CES 2018 Dispatch: Transition to 5G Mobile Will Be Transformative for Hotels

Skift

Attendees at the Samsung booth at CES 2018 on January 9 check out new display technology. Skift

Skift Take: 5G mobile technology isn’t here yet. But once it does emerge, smart hotels will be wise to provide access to the data network at their properties.

— Andrew Sheivachman

Over the next five years, a new generation of mobile technology will emerge that will change how people use their smartphones.

Hotels, in particular, will end up in the front lines of this shift. What if hotel guests can simply download any movie they want to their smartphone in a few seconds, and view it on the screen in their room, without using hotel Wi-Fi? What if meeting attendees can participate in a high-definition video meeting powered by a mobile data network?

5G New Radio will debut in the next year or two, giving consumers the ability to download at speeds up to 10 gigabytes per second; current 4G LTE connections can download about 50 megabytes per second at their peak.

The increased speed of data connections will also enhance many other aspects of the mobile experience.

“The communications technology is important, but what is also important is what comes along with that,” said Keith Kressin, senior vice president of product management at Qualcomm Technologies, during a panel at CES 2018 in Las Vegas this week. “With every jump in connectivity, there is a jump in computing; more artificial intelligence and immersion, remote computing with very low latency… there are a lot of companies putting a lot of work in to meet this 10 year cadence of infrastructure [development].”

Kressin said Qualcomm, which provides most of the chipsets for premiere smartphones, will have 5G-enabled chips ready in 2019 for the first emergence of widespread 5G connectivity in 2020.

Smartphone manufacturers think the shift will also usher in a new era for cloud-based computing and services powered by artificial intelligence.

“We look a lot at the use cases,” said Justin Denison, senior vice president of product marketing at Samsung Electronics America. “Now you can have everything around you connected to the network with really quick latency and, in certain cases when you really want it, explosive bandwidth… when we get to this foundational change of 5G it allows this low latency instant interaction with the cloud. Now you can use intelligent agents on a single unified cloud, bringing intelligence not just to the device [but the cloud].”

The implications of this technology for travel and hospitality are immense. Hotels, in particular, have the opportunity to provide extra value to guests by providing 5G mobile connectivity in their properties. The problem with 5G when compared to 4G and 3G, however, is that its range is extremely limited due to the nature of the technology.

The Promise for Hotels

Regardless of the range limitations, the debut of 5G mobile will have a huge impact on consumers. Being able to download a full movie in three seconds, or video chat with perfect clarity, has the potential to be transformative. And early adopters will crave the ability to use a 5G network not only at home or the office.

This represents a huge opportunity for hotels willing to invest in the technology. Since the first iteration of 5G will be more akin to Wi-Fi than traditional mobile signals, hotels can wire each of their guest rooms, meeting spaces, and common areas to create a huge differentiator from their peers.

Early adopters and tech-savvy companies will be more likely to stay and meet at hotels that embrace this technology, and the move away from costly and slow Wi-Fi will be a welcome change. And the existing Wi-Fi networks will become less congested, providing a better experience to those who use them for their laptops and tablets.

While hotels will be at the mercy of their local internet providers, particularly when it comes to access to a fiber optic connection, the investment will be worth it for some during the initial rollout of 5G.

Marriott International and Hilton Hotels & Resorts are among the first major hotel chains experimenting with concepts for connected rooms. Marriott is betting that guests will want voice-control options in their room, while Hilton will provide that digital experience through their Hilton Honors app.

It’s unclear at the moment what effect this could have on a hotel’s behind-the-scenes technology stack, which operates in a closed environment compared to consumer technology. But as more sensors and devices operating in the internet of things emerge, hotels can leverage these tools more effectively if equipped to handle 5G. As smart speakers and other artificial intelligence-powered devices become more commonplace, a 5G network will help shoulder the burden of the increased need for bandwidth.

This investment in the next few years can also help futureproof a hotel’s guest-facing technology as this generation of mobile technology continues to evolve.

How 5G Works

Mobile data technology tends to move in 10-year increments, and 5G is no exception. The technology that will power 5G data connections, however, differs from previous mobile technology in an important way.

If you remember high school physics class, the lower the frequency of a wave, the longer it tends to travel (please keep reading). This is why 3G and 4G mobile is powered by cellular towers; the waves travel quite far, so one tower can provide coverage to a large area.

5G, however, will operate at an extremely high frequency to deliver super fast data speeds. The signal itself, therefore, will only be able to travel a much shorter distance in the technology’s current form.

Instead of towers, 5G will initially operate using access points in homes and buildings in a manner more similar to Wi-Fi. The upside of this method is that many devices will be able to access data at high speeds. The downside is that the range of the signal will be extremely limited and need a fiber optic connection to function.

For this reason, 5G will likely first become prominent in dense cities that can be packed with these transmitters. Phones will have both 4G and 5G capability once 5G debuts, because most places simply won’t have access to the 5G bands. There are also issues in the U.S. with respect to the Federal Communications Commission allowing mobile phones to use the broadcast bands they need for 5G.

 

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Carnival Draws on Shaq’s Star Power for New Fun-Centric Brand Campaign

Carnival Cruise Line

Shaquille O’Neal is shown in a pool on a Carnival cruise ship as part of his new role as the cruise line’s “Chief Fun Officer.” Carnival’s new brand campaign tells customers to “Choose Fun.” Carnival Cruise Line

Skift Take: Carnival’s high-profile new spokesman should earn the brand some fresh interest, but will it be enough to bring new cruisers on board?

— Hannah Sampson

Carnival Cruise Line just named a new CFO, but not the kind you’d expect.

The Miami-based cruise line announced Thursday night in a video that retired NBA player and actor Shaquille O’Neal was taking on the title, without specifying what the letters stood for. (Footage of O’Neal playing duck, duck, goose and tag in the office might have offered a hint.)

As the operator was scheduled to reveal this morning, O’Neal will be the “Chief Fun Officer” as part of a new brand campaign that drills down on the word fun. The campaign comes during the key cruise booking time of year known as “wave season.”

“He is full of ideas about how he can represent and be Carnival’s chief fun officer,” said Christine Duffy, the cruise line’s president. “He is all in more than any other celebrity that I’ve come in contact with. He is just one idea after the next and genuinely enthusiastic and excited about the brand and the role that he’s playing.”

The teaser video ran during TNT’s Inside the NBA show, on which O’Neal, a former member of Carnival Corp. chairman Micky Arison’s Miami Heat, is an analyst. A 30-second ad showing him giving a ship tour will air online.

Duffy said the “Fun Ship” brand has more in store for the Shaq partnership.

“I don’t want to reveal everything, but I just think he is so aligned with our brand that we will be using him in different ways, not just traditional this is wave and this is our campaign and our commercial this year, and next year we’ll move onto something else,” she said. “This has legs.”

Duffy said she believes O’Neal’s profile will help the line break through to non-cruisers — which are also a big target of the entire campaign.

Not Your Average Cruise Passenger

The characters in Carnival’s new series of ads don’t seem like typical cruise passengers.

There are the kids who admit to their father that they didn’t want to go on a cruise, the introvert who tagged along for a friend’s birthday, and the husband who avoids posting pictures on social media.

All, of course, end up having an unexpectedly good time during their first cruise — which is the point of the “Choose Fun” campaign.

“I think the new campaign really gives us a call to action, something that our repeat cruisers and loyal Carnival fans can really get behind and see as a mantra,” Duffy said. “But I think it also is an appeal and opportunity for people who have never really considered cruising or who don’t think of themselves as a cruiser to really appreciate and begin to understand the opportunity to choose fun really lives on a Carnival cruise ship.”

In addition to the longer testimonial ads, Carnival is running shorter clips that feature activities available on a cruise. Ads will appear on social media; online platforms including Amazon Video, Hulu, and Roku; and on TV in regional markets including Atlanta, Houston, Dallas, and Los Angeles.

Duffy said that unlike other campaigns, “Choose Fun” is trying to show activities that travelers might already enjoy and show that they can be done on a cruise.

“Many of these things that you love to do or that you want to do on your vacation are all contained in one spot,” she said.

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Why Consumer Technology Matters — Corporate Travel Innovation Report

Skift

A CES sign outside the Las Vegas Convention Center. Skift

Skift Take: As corporate travel becomes more consumer-oriented, leaders should consider the ways travelers will behave following the next wave of transformative technological change.

— Andrew Sheivachman

I attended CES in Las Vegas this week, and couldn’t help but think about what corporate travel should learn as big travel management companies transform into technology-focused service organizations.

As smartphones become connected to smart speakers and devices around the home, via digital voice-powered assistant technology, travelers will want to access their travel information and even place bookings regardless of what device they use. Even toothbrushes and showers are going to incorporate artificial intelligence soon. It’s only a matter of time until a business traveler asks their toaster what time their flight is and expects the right answer.

It will take a few years for the Internet of Things to really saturate the commercial market, but it’s going to happen. I muse on the takeaways for corporate travel, and the travel industry at large, in a pair of stories below.

— Andrew Sheivachman, Business Travel Editor

Business of Buying

Corporate Travel Can’t Afford to Miss the Next Wave of Consumer Technology: Consumer technology is undergoing a transformation, powered by artificial intelligence and voice commands. Corporations should pay attention to how their travelers’ behavior shifts in order to stay in front of upcoming trends.

The Airport of the Future May Evolve From Transport Hub to Attraction: Airport architects are busy rethinking the terminal experience, and that’s a good thing. But don’t expect any major changes, at least not soon. Instead, travelers will get incremental improvements.

Airlines Turn to Private Messaging to Avoid Social Media Blowups: Airlines and their passengers are embracing private messaging to resolve issues. That’s good for customers, who don’t need to wait on hold for an agent. And it’s helpful for airlines too, because agents can respond to more than one message at a time.

Disruption + Innovation

Chrome River Raises $35 Million for Expense Software: It would be bad if Chrome River spent all of its newfound money on travel and entertainment. But at least it would be able to expense it efficiently if it did.

TripAdvisor Reorganizes Business Units in Attempt to Revive Its Prospects: It is widely acknowledged that TripAdvisor needed to reinvigorate its business and product lines after a difficult transition to hotel metasearch and instant booking. The company believes the new internal structure will give its units that enhanced focus.

A New Data Era Will Reshape the Travel Industry: Consumer behavior will shift in drastic ways in coming years, powered by a new generation of devices with ridiculously fast data connections and the mainstreaming of gadgets that have been niche products until now.

SUBSCRIBE

Skift Business Travel Editor Andrew Sheivachman [as@skift.com] curates the Skift Corporate Travel Innovation Report. Skift emails the newsletter every Thursday.

Subscribe to Skift’s Free Corporate Travel Innovation Report

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Virgin America Is No Longer an Airline in the Government’s Eyes

Virgin America

With fleetwide Wi-Fi by 2009, Virgin America was ahead of the in-flight Internet trend. The airline no longer has its own operating certificate. Virgin America

Skift Take: Slowly, Virgin America is disappearing. That’s bad news for its loyal customers in San Francisco, Los Angeles and other parts of the country. But it’s necessary. Virgin America was too small as a stand-alone carrier to compete with the nation’s four largest carriers.

— Brian Sumers

Virgin America, the upstart California airline that probably did more than any U.S. carrier except JetBlue Airways to improve the overall passenger experience over the past decade, no longer exists — at least not officially.

Alaska Airlines, its owner since December 2016, said Thursday it has obtained a single operating certificate from the Federal Aviation Administration. For U.S. regulators, Alaska and Virgin America are one — even if plenty of planes still say Virgin America on them.

It’s the latest in a series of changes required in an airline merger. Today, even with the single operating certificate, passengers still check-in with one airline or the other, and they use the website or app from the airline they’re flying. But by April, Alaska expects to have a single reservations system, and to customers, the airlines will be one — more or less.

It will take longer to paint the planes, retrofit Virgin America’s interiors to match Alaska’s, and co-locate gates and check-in areas at airports. But eventually, many of the touches that made Virgin America special will disappear, including the white leather business class seats, and in-seat television screens. Alaska will keep Virgin America’s snazzy mood lighting, though it’ll be a blue hue rather than red. Alaska also is upgrading all planes across both fleets, adding improved Wi-Fi and better in-flight entertainment, though it will be streamed to passenger’s own devices, rather than embedded in the seat.

Virgin America has its loyalists in San Francisco, its largest city; Los Angeles, a focus airport, and elsewhere in the U.S. But it was never much of a threat to the four largest U.S. airlines — American Airlines, Southwest Airlines, United Airlines and Delta Air Lines — that dominate most of the nation’s air routes.

With only about 60 planes at its peak, Virgin America was too small to offer the breadth of flights most frequent flyers expect. Business travelers often want to fly where they want, when they want, nonstop. One or two flights a day from L.A. to Chicago didn’t entice them.

Better Product

But from a product perspective, Virgin America almost certainly pushed major U.S. airlines to improve. A decade ago, on lucrative routes from New York to San Francisco and Los Angeles, Virgin America offered a more comfortable business class seat and better amenities than most big airlines. Since then, American, Delta and United have improved their seats and food, while Virgin America’s transcontinental product changed little.

Virgin America was also the first U.S. airline to have W-iFi on every plane, installing Gogo fleetwide by 2009, celebrating with an air-to-ground Skype video call with Oprah Winfrey. It helped that its fleet was tiny — at the time Virgin America had only 100 daily flights — but it still showed customers the airline understood what the modern traveler wanted. In 2009, major U.S. airlines had connected only a small fraction of planes, and some executives thought Wi-Fi might be a passing fad.

Virgin America was also the first U.S. carrier to sell premium economy class, rather than just seats with extra legroom. Technically, it wasn’t a standalone class because Virgin America took the bulkhead rows and exit rows and called them Main Cabin Select. But it came with priority security screening and free food and drinks — something no other airline offered. Today, Delta’s Comfort Plus product also includes free food and drinks.

Then there was Virgin America’s frequent flyer program. It may not have been the most lucrative program for flyers, but its structure was slightly forward-leaning. Virgin America allotted points based on how much money a traveler spent, not the flight’s distance. In recent years, American, Delta and United have all copied this idea, which had been earlier been used by Southwest and JetBlue.

Interestingly, Alaska still allots miles based on distance, and the combined airline has gone with the distance approach.

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Argentine Airport Operator Plans IPO to Fund Expansion

Corporación América

Corporación América controls the new international airport in Natal, Brazil. The company is preparing an initial public offering. Corporación América

Skift Take: It’s a foreign concept in the United States, where local bureaucrats generally run airports. But elsewhere, airports tend to be privately managed. Often that makes them more nimble. They can also be profitable, as this proposed IPO suggests.

— Brian Sumers

When the bell sounds in New York later this month for the initial public offering of Eduardo Eurnekian’s airport business, the man ringing it will probably be his nephew Martin Eurnekian.

It will be more than a symbolic move. The share sale represents a key milestone in the Argentine mogul’s long and varied career, as he passes the baton of his billion-dollar business to his chosen successor.

“I am doing this IPO, but that doesn’t mean I’m in charge — the one who manages the airports is my nephew,” Eduardo Eurnekian said during an interview in his Buenos Aires office. “I will oversee this deal this month, and my career in airports will be complete.”

Eurnekian’s closely held Corporacion America Airports SA, which owns concessions to operate 51 airports worldwide, is looking to sell as much as $750 million of shares in the last week of January. It will be the first IPO by an Argentine company this year.

It will also mark the start of a new phase for Eurnekian, though the 85-year-old entrepreneur — who says he still swims and practices yoga every day — won’t be retiring out of sight. The son of Armenian immigrants who fled the genocide in the early 20th century said that handing over day-to-day operations will free him up to explore new areas of business.

Putin, Maradona

In an interview in his office, surrounded by photographs of himself with a spectrum of people he’s met throughout his career — from Russian President Vladimir Putin to soccer star Diego Maradona, Pope Francis and Buenos Aires province Governor Maria Eugenia Vidal — Eurnekian spoke of his interest in biotechnology, cattle, agriculture and renewable energies.

Eurnekian knows change. His Palermo neighborhood office is located in what was once his textile factory. Later it became his media headquarters, when he left the clothing sector to reign in cable television, before the airport business propelled him to his greatest success. That’s still where he sees the most room for growth.

The key to his success in the sector, Eurnekian said, was finding a niche in the operation of medium-sized airports that didn’t appeal to larger rivals such as Aeroports de Paris, LHR Airports Ltd. and Fraport Frankfurt Airport Services Worldwide.

Eurnekian said he believes more profits can be squeezed from the airports he already operates by either expanding their capacity or providing retail and entertainment options for travelers. That could mean adding stores, restaurants and other services, as the company plans to do at Ezeiza airport in Buenos Aires, or by increasing their size through building new runways, as the company plans to do in Florence, Italy.

“The future will be airports with more space, such as in Mumbai, or airports with more services, such as is the case of Florence, where we will add more hectares in order to incorporate services, shopping malls and offices,” he said. “Today air passengers are growing at double the rate of gross domestic product, and in some regions as much as three times — and I charge by the passenger.”

The core of Eurnekian’s business that generated $1.2 billion in the first nine months of 2017 is in Argentina. Aeropuertos Argentina operates 36 airports in the country, handling more than 90 percent of the country’s total passenger traffic.

Healing Rift

Eurnekian named nephew Martin, 39, chairman of Aeropuertos in April, replacing Rafael Bielsa, a former foreign minister under ex-President Cristina Fernandez de Kirchner. Transport Minister Guillermo Dietrich acknowledged in November that Martin’s appointment helped heal a rift with President Mauricio Macri’s government and persuaded Macri not to exercise an option to terminate the concession early.

Eurnekian was initially skeptical of Macri’s reform agenda. Now he’s more optimistic, saying he thinks Argentina has great potential even if he believes dismantling 80 years of protectionist policies will take some time.

“We isolated ourselves and wanted to believe we were the best, and the day we took our head out of the sand we realized we’d fallen from 12th place to 80th,” he said. “This government is a step forward. There are people that have another vision of the world, that are looking for competitiveness. They haven’t still given the big step a liberal would like to see, but they’re in the right path.”

Still, Eurnekian says the reforms Macri is carrying out are more tepid than those of Brazil, its largest trade partner. He hopes the changes Brazil is implementing will push Argentina to be bolder in its attempts to make the economy more competitive.

‘Trust Me’

At least a portion of the proceeds of the Corporacion America share sale will be used to lead the expansion of the Buenos Aires airports, including building hotels. Eurnekian looks to add two in Ezeiza, the international hub that handled 7.4 million passengers in the first nine-months of 2017 and 9.8 million passengers in 2016. He also sees one hotel in Buenos Aires city airport, which will likely gain terrain by advancing over the estuary known as Rio de la Plata.

Bank of America Corp., Oppenheimer & Co., Goldman Sachs Group Inc. and Citigroup Inc. were hired by Corporacion America to help raise at least $500 million. Pension funds are the largest investors for airport stocks as flying becomes safer and cheaper, Eurnekian said.

“They buy the stocks because they trust me,” he said. “I don’t want to sound pretentious, but if they didn’t trust me, they wouldn’t be waiting with so much anticipation for the share sale.”

©2018 Bloomberg L.P.

This article was written by Charlie Devereux, Carolina Millan and Pablo Gonzalez from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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Delta Finds Passengers Paying for Upgrades With Their Own Money Is Big Business

Delta Air Lines

Delta Air Lines is trying to get business travelers to use their own money or miles to upgrade. Pictured is first class on a Boeing 737. Delta Air Lines

Skift Take: You don’t expect corporate travelers to dip into their own pockets on business trips. But certain travelers love to fly in premium cabins, and that’s good news for Delta’s revenues, which were already strong.

— Brian Sumers

Under the old rewards program paradigm, regular flyers learned that if they remained loyal to one airline and flew enough miles, they would earn what many road warriors say is business travel’s top perk— free first class upgrades.

But for all but the most big-spending corporate customers, that benefit has mostly disappeared. Now, on many airlines, and on popular routes, if business travelers want first class seats, they must buy them.

It turns out, at least according to Delta Air Lines, they’re actually forking over the cash. And with many barred by their employers from using corporate money for business class, first class or even premium economy seats, business travelers often pay out of pocket, Delta President Glen Hauenstein told investors Thursday.

Up-selling customers who once might have sat up front for free is becoming big business for the airline. Speaking on Delta’s fourth quarter earnings call, Hauenstein said the carrier made it easier for travelers to buy upgrades after purchase in mid-2017, and earned an extra nearly $100 million in the first six months it offered the program.

Two Receipts Can Help Road Warriors

If a passenger buys an upgrade on Delta’s website after buying a ticket, the system can generate two receipts — the first for the ticket, which the customer can submit for reimbursement, and the second for the upgrade. By this summer, Hauenstein said, customers will be able to buy post-purchase upgrades not only with cash, but also with miles. That functionality should go live just after Delta introduces premium economy on Europe routes.

Most airlines permit customers to buy up to first class and premium economy after buying a ticket. But except for United Airlines, which has been aggressive on its website and mobile app with up-sells, carriers often require customers to call to make changes, and relatively few customers even know it’s possible. For the average customer, making a purchase on the Web or through an app is easier, and for Delta, that’s driving sales.

“If you think about how that opens the aperture to control your travel experience for people who want to buy those premium products and services, we think that’s going to be key to our ability to drive revenues moving forward,” Hauenstein told investors.

Good Timing

Delta is increasing its up-sell functionality at an opportune time. The airline is replacing older domestic aircraft like the MD88 with modern Airbus A321s with more premium seats, and it would prefer not to give them away for free. This year, Hauenstein said, Delta’s fleet will have 5 percent more premium seats than before.

Today’s up-sell functionality works fine, he said, but in the future, Delta might want to personalize offers to customers. “As we continue to work on our digital evolution, we could see expanding that so that we can actually market to you,” Hauenstein said.

For Delta, Hauenstein said, the goal is to avoid “driving to the bottom” by selling an airline seat as a “commodity.” Instead, it wants to attract “people who are discerning who want to buy premiums and products and services.”

At the Skift Global Forum in New York in September, Delta CEO Ed Bastian said the airline sells about half of its domestic first class seats, up from roughly 15 percent a few years ago. On routes where business travelers want free upgrades most — such as New York to Los Angeles — the paid load factor likely is much higher.

At the forum, Bastian said Delta must try to sell the seats, rather than give them away.

“Any business where you give the majority of your best product away for free doesn’t work,” he said.

Impressive Quarter

Delta’s premium positioning, which began just after it merged with Northwest Airlines a decade ago, continues to pay dividends, with Hauenstein saying the carrier commands a domestic revenue premium of 117 percent over the U.S. airline average.

On Thursday, Delta reported fourth quarter adjusted pre-tax income of $1 billion, after accounting for a December power outage at its Atlanta hub and the effects from Winter Storm Benji. Delta said fallout from the two unexpected problems cost $60 million.

For full-year 2017, Delta earned adjusted pre-tax income of $5.5 billion, $621 million less than in 2016.

While Delta’s business is strong, the airline’s fuel costs are rising. In the fourth quarter, Delta said it paid $349 million more for fuel that during the same period last year, and it expects fuel prices to rise further. For the first quarter, Delta estimates it will pay a net cost between $2.05 and $2.10 for jet fuel, up from $1.93 in the fourth quarter.

Higher fuel costs worry some analysts, but Delta CEO Bastian said he is not concerned, and he doesn’t see fuel prices skyrocketing this year, as they did in 2008.

“As an industry, we have demonstrated our ability to cover higher fuel prices,” he said. “Don’t forget we were profitable with fuel well over $100 a barrel. And I think over the medium term if the new level is at $70, the industry will adjust reasonably quickly.”

With fuel prices unlikely to spike, Delta has reason to be bullish. On the call, Bastian said “demand is the healthiest we’ve seen in years,” with strength not only in the United States, where business has been highly profitable for several years, but also abroad.

In every geographical area, including Latin America, where business has lagged amid economic woes in Argentina and Brazil, Delta reported a revenue uptick in the fourth quarter, year-over-year.

“When you read all the headlines about this synchronized global economic expansion that’s kind of what we’re seeing manifesting itself,” Hauenstein said.

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Smart Robots at CES for Hotels or Travelers Weren’t Especially Genius

YouTube

A screengrab from LG’s press conference at CES 2018 in which the company touted robots that might be useful in hospitality. Pictured is David VanderWaal, LG’s head of marketing in the U.S. YouTube

Skift Take: Despite some progress, it doesn’t seem like robotics will disrupt travel and hospitality any time soon. The human element is too important for hotels, and travelers don’t need unnecessary equipment to make their trips even more complicated.

— Andrew Sheivachman

For years, technology companies have been looking to disrupt the hospitality space with robotics technology that can replace human workers for tasks like carting luggage to a guest’s room or taking linens to the laundry room.

At this year’s CES 2018 event in Las Vegas, there were many examples of robots with the potential to disrupt the travel and hospitality sectors. None of them seem remotely close, however, to making a real impact.

Perhaps the most high-profile hospitality play came South Korean technology company LG, which featured in a press conference a series of robots aimed at disrupting hospitality. The company first showed off its Cloi robot onstage to disastrous results; the device wouldn’t respond to David VanderWaal, LG’s head of marketing in the U.S., leading him to joke that Cloi doesn’t like him.

While Cloi is aimed at the consumer market, it’s easy to see how similar technology could end up at hotel front desks. In person on the show floor, the device seemed cute even though viewers couldn’t interact with it using voice commands.

LG also showed off three other robots that are aimed squarely at hospitality: a Porter Robot, which can bring a guests’ bags to their room; a Serving Robot, to brings food and drinks to guests at a restaurant or lounge, and a Shopping Cart Robot, which can scan items and carry them along.

All of these prototypes, however, are just different versions of a bin with wheels. It’s hard to see how hotels brands with a strong focus on guest experience and service would embrace these devices. It’s also unclear how these devices would play with a hotel’s technology systems. How would the Porter Robot, for instance, interface with a hotel’s housekeeping systems?

In the Eureka Park section of the CES show floor, which is focused primarily on startup innovation, there were many other examples of robots geared primarily toward consumers.

Buddy the Robot, a sort of tablet on wheels with an adorable expression, seems like it would make sense for brands like Yotel to experiment with in a lounge or lobby environment (it rolled up to this reporter on it’s own, smiled, and told me it was a big boy, which is not exactly true).

There were also a variety of either tablets with arms geared for customer service, or rolling robots equipped with iPads. None seemed particularly groundbreaking, and most were more than a little creepy.

Smart luggage was also on display across the event, with suitcases that use cameras to follow you around and respond to gestures. One prototype from a Chinese company kept falling over, so it seems the technology isn’t read for prime time despite originally appearing a few years ago.

There were also examples of rolling suitcases with motors built in so users can sit on their luggage and ride around in it. It’s hard to see how any of this technology will resonate with anyone but the most adventurous travelers, especially given the recent ban on luggage with battery packs built in.

Also, who wants to risk their $500 robotic suitcase getting smashed up after being forced to gate check their bag?

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U.S. Airlines Should Ride High in 2018 Thanks to Improved Pricing Power

Delta Air Lines

Delta Air Lines could be the best performing airline stock in 2018, with analysts estimating it could rise as much as 20 percent. Delta Air Lines

Skift Take: On paper, U.S. airlines are poised for a profitable 2018. But few industries are as susceptible to outside shocks as airlines. If there’s a major terrorist attack in the United States, or if businesses unexpectedly pull back on travel, it will quickly become a tough year.

— Brian Sumers

Airlines are poised for a third year of stock gains even after a jump in jet-fuel prices.

Delta Air Lines Inc. and Alaska Air Group Inc. are projected to rise 20 percent or more this year, based on the average of analyst estimates compiled by Bloomberg. American Airlines Group Inc., Southwest Airlines Co. and United Continental Holdings Inc. are set for smaller gains.

The industry, which begins reporting earnings with Delta Thursday, is benefiting from stepped-up pricing power, steady economic growth and a boost from the U.S. tax overhaul. A recent increase in non-fuel costs is showing signs of slowing. Even the rise in oil prices won’t be all bad if it prompts airlines to rein in capacity expansion and focus on raising fares — which would be bad news for passengers but a boon for investors.

“We are optimistic about the 2018 outlook for the airlines as fares are trending higher due to rising fuel costs, and non-fuel unit cost growth seems to be reverting to historical levels,” Helane Becker, an analyst at Cowen & Co., said in a note to clients this week. “The airlines should benefit from the change in tax law.”

Since labor and fuel typically are airlines’ largest expenses, higher energy prices tend to make airlines more cautious about growth.

Carriers including American and Delta have slowed the expansion of flights and seats in recent years to let demand catch up with supply — and make it easier to charge more for tickets. Fare wars, which had dogged the industry for two years and flared up again last summer, abated in the second half of 2017.

Passenger revenue from each seat flown a mile, a benchmark gauge of pricing power, is likely to grow 2 percent to 3 percent for the foreseeable future, said Darryl Genovesi, a UBS Group AG analyst. Investors will get an update on the industry’s 2018 expectations when Delta, the No. 2 U.S. carrier, reports earnings and discusses its outlook Thursday.

“We continue to believe that the airlines’ stocks work when they are able to demonstrate pricing power,” Genovesi said.

There are still risks capable of denting or reversing potential stock gains. Labor costs have been rising as carriers have had to pay up to reach agreements with pilots, flight attendants and other work groups. Some airlines also face major airport renovations, new aircraft and technology updates.

“Many airlines really need to get their act together here,” Hunter Keay, a Wolfe Research analyst, said in a note last month to investors.

The S&P 500 Airlines Index, which includes the five largest U.S. carriers, rose 11 percent in 2017. While that was its second straight yearly increase, the advance trailed the 19 percent gain for the broader S&P 500 Index. This year through Tuesday, the airline gauge has slipped 2.4 percent while the S&P has climbed 2.9 percent.

Carriers also have relatively low stock valuations. Airline share prices are only 12 times earnings, according to the industry index. The S&P 500 average is 23. Railroads get 25.

That’s been a sore spot for airline bosses such as American’s Doug Parker and Delta’s Ed Bastian. But they still need to show that their companies, with their history of bankruptcies and boom-bust cycles, can withstand economic downturns and increases in fuel costs. With benchmark U.S. oil prices at a three-year high, investors will be watching closely at the impact on profits.

An added boost is likely from U.S. tax changes. Southwest, the only U.S. taxpayer among the four largest carriers, already has said it will invest savings from lower tax rates, in part by purchasing planes, hiring workers and boosting benefits for current employees.

Airlines that aren’t currently paying taxes will win, too. American, Delta and United don’t pay cash federal taxes because of billions of dollars in past operating losses that they use to offset taxable income. However, they will see an immediate boost to their per-share earnings because those earnings reflect “book” tax rates, even if the airlines don’t currently pay cash, Raymond James Financial analyst Savanthi Syth said.

©2018 Bloomberg L.P.

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

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China Shuts Down Marriott’s Website and Mobile App Over Tibet Gaffe

Marriott

Marriott is being punished by Chinese authorities for identifying Taiwan, Tibet, and other Chinese-claimed regions as their own countries. Pictured is a suite at the Shanghai Marriott Pudong East as seen on May 13, 2016. Marriott

Skift Take: This incident is a tough reminder for Marriott and many other global companies that when it comes to China, especially, everything is politics.

— Deanna Ting

Marriott’s Chinese website and mobile app are being shut down temporarily at the request of Chinese government officials in Shanghai as punishment for the company listing Chinese-claimed regions Tibet, Hong Kong, Macau, and Taiwan as countries in a recent Mandarin-language customer survey sent to Marriott loyalty members.

In a statement issued on January 11, Marriott CEO Arne Sorenson said “In China, at the request of the Government, we have taken down our Chinese websites and apps to conduct a full review and audit.” He later added, “Upon completion of a full investigation into how both incidents happened, we will be taking the necessary disciplinary action with respect to the individuals involved, which could include termination, changing our approval and review procedures for online content, reviewing our customer feedback channels, and enhancing training to ensure these situations don’t happen again. We are also working closely and co-operating with the relevant Government authorities in China.”

The shutdown of Marriott’s Chinese website and app has a direct impact on the company’s ability to gather bookings from the world’s largest travel market, the importance of which is not lost on global travel brands. Chinese consumers, in particular, rely heavily on mobile applications to do all of their commercial transactions, including booking travel.

The timing of this also takes place at a time when many Chinese travelers are making plans to travel for the start of the upcoming Lunar New Year, which takes place on February 16. Chinese New Year is often referred to as the world’s largest human migration because hundreds of millions of Chinese travelers will return home to celebrate the holiday with family.

Marriott has expressed a deep-seated interest in growing its market share in China. In August, the company formed a partnership with Alibaba Group, often thought of as the “Amazon of China,” to promote Marriott’s hotels to Chinese travelers.

Prior to the shutdown of its Chinese website, the Bethesda, Maryland-based company also issued an apology to the Chinese government, saying: “Marriott International respects the sovereignty and territorial integrity of China. We don’t support separatist groups that subvert the sovereignty and territorial integrity of China. We sincerely apologize for any actions that may have suggested otherwise.”

That apology was also tweeted by the company on its Marriott Rewards Twitter account on January 11:

China claims to have sovereignty on all four regions that were listed separately on the Marriott questionnaire: Macau and Hong Kong are identified by the Chinese government as “special administrative regions.” Taiwan governs itself and holds its own democratic elections.

Marriott’s website and mobile app were specifically shut down by the Shanghai Cyberspace Administration and they issued a statement asking Marriott to “take down all relevant content, conduct a thorough check on all contents it posted on its website and online application to prevent anything similar, and address the public’s concern in a timely fashion to eliminate a negative impact.”

An investigation into the incident is also being launched by local Shanghainese authorities as a possible violation of China’s cybersecurity and advertisement laws. The shutdown is expected to last for around a week. Marriott has not yet said how this shutdown or the pending investigation could impact its future business in China, including its partnership with Alibaba Group.

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Ski Resort Operator Compagnie des Alpes Buys Travelfactory

Compagnie des Alpes

Val d’Isère is one the French resorts best known to foreign skiers and is owned by Compagnie des Alpes, which has now taken a majority stake in online booking group Travelfactory. Compagnie des Alpes

Skift Take: The world’s biggest operator of ski resorts, Compagnie des Alpes, wants to fend off the threat of third-party distribution by offering consumers a one-stop shop for booking all parts of a trip. Leave it to the French to lead the resistance.

— Sean O’Neill

French resort operator Compagnie des Alpes (CDA) has taken a 73 percent equity stake in Travelfactory, which offers vacation rentals and group ski trips via several brands, such as Travelski.

The value of the transaction was not disclosed. The deal enables the company to take full control within four years.

Last year, Travelfactory had sales of about $41 million, or about €35 million, the company said. It processed about $100 million, or €85 million, in transactions, and employed 130 people.

Founded in 2000, Travelfactory has three main brands: Travelski, an online agency that specializes in ski holidays; Locatour, a tour operator; and Golden Voyages, a millennial-focused agency.

Vertical Lift

Ski operators fear that online travel distribution is cutting into their profit margins and separating their relationship with consumers. This deal is an example of an effort by operators to vertically integrate the online booking of tour packages, equipment rentals, and lodging into one offering they control.

Dominique Marcel, Chairman and CEO of CDA, said: “The acquisition of Travelfactory will help us accelerate our development in the integrated distribution of ski holidays, which is in line with our ambition of being able to act directly on the resort occupancy rate.”

Travelfactory also runs other online tour operator and ski rental brands and it has 13 real estate agencies in ski resorts in France, which operate under the brand names Ski et Soleil and Alpes For You.

CDA is the largest operator of ski resorts worldwide, with an emphasis on locations in the French Alps.

It reported total revenues of $910 million, or €762 million, in the year ending September 30, 2017.

Separately, it is looking to draw more business from Chinese tourists and to tap into China’s growing domestic ski tourism. It said it is in talks with Chinese investment group Fosun, which already controls French holiday group Club Med, to be a potential co-owner of Travelfactory and to invest in other joint ventures, too.

Yet French resort areas are concerned about foreign investment in their communities, which has led to political pressure against such deals.

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