the growth of Airbnb and how it’s disrupting the entire rental market, I always thought, ‘what’s missing?,’ You’re never sure of what you are going to get with Airbnb; you rely on pictures on the site and there’s generally no service and no experience because you’re on your own. With YotelPad, we could build something to take that into account. You know what you are going to get. … It’s something I have been thinking of for a long time, and YotelPad might have just put that all together and hopefully, I am right.”

Viriot said that most traditional extended stay product consists of “very large and very luxurious” accommodations, but that they “lack experience.” Because of that, traditional extended stay is finding it challenging to compete against offerings like Airbnb.

“The only thing an extended stay can do better than Airbnb is about serving and providing services and an area to develop a sense of community,” Viriot said. “That’s why there’s still huge potential in the extended stay segment. It needs to be more affordable and more flexible and the element of the community is critical. At the end of the day, what customers are looking for is an experience. With YotelPad, we inverted the rules. The studios or pads are very compact and very well designed and we invest a lot into the communal areas.”

The extended stay market is indeed changing, and pivoting more toward approaches that emphasize communal living or even co-living as an answer to the popularity of platforms like Airbnb and HomeAway.

Extended-stay hotels are also a particularly bright spot in the hospitality industry, with demand at record highs in the U.S. Extended-stay hotel demand growth outpaced the change in supply in the most recent third quarter in 2017, according to The Highland Group.

Skinner said, “Occupancy in extended stay hotels has been in record territory for four to five years now in the U.S., despite thousands and thousands of rooms being added. The fundamentals for extended stay are very good because the economy is expanding, jobs are being created, and there’s a lot of construction going around all across the country.”

He said that the industry’s focus on experiential lodging is “definitely growing” and that it adapts well to the extended stay experience. “Extended stay lends itself to that because you are there in the neighborhood for a long time, because you’re there on an extended assignment,” he said.

One thing that YotelPad will not be, however, is an experiment in co-living, Viriot emphasized. He said he still believes that people still prefer to have their own living quarters and the option to decide what they want to share in the community.

“You have your own Pad, and there’s not someone else with you in there. It has everything you need — a kitchenette, bathroom, etc. but you can open the door and access the communal areas and decide when and where you want to share and co-live,” he explained. “We purposefully made this decision.”

A Closer Look at YotelPad Park City

YotelPad Park City’s developer, Replay Resorts, is a resort developer whose executive team was formed from Intrawest, a leading destination resort developer that was influential in developing the ski resort of Whistler, among others. It was Replay’s decision to work with Yotel to bring YotelPad to Park City as a branded residence concept.

“We had this idea of bringing what’s happening in the urban market, the micro concept, and bringing that to the resort market,” said Patrick. “Hot resort destinations in North America are expensive for ownership and they are becoming unaffordable. With YotelPad, we’re bringing affordability and reinventing, in some way, resort living.”

Patrick said Park City is easily one of the largest and most accessible ski resorts in all of North America and because the resort hasn’t seen much condo development in recent years, now seems like the optimal time to launch a product like YotelPad and to “revitalize” parts of the resort.

In developing the Park City property, Replay’s Patrick said “every inch has been planned” and it was important to them that the property be close to the main gondola, as well as close to amenities such as bars, restaurants, and shops in the ski village. Just as important were the indoor and outdoor amenities that the residences will have, including outdoor fire pits, a hot tub, a Club Lounge, fireplace hearth room, games area, gym, and terrace. All units are fully furnished.

People who choose to buy a unit at the YotelPad Park City can choose to live in it 365 days a year or they can rent it out whenever they choose to. It’s a very similar concept, in fact, to the one being used at Niido Powered by Airbnb whereby residents are encouraged to rent out their apartments on Airbnb when they are not using them and, when they do, the landlord, Niido, benefits with a commission.

Skinner said that Airbnb’s partnership with Niido is something the entire lodging industry should be paying close attention to, and that Yotel would do well to take note of what Airbnb is doing with those apartment-hotels, which are scheduled to open later this year.

“Airbnb is a wonderful booking engine,” Skinner said. “Their name alone will draw people to their website … I think that them branding a building, from a marketing standpoint, is a very good idea. There’s no reason that Yotel couldn’t leverage their own brand on extended stay accommodation, too”.

Patrick said that he thinks the YotelPad concept will appeal to many markets, and that Replay has plans to bring the concept to other resort locations in the future.

Can YotelPad Succeed?

We won’t know until the first YotelPad opens in 2019 if the brand will prove to be successful but, not surprisingly, Viriot and Patrick are optimistic about its prospects.

Given Yotel’s recent $250 million in investment from Starwood Capital, Viriot thinks the company’s overall future is bright, and especially so for YotelPad, which was already in development prior to Starwood’s investment.

“Starwood Capital also has its own extended stay brand, but it’s positioned very differently,” he said, referring to Uptown Suites. “But it shows they are also big believers in the extended stay space, as we are. They gave us confidence to go deeper into it.”

A Yotel expands its brand portfolio to three, he said a loyalty program is “also in the works” but that it won’t resemble the hotel loyalty programs we’ve become accustomed to. Instead, it’ll be more like a customer resource management system.

“We will come up with our own program,” he said. “Having loyal customers is key and for me it means having program that allows us to recognize them and personalize their stay and give them immediate rewards rather than never-ending point accumulation.”

And to market the new brand, Viriot said the team is focused on digital marketing. And for distribution, well, he’s open to a number of channels, including Airbnb.

“We might use online travel agencies. Will we put them on Airbnb? I don’t have the answer yet, but I’m thinking about it with a smile,” he said.

Advertising YotelPad on Airbnb certainly aligns with a larger strategy that Airbnb is currently pursuing, as it attempts to bring more traditional accommodations — hotels included — onto its platform.

As for the future of YotelPad, Viriot said, “I’m passionate about how our business is being disrupted and how residences via apps like Airbnb everything are changing. I think this brand, YotelPad, has enormous potential because it ticks boxes from so many perspectives. It’s so flexible. It might be the ultimate hybrid between a hotel and a residence.

“Having said that, and as passionate as I am, I haven’t set a specific target for it. When I speak to my owners and developers they all like it a lot. We already have the first five or many, and many more will be announced soon. You never know — it might be our largest brand, but I don’t want to jinx ourselves. Let’s start with five and see what happens.”

Ryan Wolkov

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Author: Ryan Wolkov

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Airbnb Follows HomeAway’s Lead By Not Requiring Full Payments in Advance


Airbnb is now allowing guests to pay less up front when booking an accommodation on its platform. Airbnb

Skift Take: As the professionalization of homesharing progresses, adding a payments feature such as this makes a lot of sense.

— Deanna Ting

First came split payments for groups. Now it’s flexible payments.

Today, Airbnb announced a new and more flexible payments policy called Pay Less Up Front. Now, when people book an accommodation on the Airbnb platform that costs $250 or more, they have the option of first paying a deposit — generally 50 percent — and then paying the remainder closer to their check-in date.

To qualify, bookings must also be made at least 14 days prior to the check-in-date. If a guest can’t fulfill the second payment, his or her booking will be automatically cancelled.

Before this new feature, users had to pay 100 percent of the cost of their Airbnb accommodation up front.

Flexible payments in the homesharing and vacation rental space, however, aren’t anything particularly new. For instance, sister companies HomeAway and VRBO, both Expedia-owned, offer this type of flexible payment option. But by adding this feature, in addition to offering split group payments, Airbnb is making its platform particularly appealing to cash-flow sensitive travelers.

Airbnb said it decided to add this feature primarily because it not only benefits guests but hosts, as well. In its testing of flexible payments, the company found that 40 percent of its guests, if given the option, would choose to pay less up front and pay the remainder later, and when they did, they would generally opt for higher-value accommodations.

In other words, with Pay Less Up Front, guests would spend more on their Airbnb stays, generating more revenue for hosts, and for Airbnb, too. For every booking made on its platform, Airbnb collects a three to five percent fee from hosts and a five to 15 percent fee from guests.

Airbnb also said that it found that with this payment feature, customers made bookings with nearly double the lead time, meaning hosts were able to confirm and manage their bookings more easily. This feature also helps guests who may have been previously wary of booking a particular listing further in advance because of having to pay 100 percent up front.

Cancellation policies, of which Airbnb has three standardized versions, will not be impacted if a guest pays with the deposit, the company said. So, if a guest who uses Pay Less Up Front cancels his or her booking, that should not have an impact on how much the host collects. Airbnb said that its hosts don’t receive payment until approximately 24 hours after a guest checks in; the company collects both the deposit and the final payment prior to check-in. The company also said it will honor the payouts specified in the cancellation policies that a host has instituted.

What happens if a guest fails to make his or her second payment will also depend on the cancellation policy that a host has chosen. An Airbnb spokesperson told Skift that, generally, if the second payment falls through, Airbnb will follow up with the guest to request another form of payment and the guest will have approximately 72 hours to resubmit another form of payment to keep the booking. It’s not clear, however, if there are additional ramifications for a guest who misses his or her final payment.

Andrew McConnell, CEO of Rented.com, which helps homeowners find rental managers for their vacation homes, said this new feature seems like an all-around win not only for Airbnb hosts and guests but for Airbnb, too.

That’s, of course, if this payments policy change indeed leads to the increase in bookings that Airbnb envisions.

“It’s a win for the host because more bookings mean higher occupancy and revenue,” he said. “It’s a win for guests, especially since there’s no financing fee. It seems like a no-brainer even if you are a billionaire to only put a portion down instead of the whole thing. And for those guests who are cash-strapped, this could be the difference in being able to make the booking or not. And it’s a win for Airbnb because more bookings and lower upfront costs mean happier customers, more repeat customers, more bookings, and thus more booking fees.”

McConnell said this symbolizes the “maturation of Airbnb as well as of the industry” as some differences between hotels and homesharing get diminished.

“[Airbnb] really becomes more and more of a good substitute for hotels,” he said. “When you book a hotel, unless you do prepaid non-refundable rates, you don’t’ have to put anything down and it makes it much easier to book a room. When people feel more comfortable booking, they book more frequently. That’s more revenue for booking channels, and more money for hosts because they get more people coming in. For guests, it gives them that piece of mind. It also opens up travel more for people who may not be sitting on a lump sum today but need to plan vacations more ahead of time.”

While many hotels require guests to pay for the cost of their accommodations when they arrive at the hotel, more and more hotel brands are also, interestingly, adopting tougher cancellation policies.

An Airbnb Host’s Perspective

While industry experts like McConnell see this flexible payment option as a win-win situation for both Airbnb guests and hosts, one host said she’s not entirely convinced. Melanie Meharchand, an Airbnb host based in Monterey, California, who lists two properties on Airbnb, said that while she understands how this can be beneficial for hosts, there may also be “some downsides,” too.

She expressed concerns over how flexible payments might impact cancellation policies, adding that it might lead to some confusion for hosts.

“The availability settings in the system even for a host are so complicated right now that sometimes it’s very hard for hosts to figure out how much they get paid once something is paid,” Meharchand said. “You don’t know exactly at the end of the day how much you will get paid.”

However, Airbnb disagreed with this notion. “This doesn’t impact the way — how, when, or how much — a host gets paid at all,” an Airbnb spokesperson said. “Hosts won’t notice a difference, except perhaps they are getting longer stays and bookings secured further out, which hosts like.”

Still, Meharchand isn’t so convinced.

“It could mean that payments paid partially in advance or two weeks before or in combination with a cancellation policy could mean that hosts could not have any payment at all,” Meharchand said. “[Hosts] may be making time for a guest who may not ultimately end up making a booking. There’s very little compensation for hosts with Airbnb’s move toward a penalty-free cancellation policy.”

Meharchand also wondered about the flexible payments introduction given current hotel industry trends.”It’s interesting that Airbnb is doing this when you see other hotel companies moving toward stricter cancellation policies,” she said.

The ability of hosts to screen potential guests has been diminished, Meharchand said. There are two sides to that proposition though: While that can be a good thing because it reduces the likelihood of discrimination, it can also be a bad thing for hosts who want to know more about who is staying in their homes.

“If Airbnb thinks this feature will help people pay for properties they might not otherwise have been able to afford because they are paying in two installments, that puts a red flag in my mind,” she said. “We might be getting groups who might not be able to afford a property and might be less careful about a property. Part of the credit card system and having to pay everything in advance just meant you got a higher quality of guest overall. Airbnb could be opening itself up to slightly more risk with lower-quality guests being able to book. The screening mechanisms for hosts are being taken away.”

Flexible payments, Meharchand believes, is one of many steps the company is taking to make it easier for people to book a stay on Airbnb, and one of those includes the company’s push toward expanding Instant Booking on its platform. Of its more than 4 million listings worldwide, more than 1.9 million are instantly bookable, including Meharchand’s two listings.

“I did opt into Instant Book for both of our listings,” Meharchand said, “because the penalty for not being in Instant Book is that you are far less likely to get booked on.”

Said Meharchand: “Making homes more accessible by easier payments schemes is great, and it’s part of a whole scheme to make homes more accessible, but it can also be worrisome for some hosts because it reduces hosts’ ability to screen guests for people who would be appropriate for our homes.”

Ryan Wolkov

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European Tourism Had One of Its Best Years While U.S. Had One of Its Worst

Dan Peltier  / Skift

European tourism made a rebound in 2017. Pictured are tourists walking the Royal Mile in Edinburgh, Scotland. Dan Peltier / Skift

Skift Take: Europe’s 2017 tourism story is nearly the opposite of its 2016 downward twists and turns. It wasn’t a perfect year and some destinations on the continent are still struggling, but it’s also a sign that many Europeans are choosing to travel closer to home to stick to their budgets.

— Dan Peltier

After economic shocks and terrorist attacks roiled Europe in 2016, international visitor arrivals made a notable comeback in 2017, making it the strongest year for the region’s tourism in seven years.

By contrast, according to the latest international tourism data from the the United Nations World Tourism Organization, the number of international visitors to the U.S. is expected to drop compared to 2016.

Asia-Pacific has had some of the highest growth rates in tourism arrivals for the past few years, with regions like South Asia (10 percent) and Southeast Asia (8 percent) showing high growth rates. Southern and Mediterranean Europe (13 percent) was the region with the highest growth rate and raw numbers in the world last year, increasing from more than 228 million to more than 258 million visitors. North Africa also saw 13 percent growth, but its increase was from a much smaller number — 18.5 million to nearly 21 million.

Western Europe, which includes some of the world’s most visited countries such as Spain and France, had 7 percent growth in arrivals after having virtually no growth in 2016.

Europe, the world’s most visited region, had about 51 million more tourists last year than it did in 2016 (671 million compared to 620 million, respectively), and the region as a whole grew 8 percent year-over-year.

The Americas was the weakest world region for tourism growth last year at 3 percent. South America led the way with 7 percent growth, but North American only saw 2 percent growth. That resulted from strong demand in Mexico and Canada but a decrease in arrivals in the United States, historically one of the world’s most visited countries (see chart below). Some travel industry organizations like the U.S. Travel Association feel that President Donald Trump’s anti-immigrant rhetoric and policies are partly to blame for the poor performance but that a stronger U.S. dollar is also at play.

The U.S. Department of Commerce has said that international visitor arrivals were down 4 percent through July of 2017, the latest month for which it has released information. The UNWTO said its results are based on preliminary data as reported by destinations and estimates for figures not yet reported.

Overall, some 1.32 billion people crossed international borders and made overnight trips to destinations in 2017, a 7 percent increase over 2016. That growth is above the 4 percent growth rate for each year since 2010 and a sign that any downturn from Brexit or terrorism, for example, wasn’t long-lived. That means that of the 89 million additional people who traveled internationally in 2017, more than half (57.3 percent) of those arrivals went to Europe. And many European destinations appear to not only have recovered from losses that marked the past two years, but also exceeded previous visitor records.

U.S. Travel Association CEO Roger Dow said in an interview last month that one reason for the general growth in European tourism could be the rise of European low-cost carriers incentivizing travelers with low fares to regional destinations they feel they can’t pass up.

UNWTO Secretary-General Zurab Pololikashvili, who took office earlier this month for the 2018-2021 term, said in a statement that results were partly shaped by more positive global economic trends and strong outbound demand from many traditional and recovering source markets such as Brazil and Russia.

After a year filled with examples of citizens, particularly in Europe, protesting against overtourism and crowded city centers and infrastructure, Pololikashvili also acknowledged that tourism shouldn’t be a zero-sum game. “Yet as we continue to grow we must work closer together to ensure this growth benefits every member of every host community, and is in line with the Sustainable Development Goals,” he said.

The goals were adopted by the United Nations in 2015 and include three tourism-specific measures such as ensuring that tourism growth leads to job creation and to take steps to protect the environment from any negative impacts from tourism.

The UNWTO projects that international tourism arrivals will grow by 4 to 5 percent in 2018 and that the momentum from last year will continue. But if recent history has been any guide, there are too many factors such as currency or security concerns that could either inflate those numbers or cause them to spiral down.


Numbers are in millions

Region Arrivals in 2016 Arrivals in 2017 Percent Growth
Europe 620 671 8.00%
Northern Europe 79.7 83.6 5.00%
Western Europe 179.6 192.1 7.00%
Central/Eastern Europe 131.8 138.3 5.00%
Southern Europe 228.6 258.3 13.00%
Asia-Pacific 302.9 324 6.00%
Northeast Asia 153.9 158.5 3.00%
Southeast Asia 113.3 122.3 8.00%
Oceania/Australia 15.6 16.6 7.00%
South Asia 20 22 10.00%
Americas 200.9 207 3.00%
North America 132.2 134.8 2.00%
Caribbean 25.1 26.1 4.00%
Central America 10.9 11.3 4.00%
South America 32.7 34.9 7.00%
Africa 58.2 62 8.00%
North Africa 18.5 20.9 13.00%
Sub-Saharan Africa 39.6 41.5 5.00%
Middle East 53.6 58 5.00%


Source: UNWTO

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Smart Speakers and Hotel Rooms Aren’t an Easy Fit


A Google Now and smart refrigerator adveritsement outside CES 2018 in Las Vegas. Skift

Skift Take: Technology companies are embedding smart speakers into all kinds of household devices, ranging from toothbrushes to refrigerators. A strong use case for hospitality, however, has yet to emerge.

— Andrew Sheivachman

Smart speakers powered by artificial intelligence could be reaching the apex of their hype cycle.

Vendors displayed dozens of them at CES 2018 in Las Vegas last week, with many embedded into household devices instead of standing alone as a consumer product.

In the hospitality space, smart speaker adoption has been limited. Wynn Las Vegas, for instance, added an Amazon Echo unit to each hotel room in early 2017, while chains like Best Western and Marriott have also installed units in a small number of hotels.

There are still many issues, however, that hinder the proliferation of smart speakers in a hospitality environment.

Foremost is ensuring the privacy of guests. There have already been scandals based on errors causing smart speakers to constantly listen in to the conversations around them, and problems like these give hoteliers pause.

Josh Weiss, vice president of brand and guest technology at Hilton Hotels and Resorts, told Skift that while his team is constantly experimenting with voice controlled devices, the company as a whole is more focused on using the Hilton Honors app as a digital tool instead of voice control.

He likened the security concerns with smart speakers to installing a webcam for meetings in hotel guest rooms. Even if the camera is off, or physically covered, a guest will still feel like their being monitored with the device in the room.

Marriott, on the other hand, plans to make a wider push using smart speakers and voice control technology.

The fragmented nature of hotel ownership, branding, and franchising is another obstacle. Hotel owners simply may not be willing to make the investment for 200 or 500 Amazon Echo devices with no clear path towards monetization, even if their brand is touting the devices.

The process of installing devices, as well, is different for every hotel; older hotels may not have the information infrastructure to handle the devices, while new-build properties do but may prioritize other aspects of the guest experience.

Even if a hotel brand claims to have installed these devices in dozens of hotels, it’s hard to see a path forward toward widespread adoption without a clear case for return on investment, particularly when hotels can use that money toward renovations and other products improvements.

The Connected Future

There’s also the reality that consumer devices like Google Home and Amazon Echo don’t interface with back-of-the-house hotel systems.

Sensors can tell a hotel whether a room is occupied, for instance, and lower the temperature to save on energy costs. Soon guests will be able to establish a profile including their preferred room temperature and what time they’d like to wake up in the morning, which will be reflected automatically in their room. Automation has the capability to become a powerful tool for hoteliers in the future.

Hotel technology startups, however, are working on hardware that bridges the divide between guest-facing tools and behind-the-scenes technology.

“Hotels are hard,” said Michael Cohen, head of business development for Angie Hospitality, because the kinds of devices that are ending up in homes don’t really meet the needs of hoteliers.

The guest room device from Angie Hospitality, which is being deployed in hotels in the U.S., provides guests with a private, secure Wi-Fi connection along with voice control capabilities for their room and searches powered by artificial intelligence. The system can also provide voice-over-internet-protocol phone connections, essentially replacing the traditional phone in a guest room.

On the hotel end, the device can connect into hotel back-end systems governing energy management, revenue management, and housekeeping. Hoteliers will have visibility into guest preferences and be able to better tailor the hotel experience to guests based on data.

The vision is to allow hotels to create a customized experience for guests, perhaps suggesting a hotel’s restaurant instead of nearby local options or providing customized content for conference attendees.

But given the scale of the global hospitality industry, it seems like the voice controlled future is still in its nascent stages.

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Launching: Skift Table Daily Newsletter

Skift Take: Don’t miss out on all the news you need to better understand the business of dining out.

— Jason Clampet

Today Skift Table is taking its newsletter daily for our nearly 10,000 subscribers.

The Skift Table Daily newsletter covers the latest news, ideas, trends, and most relevant and interesting stories of the day. Like our travel coverage, Skift Table looks at changing consumer behavior in the industry — in this case the business of dining out.

We announced the change to existing subscribers earlier this month and began offering people the opportunity to hear from us five days per week or just once, on Wednesdays. To subscribe to either list, visit our subscription page.

What to Expect

Daily content is made up of Skift Table originals and stories syndicated from Bloomberg and the Associated Press coupled with the best of the industry and consumer media. What matters to us is that the headlines and stories deliver great insight into how people in the industry do their jobs and the technology, innovation, and ideas that will move the industry forward.

Our perspective on the business of dining out is broad, and is informed by the experience we’ve had remaking how the travel industry views itself through a Skift lens. We tackle topics such as how people are choosing where to eat, which in-restaurant technology really matters, and how restaurateurs make the small decisions that net big impact.

The Wednesday newsletter, which both Daily and Weekly subscribers will receive, dives deeper into three or four top and timely issues as you’ve come to expect from our previous coverage. All of the newsletters will arrive in your inbox every day at 10am EST. You can find many of our stories at table.skift.com, too.

Contact Skift Table senior editor Kristen Hawley at kh@skift.com regarding stories or email our GM Jason Clampet with any business suggestions, ideas, or feedback at jc@skift.com.

Subscribe now to the Skift Table Daily

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Travel Startups Work With Breakthrough Technologies That Could Threaten Industry Leaders

Consumer Technology Association

The latest in augmented reality and virtual reality was on display at CES 2018 in Las Vegas. Consumer Technology Association

Skift Take: Emerging technologies, like artificial intelligence and blockchain, have yet to make the leap from buzzword to mainstay, but have the potential to disrupt travel incumbents. The big players will have ample opportunity to adapt, though, and leading startups can play a role in helping executives grapple with when and how to implement these technologies.

— Seth Borko

Venture capital companies invested a record amount of money — $5.3 billion — in travel startups in 2017. In its latest report, Skift Research analyzes the rapidly evolving market for travel startups and their venture capital backers.

Breakthroughs in artificial intelligence, blockchain, virtual reality, and other technologies threaten to pressure and even unseat long-time incumbents. However, startups working in these areas often face challenges both in commercializing their tech and in convincing a sometimes-skeptical audience.

Startup founders in these emerging technology fields should work on bridging the knowledge gap, ensuring that there is real value in their products and services, and then attempting to get C-Suite buy-in at larger corporations.

Last week we launched the latest report in our Skift Research service, Venture Investment Trends and Startup Opportunities in Travel 2018.

Below is an excerpt from our Skift Research Report. Get the full report here to stay ahead of this trend.

Skift’s state of startups survey asked which technology was likely to be most disruptive to the travel industry.

Artificial Intelligence and the closely related field of machine learning/predictive analytics topped the list. These technologies continue to advance and are poised to disrupt a wide range of industries.

Going to the source: where startups see the greatest technology potential

Source: Skift + Amadeus State of Travel Startups Survey

Preview and Buy the Full Report

Close behind was blockchain technology, which has been the spotlight this year as the technology underpinning for virtual currencies like bitcoin. However, we expect that much of the true innovation will come not from the currency itself but from the protocol’s ability to decentralize areas such as distribution and contracts. Legacy IT systems could be left behind if they don’t adapt.

Bonny Simi, president of JetBlue Technology Ventures, agrees. She sees potential from distributed databases and smart contracts around payments, distribution, and loyalty systems. A smart contract is a self-executing, self-enforcing contract embedded in software. In this context, a smart contract could perhaps be used for programming automatic settlements.

Virtual and augmented reality also had a strong showing in our survey and are likely to play a large future role in travel. Erik Blachford, venture partner at TCV and former CEO of Expedia, observes that no one has yet “figured out how to integrate … higher-order functions [like virtual and augmented reality] into the travel experience.”

Despite the potential of augmented reality and virtual reality technologies, many established players indicate that implementation is not on their current roadmaps.

What will be key here, as with all new tech, said Simi, is a continued effort to bridge the cultures of new companies and legacy giants. “It’s hard for them to grasp a new economy and new ways,” she said, regarding organizations that have been in the industry for decades and rely on older technology.

Preview and Buy the Full Report

Despite the potential of augmented reality, virtual reality, blockchain, and voice-based search, for that matter, the success of these technologies and the startups going to market with them is far from a foregone conclusion. We find that many travel executives are hesitant about their potential. For instance, almost half of those we polled were not sure when, if ever, they would incorporate blockchain into their business models. Yet, just seven percent said that they would “never” integrate blockchain into their tech stacks. We believe that most are waiting to see a stronger use case for these new products before committing.

The travel tech roadmap: executives most uncertain about blockchain, VR/AR

Source: Skift Research

Subscribe now to Skift Research Reports

This is the latest in a series of research reports, analyst calls, and data sheets aimed at analyzing the fault lines of disruption in travel. These reports are intended for the busy travel industry decision maker. Tap into the opinions and insights of our seasoned network of staffers and contributors. Over 200 hours of desk research, data collection, and/or analysis goes into each report.

After you subscribe, you will gain access to our entire vault of reports, analyst calls, and data sheets conducted on topics ranging from technology to marketing strategy to deep-dives on key travel brands. Reports are available online in a responsive design format, or you can also buy each report a la carte at a higher price.

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British Airways Finally Improves Its Catering — Business of Loyalty

British Airways

British Airways is improving its catering on long-haul routes. This comes after the airline had cut what customers received on some routes. British Airways

Skift Take: After so much bad news for passengers flying on British Airways, there’s finally a bit of improvement coming to the airline — but only for international travelers.

— Grant Martin

An upgraded meal service is coming to British Airways, reversing a long campaign of cuts to the airline’s in-flight experience.

The upgrade is focused on long-haul economy service, for the cabin it calls World Traveller. Starting January 17, in what the airline says is a “multi-million pound investment,” passengers will be served an improved, four-course meal while upgraded snack baskets will be circulated throughout the flight.

Some of the improvements include replacing the plastic water cup served with the meal with a bottle of water and upgrading the second meal to a pizza wrap.

For many, the catering improvements can’t come soon enough. Under Alex Cruz (a CEO hired from Spanish low-cost carrier Vueling) and amid tight competitive pressure, British Airways has cut dramatically over the last few years. On short-haul flights, the carrier stopped giving free snacks last year, choosing to sell packaged goods from Marks and Spencer. That move initially irritated travelers but enraged them when the carrier started regularly running out of food.

Cabin design has also suffered. British Airways recently confirmed it will introduce a series of ultra-dense cabins on short-haul flights with seats that don’t recline, leading many to compare the airline directly to the low-cost carriers premium travelers despise.

In addition, British Airways is moving to a revenue-based loyalty program this year, meaning some frugal but loyal flyers may earn fewer points than before.

Perhaps to counter some of the negative sentiment regarding its brand, in November the airline embarked on a campaign to return to the “glory days” of air travel. Among other improvements, British Airways committed to expanding Wi-Fi, adding new aircraft, and improving catering. 

Despite the renewed effort, it remains to be seen whether the improvements are enough to curry favor with travelers.

Most major carriers in the United States invested heavily in catering through 2017, taking some of the profits generated from ancillary fees and relatively cheap fuel to strategically upgrade meals on high-value routes. So while British Airways may have improved catering, it still won’t be better than the competition.

— Grant Martin

Skift Stories and More Expert Insight

Bag Fees Were the Most Successful Airline Business Model Change of the Past Decade: In the past decade, airlines have successfully convinced flyers to pay for everything from seat assignments to checking bags. But some of their most loyal customers are fuming.

The Airport of the Future May Evolve From Transport Hub to Attraction: It’s not happening fast enough for many travelers, but many of the world’s airports have over several years morphed into community spaces, where travelers can spend time in a yoga room, beer hall, butterfly garden, or children’s playground before they fly.

Airlines Turn to Private Messaging to Avoid Social Media Blowups: Nothing has made airline social media managers more nervous over the past decade than a Twitter rant from a customer with hundreds of thousands or even millions of followers. But even the most angry travelers are more often taking complaints directly to airlines and bypassing public forums.

World’s Busiest Air Route in 2017 Was to Tiny Island Off South Korea’s Coast: The world’s busiest air route isn’t London to Paris or New York to Los Angeles, but the trip between Seoul and a tiny island off the coast of South Korea.

IHG Changes Best Rate Guarantee Policy, Gets Rid of Free Nights: IHG made changes to its terms and conditions, completely changing its Best Rate Guaranteed policy. According to the new policy, guests who successfully submit a Best Rate Guarantee claim will now get a varying number of IHG points rather than a free first night.

Silvercar Launching Audi Q5 Service: Silvercar, an upscale car rental company owned by Audi, announced a new addition to its premium family: the Audi Q5.

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Egypt Has a New Tourism Minister as Visitor Numbers Climb

Mathias Apitz  / Flickr

A resort on the Red Sea in Egypt. The tourism minister in Egypt was replaced as the destination recovers from a slump in visitors. Mathias Apitz / Flickr

Skift Take: While more visitors are coming to Egypt, the new tourism minister still has plenty of work ahead after several difficult years for the destination.

— Hannah Sampson

Egyptian lawmakers approved the appointment of a former senior central bank official as tourism minister, one of four cabinet changes after President Abdel-Fattah El-Sisi called for a reshuffle.

Rania Al-Mashat, who held a top position at the bank before moving to the International Monetary Fund, takes over at the Tourism Ministry as overseas arrivals have recently been climbing after the vital sector was hit hard by the downing of a Russian airliner in 2015 and other militant violence.

In other appointments, the head of Egypt’s statistics agency was confirmed as local development minister, while Khaled Badawi, chief executive of National of Bank of Egypt unit Al-Ahli Capital, took over the public sector portfolio. Ines Abdel Daim, who formerly ran the Cairo Opera, was approved as culture minister. The reshuffle came as Egypt gears up for presidential elections slated for March.

Local media had earlier reported a more far reaching overhaul of the cabinet, including splitting the Ministry of Investment and International Cooperation into two entities, and the replacement of the agriculture minister, who had been dogged by a fight over the permissible levels of the ergot fungus in wheat imports. Several Egyptian newspapers had said up to seven ministries could see changes.

The new faces at the public sector and local development ministries come as the government is seeking to extend its program of economic reforms by selling stakes in some key state companies on the Egyptian bourse, slimming down a bloated public sector and improving local services.

–With assistance from Tarek El-Tablawy

©2018 Bloomberg L.P.


This article was written by Salma El Wardany and Ahmed Khalil El-Sayed from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Airbus Casts Doubt on the Future Production of the World’s Largest Jet


Emirates is by far the world’s largest A380 operator, but it’s not sure it wants any more of the jets. That’s bad news for Airbus, which may not have other customers. Bloomberg

Skift Take: The A380 hasn’t sold early nearly as well as Airbus expected. Is it possible most airlines will never want a plane so big? Or is the A380 merely ahead of its time? Perhaps more carriers will want a massive jet as more airports face capacity crunches. But by that time, the A380 could be out of production.

— Brian Sumers

Airbus SE publicly questioned the future of the A380, saying its flagship aircraft program risks being shut down if the manufacturer fails to win a crucial order from the planemaker’s main backer, Emirates of Dubai.

Emirates is the only airline with enough capacity to take enough planes to keep the program alive, Airbus sales chief John Leahy said Monday in an online presentation. Discussions are ongoing, he said.

“I believe we can find a solution with Emirates in hopefully the not too distant future,” Leahy said in an interview with Bloomberg TV. “But we do need a strong base that only a big operator like Emirates can provide.”

Airbus has struggled to rack up sales of the superjumbo, which it argues will be needed to help increase passenger traffic at the world’s busiest airports. The company was forced to slash production rates in July to try and stretch out the order book. Emirates, by far the biggest operator of the plane, scuttled a deal to buy 36 of the planes in November, leaving Airbus hanging and raising doubts about the future of the program.

Airbus wants Emirates to order enough planes to sustain production at six a month over the next 10 years, giving the planemaker scope to sell two or three of the superjumbos on top of that to eke out a profit on the program, Leahy said.

The company produced 15 in 2017 and has said it plans to reduce that figure to eight next year. Airbus can break even producing as few as 6 of the planes a year, Chief Operating Officer Fabrice Bregier said.

The plane’s future has been in doubt for several years. As far back as 2014, Chief Financial Officer Harald Wilhelm said the program could be killed if demand didn’t pick up.

The final 2017 order tally for all aircraft, announced Monday, highlights the challenges facing Airbus as the company prepares for a wholesale overhaul of its leadership team. The planemaker, run from Toulouse, France, has had success selling smaller planes while demand for widebodies wanes — especially hitting the biggest plane in its commercial lineup.

The four-engine A380, introduced in 2005, is so big that some airports had to expand runway facilities in order to accommodate the 550-seat plane. While it’s used in the world’s biggest airports including London’s Heathrow and New York’s JFK, the industry as a whole has moved toward smaller planes going point-to-point, reducing airlines’ dependence on bigger hubs.

More business from Emirates is key to attracting other buyers of the plane and ensuring jets sold now would hold their resale value. With a list price of $446 million, the plane is one of the most expensive and least flexible for airlines to deploy in their fleets. Without new orders, it becomes impossible for Airbus and its suppliers, which include Rolls-Royce Holdings Plc, GKN Plc and the General Electric Co.-United Technologies Corp. venture Engine Alliance, to make a profit.

Bumper Crop

While the A380 struggles, Airbus is outselling its rival, Boeing Co., on smaller single-aisle aircraft like the A320 family. The company announced a bonanza of orders in late December, and said on Monday that it sold more than 1,000 of the planes in 2017. The achievement is especially notable since Boeing refreshed its lineup last year with the 737 Max 10, a direct competitor.

Leahy, the outgoing chief salesman, said Monday he’ll stay on for several months after handing over the job to his successor, Eric Schulz, on Jan. 25. Chief Executive Officer Tom Enders said last month he plans to step down in 2019. Bregier will leave in February. He said Monday he plans to seek a job at another company.

©2018 Bloomberg L.P.

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

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Iceland Airport Will Get a $1 Billion Upgrade to Cope with Tourism Boom


Check-in desks at Keflavik airport. Iceland is looking to expand the facility. Bloomberg

Skift Take: When the U.S. military built Keflavik airport in the middle of World War Two, nobody would have thought that Iceland would go on to become a major tourist destination. Expanding it therefore makes sense, but the country also needs to consider how other parts of the island will cope with millions more visitors.

— Patrick Whyte

A tourist boom has caused traffic at Iceland’s Keflavik airport to grow more than five-fold over the past nine years, with a predicted 10 million passengers this year. Now Iceland’s main entry point to the world is preparing to accommodate twice as many.

The airport expects to invest about $1 billion over the next 7 to 8 years to make room for new airlines and routes as it touts itself as a hub between Europe and the U.S. Domestic carriers Icelandair and Wow Air have opened routes to mid-size cities in North America, while Delta, United, American Airlines and Air Canada have or will soon start flying out of Keflavik, which was built by the U.S. military during World War II.

The airport will pick up the pace of investments after spending about 39 billion kronur ($372 million) since 2011, and will need the help of foreign investors as it takes its biggest steps, according to Bjorn Oli Hauksson, managing director of ISAVIA, the state-owned company that operates all airports in Iceland. This could involve issuing bonds, he said.

“It is simply a question of when in the next three to four years we will give the signal for the biggest step which will be a new finger for Keflavik,” he said in an interview.

Surrounded by black, barren lava fields, there’s plenty of room for Keflavik and other operations to grow. Its vision of the future includes an “Aerotropolis” that would stretch all the way to Reykjavik, some 30 kilometers away.

‘Family Silver’

Hauksson says this expansion will require a broad slate of investments. “There are many ways to choose from but it is clear that foreign investors will play a part in the build up in Keflavik,” he said.

The government has been refraining from taking out dividends to allow for investments and has, in that sense, increased its equity each year in a valuable asset, Hauksson said. “It is up to them what they want do,” he said. “They could decide to keep it or they could decide to put it on the market. You may say that Keflavik airport is like the family silver.”

As a gateway, Keflavik is a key part of Iceland’s tourism boom, which has been instrumental in helping the country resurrect itself after the 2008 economic collapse. The central bank expects economic growth have expanded 3.7 percent last year, after a blistering 7.4 percent in 2016.

While serving as a hub for travelers from Europe to North America, the airport operator is also looking to develop Keflavik as a cargo airport, according to Hauksson.


Building cranes are now one of the main features of the landscape. Total public investment has not been greater since at least 2004, according to Statistics Iceland. Government investment increased 30 percent in past three quarters from a year earlier and municipalities invested 50 percent more in the same period, with the city of Reykjavik almost doubling its investments in 2017.

Icelanders are pouring on spending after it exited capital controls last year. There’s a pent-up demand of at least 400 billion kronur to fix infrastructure after years of neglect following the economic collapse.

The government, which took office in November, expects investments to increase by 21 percent over the next five years, but has also flagged that it’s aware that too much spending could breath too much life into an already hot economy.

Hauksson says he’s optimistic that the new government will be on board to expand Keflavik but that the size of the projects demand caution.

“We haven’t before experienced an infrastructure build-up on this scale within one company in Iceland,” he said.


©2018 Bloomberg L.P.

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

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