Momondo CEO Exits Company as Acquisition by Kayak Closes

Skift

Momondo Group CEO Hugo Burge, left, speaks with Skift’s Luke Bujarski at Skift Forum Europe in London in April. Burge announced Monday morning he has stepped down from the role as the acquisition of Momondo by Priceline Group closed. Skift

Skift Take: It’s surprising that Momondo Group CEO Hugo Burge would depart the moment the acquisition of his brands by Priceline Group would close. But Kayak’s promise of boosted marketing spend suggests the Momondo and Cheapflight brands will live on.

— Sean O’Neill

It’s a meeting of rivals who are suddenly now on the same side. The product teams of Kayak and Momondo, two long-time price-comparison search services, are meeting for the first time on Monday.

There’s a notable absence at the meeting, though. The biggest immediate change is that longtime Momondo Group CEO Hugo Burge stepped down Monday morning. In a comment on Twitter, he says: “I’m rooting for our team, now part of Kayak, to carry on the fight for better travel search.”

The two sides had been unable to meet until regulators approved parent company Priceline Group’s acquisition of UK-based Momondo for about $550 million. Watchdogs approved the deal late last week.

The UK-based company will become part of the Kayak operation, which the Priceline Group acquired in 2013 for $1.8 billion.

Skift exclusively reported in January that Kayak-Momondo deal talks were underway.

Kayak chief executive Steve Hafner says in an interview that the Momondo Group brands will report to him but will retain their offices in the UK, Copenhagen, and Boston.

Hafner hopes Momondo will help the operation’s push into new markets. To achieve that, he expects to increase the marketing dollars that Momondo Group was already spending to promote its brands.

The spending will happen in markets where Momondo and Cheapflights — a London-based metasearch engine that is part of Momondo Group — already have strong brand recognition, such as Momondo’s reputation in Scandinavia and Russia and Cheapflights’ robust performance in the UK.

The company will likely decrease the marketing on those brands in places where Kayak has shown greater traction, such as France and Germany, Hafner says.

Hafner offered a few rationales for the deal. The main one, he says, is to expand Priceline Group’s geographic scope by making its services available in more markets and to improve the collective groups’ products.

On the product front, he anticipates a three-month effort to combine the groups’ back-end technology. He expects the various teams will learn from each other about the best practices in speed, inventory, and user interfaces.

Another aim is to “provide more commercial value to travel providers and our online travel agency partners,” says Hafner. 

He adds that he presumes some employees will be let go to avoid redundant efforts in the combined operation but that such cost savings were not what was motivating the logic of the deal.

“Meta-search or limited-search”?

Recently there has been grousing from some smaller online travel players about the difficulty of breaking into so-called core search, or the main listings that consumers fetch when they check for prices on flights, hotels, and other travel products.

While Kayak and Momondo have each recently touted that they aggregate data “from hundreds of services,” trade insiders point out there may be more than 50 smaller online travel sites with unique inventory that don’t make the cut to be included in Kayak or Momondo listings.

Some of these companies have recently said to Skift anonymously that they had been told by Kayak and Momondo that if they advertised on the various brands for a few years, and if they “performed well”, they would be introduced to the business development teams at those companies for consideration to be included in the core search results of Kayak, Momondo, and Cheapflights.

But these small players say they’ve been doing advertising for a few years now yet haven’t gotten into core search results via an API (application programming interface, or a method used for retrieving data) — or via front-door comparison check boxes or other prominent placements.

While Momondo and Kayak have had different thresholds for judging which companies to include in their results, Hafner says to Skift there will be “no change in the dimension of the scope of who gets included.”

He says: “We want to work with providers that can support our volume of queries on their systems. We only exclude companies that fail to meet one or our criteria, such as providing accurate pricing in real-time, which is hard. When you hear grousing, it’s from companies that don’t meet that and other key criteria.”

So why does Kayak (and now Momondo) take the online travel player money and posts advertisements for their services if Kayak doesn’t think they’re good enough to include in search results?

Hafner is unequivocal in his response: “The ads don’t show real-time pricing. A lot of small providers say they have, say, the Hyatt Regency in such-and-such a destination for $109 but when you click through it doesn’t include a $25 service fee or some other trick. We absolutely want to provide a consistent apples-to-apples, fast, transparent set of pricing for our customers.”

Merger of “near equals” in Europe

As for the acquisition, Hafner doesn’t have much more to add to explain the strategy for managing several competing brands, other than the mention of playing to geographic strengths.

“We’ll know more once the product teams have evaluated the relative strengths and weaknesses of all sides,” he says.

Glenn Fogel, chief executive of the Priceline Group, says in a statement: “Momondo and Cheapflights are premium brands that have garnered a loyal customer base throughout key markets in Europe.”

Priceline Group executives are said to have been wary of moves by rivals in Europe, such as Chinese travel giant Ctrip expanding with its $1.74 billion acquisition metasearch player Skyscanner as a means to expand Ctrip’s international footprint.

Skyscanner is reporting growth in its hotel sales since the acquisition.

For Burge, Monday’s announcement is the end of a long journey. He joined and invested in London-based Cheapflights in March 2000. He led the acquisition of Copenhagen-based Momondo and became CEO of the combined group in 2011.

In a comment on LinkedIn, he says: “I have so many wonderful memories and a warm sense of pride as I watch the brands become part of something bigger, stronger and even more able to carry on the fight for better travel search.”

He tells Skift in a statement that he plans to keep focusing on Howzat Partners, the investment fund he co-founded that invests in early-stage digital businesses.

“It is going great guns, so I’ll spend a bit more time with David Soskin and Sascha Hausmann on that,” he says. “But otherwise I’m taking a brief break.”

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Disney’s Once-Futuristic Epcot Is Getting a Modern Overhaul

Disney Parks and Resorts

Disney announced changes for Epcot at D23 Expo this month. The outside of the upcoming Guardians of the Galaxy attraction is shown in this rendering. Disney Parks and Resorts

Skift Take: Epcot, the theme park that once represented Walt Disney’s vision of an experimental future, is about to get a transformation that will bring it more in line with the parent company’s current strategy.

— Hannah Sampson

There was a time when Epcot, the second piece of Florida’s sprawling Walt Disney World resort, functioned as a source for slow-paced education about energy, technology, farming, and world cultures. Speedy thrills were for other lands.

In more recent years, the park, which opened in 1982, has added more adventurous (and crowd-generating) components: the speedy Test Track; the multi-sensory Soarin’; the blastoff-simulating Mission: Space; the wildly popular movie-based Frozen Ever After.

But The Walt Disney Company still wants more for Epcot as it pours money into upgrading its theme parks around the world — and especially in Orlando, where competition from smaller rival Universal Studios have proven fierce in the years following the addition of Harry Potter attractions.

“If you look at what Disney’s done since Universal opened Wizarding World in 2010, they focused on each of their four parks in succession,” said Robert Niles, founder and editor  of Theme Park Insider. “Magic Kingdom, then Animal Kingdom, then Hollywood Studios has been getting the most work… It’s Epcot’s turn now. At some point, they were going to get to Epcot.”

Earlier this month, at the fan convention D23 Expo in Anaheim, California, Disney Parks and Resorts Chairman Bob Chapek laid out the plans, meant to shift Epcot to a heavier-trafficked, family-friendlier, more-branded destination. Disney has not put a price tag on the changes at Epcot; Chapek said teams are working to finish in time for the 50th anniversary of Walt Disney World in 2021.

“Work of this magnitude obviously is going to take some time,” he said.

The new additions include: a new ride based on Remy the rat chef of the Pixar film Ratatouille, patterned after the popular version at Disneyland Paris; renovations and a facelift to the front part of the park, known as Future World; a new film for the China section; a new space-themed restaurant next to an updated Mission: Space; and, biggest of all, a major attraction based on the blockbuster Guardians of the Galaxy films.

“Our work on the park is centered around a few guiding principles,” Chapek said. “We want to keep it true to the original vision while making it more timeless, more relevant, more family, and more Disney.”

The family element seems especially important, especially when it comes to a park beloved by locals for its selection of beers and annual food-and-drink festivals. Chapek, who hinted at an upcoming “major transformation” at the park in November, said the company is taking the consideration of families with young children especially seriously.

“They love Epcot,” he said. “But they want it to have a litle bit more of that Disney wow factor.”

Experimental Prototype Community of Tomorrow

The germ of the idea that became Epcot started with founder Walt Disney, who wanted to build an actual futuristic city, according to D23, Disney’s official fan club. He came up with the term Experimental Prototype Community of Tomorrow in 1966 and discussed the concepts in a film that year. But he died at the end of that year, and the company went on to open Magic Kingdom in 1971.

EPCOT Center — a theme park rather than livable city because “it could not be both a showplace and a place to live,” the official history says — followed in 1982 at a cost of around $1 billion.

But the park, which later changed its name to Epcot, held onto some of those ideas about experimentation. It boasted two parts: Future World, with attractions centered around communication, energy, motion, and agriculture,  and World Showcase, with sections devoted to nine countries.

“What EPCOT is is an exceptionally well-done, very different, World’s Fair,” the Christian Science Monitor wrote in a story about the opening.

“It is a world of improbable cleanliness and astonishing architecture, a world of such odd sights as a million-pound silver sphere, looking like a giant golf ball, poised on four supports so that you can can walk underneath; waterfalls that flow uphill; performing vegetables; and animated humanoids so lifelike that one man commented, ‘If I were an actor, I’d be real worried,’” the story said.

Tom Fitzgerald, a creative executive at Walt Disney Imagineering who worked on the original park, is also leading the update. During the announcement this month, he described Epcot as a place where “the real becomes fantastic and the fantastic becomes real.”

“Epcot has always been, from day one, an optimistic celebration of the real world brought to life through the magic of Disney,” he said. “It’s really kind of a living showcase of the world we have created and the world we continue to create together.”

The Age Factor

But observers agree that the living showcase is showing its age.

“Epcot has needed rehabilitation now for a long time,” said Dennis Speigel, president of consulting firm International Theme Park Services. “It was always, from the visitor’s viewpoint, a passive park. People went there to eat and enjoy cultural attractions, but that lost its halo, I think, over the years.”

Test Track, a high-speed car ride, added some excitement — and something fun for older kids and teens — when it opened in 1999. And the park made several adjustments in the years that followed, said Brad Rex, who was Epcot’s vice president from 2001 until 2007.

“Epcot is very popular, and the investments that were made in the five years I was there were critical to its current popularity,” Rex said in an email.

Mission: Space, which simulates a rocket blastoff, opened in 2003, followed by Soarin’, a crowd favorite recently updated to make riders feel like they’re flying amid world monuments and habitats. The Seas with Nemo & Friends, a ride through a real aquarium with animated characters from the movie Finding Nemo, opened in 2007.

“One of the key points of our strategy at the time was to make Epcot ‘Fun and Friendly for Families,’ and that strategy has continued with the addition of Frozen, Soarin’ Around the World redo and expansion, and the new announcements,” said Rex, who is now president and CEO of eHome Counseling Management Partners.

Frozen Ever After, which opened last year, has become the ride with the most requests for FastPasses — the system that lets guests reserve a time in advance to user a shorter line — at Epcot, Chapek said.

“We want to build on that success so that World Showcase celebrates both real countries and the worlds that they inspire,” he said.

Coming Attractions

Bringing in Guardians of the Galaxy, Speigel said, will help attract a wider variety of guests to the park — families and teenagers in addition to the couples who come to stroll, eat, and drink.

“I think they’re trying to blend the product properly,” he said.

And Niles, of Theme Park Insider, said the shift fits in with Disney’s overall strategy.

“What Disney’s announced is a change of direction for the Epcot theme park, but I think it’s a smart one because it helps to bring Epcot more in line with what Disney is today, which is a franchise-driven company,” he said. “It’s not so much into the modernist futuristic kind of technologically idealistic company that it was back in the ‘70s when Epcot was designed and early ‘80s.”

Todays Disney, Niles said, is “a big Hollywood entertainment studio” driven by franchises and intellectual property. After acquiring Pixar, Marvel Comics, and the Star Wars universe, the company has poured significant money into integrating those brands into parks.

“The public wants franchises, it doesn’t necessarily want nonfiction-driven entertainment,” he said. “While there are some fans disappointed by the fact that Disney seems to be moving away from the original intent of Epcot, Disney’s moved away from the original intent of Epcot two or three times already. It will reinvigorate the park.”

Even before the announcements earlier this month, longtime fans of the original Epcot — already heartbroken that the old Maelstrom boat ride in Norway had been replaced by a similar ride built around Frozen’s Anna, Elsa, and Olaf  — were bracing for the worst. The Guardians of the Galaxy coaster will replace Ellen’s Energy Adventure, in the Universe of Energy building.

Some disenchanted fans have started referring to the park as #IPCOT on social media, using the abbreviation for “intellectual property.” The hashtag is not meant as a compliment.

Rex, the former vice president, said such concerns are expected.

“Every time an attraction is replaced, some fans complain,” he said. “However, from my experience, when they go on the new attraction, they are thrilled with the different experience. You have to keep things fresh.”

The Larger Strategy

Among the world’s most-visited theme parks, Epcot ranks sixth, according to the latest global attractions attendance report from the Themed Entertainment Association and the economics practice at engineering firm AECOM.

Last year, 11.7 million people visited the park, a drop of 0.7 percent from the previous year, according to the report. Other Disney parks also saw declines — including the world’s most popular, Magic Kingdom, which saw numbers drop slightly to 20.4 million. Disney noted throughout the year that visitor numbers were down in part due to a new pricing system that charges more for the busiest times; revenues still increased.

The company has also been working to increase attendance at other parks at the Orlando resort, most recently Animal Kingdom. Pandora — The World of Avatar opened earlier this year as part of an effort to turn that park into a full-day experience.

“All the parks have had or are having major additions and it would impact Epcot’s attendance if it were the only park to remain static,” Rex said. “These new attractions will add capacity and spread out demand, which will improve wait times and the overall guest experience.”

And CEO Robert Iger has also said Disney sees great potential in expanding the characters from its movies into its parks.

“Usually when we talk about the studio, we talk about the studio results as it relates to box office and the bottom-line for that business,” he said last year during an earnings call. “But you also have to think about it in terms of how we mine these assets not just in the United States, but globally at our parks and in consumer products.”

Speigel said the driving goal is increasing the number of people who visit the park — and the amount of time they spend at Disney.

“When it comes right down to all of it, what they’re really doing with these facilities is keeping people on property,” he said. “And the longer they can keep them at Epcot now, that’s time they don’t go to Universal.”

More in Store

Even while making a host of announcements, the Disney executives kept some plans under wraps this month.

“This really is just the tip of the iceberg for what we’ve got in store for Epcot,” Chapek said. “Transforming that special park in preparation for Walt Disney World’s 50th anniversary is going to be a very big priority for us.”

Industry watchers had expected to hear an announcement about more countries coming to the World Showcase at the fan event.

“I think they would like to have something to offer South America, given the importance of Brazil to the Walt Disney World market,” Niles said. “All of that comes down to who are they going to get as partners to work with or what kind of IP they can put in.”

As for the park’s future, Rex said he thinks its moving in the right direction.

“I think Walt Disney would be absolutely thrilled to see these new attractions and additions,” he said. “Epcot was designed to continually evolve and be a very diverse park, attractive to everyone—truly a ‘community of tomorrow.’”

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AccorHotels Has a Lot of Work to Do With Onefinestay

Onefinestay

A Onefinestay property in Los Angeles. The company recorded substantial losses again this year. Onefinestay

Skift Take: Onefinestay is a nice idea but like so many other nice ideas it isn’t a profitable one, at least not yet. AccorHotels has a lot of work to do to turn the business around and justify the millions of dollars it has already spent.

— Patrick Whyte

When AccorHotels bought luxury Airbnb rival Onefinestay for $168 million (£117 million) last year it promised massive geographical expansion and tenfold revenue growth over a five-year period.

This now looks mightily ambitious given the current state of the company.

Accounts recently filed at the UK’s Companies House database for Onefinestay (Lifealike Ltd) show that the business is still producing substantial losses under its new owner.

For calendar year 2016, the group’s pre-tax loss loss ballooned by 65 percent to $37.3 (£28.8 million). Turnover grew by 7 percent to $22.3 million (£17.2 million).

The company once again blamed the poor performance on terrorist attacks in Europe, which “resulted in a reduction in trading in Paris and London.”

The directors said: “The group was disproportionally impacted relative to other participants in the travel industry due to the reliance on long haul leisure guests for whom travel is often discretionary and who cancelled or deferred trips due to concerns regarding the security situation in Europe.”

A long road

Even under the guidance of AccorHotels, Onefinestay’s path to profitability looks a long one. Revenue growth has stagnated (see below) and over the past three years the company has only added a handful of new cities.

“My concern is not the actual business idea; I love the business idea of taking a mainstream vacation rent product and putting it into a niche, which is the luxurious sector,” said one travel investor who did not want to be named. “I just don’t understand how somebody can think there’s enough people that actually have deep enough pockets to afford homes that are posted on that website.”

Onefinestay’s potential problems surrounding scalability might be one of the reasons it was bought by a strategic buyer rather than, say, a private equity house. Prior to the acquisition, it attracted $80.9 million over a number of funding rounds.

The investor added: “It was definitely a success story for the investors. It may not have been extreme multiples but it was multiples our industry on average is used to. So I think from that perspective it was a fine deal and I think for a strategic [buyer] it definitely makes probably more sense, but from a pure venture capital/private equity side I could never see how it scaled and brings up the returns we would have an interest in.”

Chris Hemmeter, managing director at Thayer Ventures, also sees the potential benefits Onefinestay might bring to AccorHotels in the long run.

“Onefinestay is an interesting model and I do think they can be profitable or at least accretive to Accor. The challenge for them is all about cost management, which gets easier as volumes scale,” he said via email.

“I also think Accor is thinking creatively about structuring their operational trade area reach in ways that will improve the Onefinestay model,” he said. “Finally, we should anticipate that as Accor integrates the Onefinestay model into their business, they will develop a product roadmap with unanticipated branches, perhaps alternative accommodations branches that are derivatives of the Onefinestay model but also new and highly profitable. Time and talent will tell!”

Changes at the top

Changes have already taken place in the leadership team. Co-founders Demetrios Zoppos and Greg Marsh, who was also the chief executive, left the company following the AccorHotels acquisition.

The company’s accounts note a one-off bonus payment of $6.8 million (£5.2 million) was handed to a director during the year. AccorHotels declined to say which director received the money other than to say the the “payment was part of a departure package.”

When the deal was announced, Marsh told Reuters: “I am re-investing in the company. For me, this is the beginning of a new chapter, not the end of the story,”

Five months later he was gone, replaced by another co-founder of the company, Evan Frank.

Earlier this year, Frank spoke to Skift about expansion plans and the company’s new vacation product.

“Well, look, 2016 was definitely a year of change for Onefinestay. A lot changed. When we think about how the year began and how the year ended, it’s really been a transformational time in a bunch of ways,” he said. “It was a good year.”

Onefinestay’s rivals

The AccorHotels purchase of Onefinestay was followed by a number of deals in the luxury alternative accommodation space.

Airbnb paid between $200 million and $300 million for its one slice of the upscale market in the form of Montreal-based Luxury Retreats and AccorHotels further increased its foothold in the sector by buying Travel Keys for an undisclosed amount.

Without published accounts, we can’t know for sure whether these two companies are loss-making like Onefinestay or profitable (some sources suggest Luxury Retreats is in the black).

A spokesperson for AccorHotels said: “As said at the time of the acquisition in May 2016, we plan to bring Onefinestay to breakeven in 2019.”

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Singapore’s Old-School Travel Agencies Struggle While Innovators Thrive

Mac Qin  / Flickr

Some long-established travel agencies in Singapore have recently folded, but other companies are finding success by adapting to changing traveler behavior. Singapore’s Marina Bay is pictured. Mac Qin / Flickr

Skift Take: Over 100 travel agencies have ceased operations in Singapore in the first six months of the year. But a closer look shows the trade is not dying; it is renewing.

— Raini Hamdi

Editor’s Note: Skift launched a series, Gateway, as we broaden our news coverage geographically with first-hand, original stories from correspondents embedded in cities around the world.

We started with regular reports several times per month from tourism hubs Beijing, Singapore and Capetown. Gateway Beijing and Gateway Singapore, for example, signify that the reporters are writing from those cities although their coverage of the business of travel will meander to other locales in their regions. Read about the series here, and check out all the stories in the series here.

While it may seem that travel agencies are dropping like flies in hot and humid Singapore, the trade is far from languishing, although it is not without challenges.

Figures from the Singapore Tourism Board (STB), which oversees the sector, show the total number of agencies has remained constant in the past few years at around 1,200, as has the rate of new agencies opening and exiting.

The 104 agencies that ceased operations in the first six months are nothing unusual from figures in the same period past years (149 in 2016, 119 in 2015, 116 in 2014), with STB expecting the total number of agencies to remain roughly the same for the whole of this year.

What jangled some nerves was the recent death of household names like 23-year-old MISA Travel and 40-year-old GC Nanda & Sons, which revives the question of whether old agencies could adapt to a new operating landscape.

Former CEO of the National Association of Travel Agents Singapore (NATAS) Robert Khoo, a retiree who now lectures part-time at Kaplan Singapore, said: “Even when I was with NATAS [from 2000-2013], the cessation rate was very high. The only difference was the agencies that closed were usually small and unknown. The closure of prominent outbound agencies such as MISA get more publicity because Singaporeans’ holidays get disrupted.”

Who Bites the Dust and Why

Singapore’s agency sector is well-regulated: All licensees must always maintain a paid-up capital of S$100,000 (US$73,000) and net worth of the same amount. Agencies have a two-year license and must renew the license before it expires on December 31 of the following year. Thus, most agency closures are orderly and cause little consumer impact — i.e., there are few scammers.

STB data shows 40 per cent of agents specialize in outbound, 40 per cent do both outbound and inbound, and close to 20 per cent focus on inbound only. Unsurprising therefore that most of the closures are outbound and ticketing rather than inbound agencies. The latter aren’t spared, however.

Singapore is small and easy for tourists to explore on their own, while “hotels put more focus on reaching consumers direct via their website deals,” said Judy Lum, general manager of Diethelm Travel Singapore. But Singapore’s strategic location is ideal as a jumping pad to the region, enabling regional inbound companies such as Diethelm, part of Bangkok-based Diethelm Travel Group, to continue to thrive.

So what ailed the outbound businesses that died? Agents interviewed blame mostly the inability of the small and medium-size enterprises handling outbound to adapt to changing consumer buying patterns. Those that handle corporate ticketing meanwhile were under pressure from global corporate travel agencies on pricing, incentives and global deals. The rest could be due to some consolidation or dormant agencies.

“A weaker economic outlook may result in slower traffic growth that affects inbound and outbound travel,” said Ong Ling Lee, STB’s director for travel agents and tourist guides. “With changes in consumer travel habits, and various intermediaries such as online booking sites that consumers and suppliers of travel products can access directly, there is also impact on travel agents’ business models and sustainability. A tight manpower situation is further exacerbated by gaps between available travel agent jobs and aspirations of Singaporeans.”

Are Fools Rushing In?

Still, Singapore is seeing as many new agency registrations as those that have exited. Barriers to entry are low, but importantly, newbies see opportunity in travel and tourism. Singapore’s population is 5.6 million, but it welcomes 16.4 million arrivals and sees 9.5 million outbound departures by air/sea (all 2016 figures).

“We have noticed that current and new travel agents are increasingly innovating, going beyond ticketing and order-taking towards becoming designers of travel experiences,” said STB’s Ong. “In terms of their business models and product offerings, they are focusing more on areas such as bespoke travel packages, developing online platforms and diversifying the channels and formats of reaching their target segments.”

Ong said STB was also working to support the industry with grants and initiatives aimed at helping travel agents transform their businesses and better use technology.

These new players may give old ones a run for their money, unless the established companies can change.

“If you look at the number of travel agents that have entered the market, it is apparent that there is still opportunity for growth,” said Robin Yap, president of Travel Corporation Asia. “Our brands — Contiki, Insight Vacations, Trafalgar and Uniworld — have all experienced growth in the past year through our travel agents, so it is indicative that customers are buying from them. However, the market has become more competitive, and customers have also become more demanding in their expectations. Customers now want travel agents to develop more personal relationships and offer expertise on travel products that helps them maximize value and savings.”

Sabre Travel Network Asia Pacific’s vice president of sales and market development, Todd Arthur, added that while online travel sales in the region are expected to double to over US$160 billion this year from 2013, its research shows brick-and-mortar agencies, including those in Singapore, still play an important role in the traveler’s journey.

More than six in 10 (64 per cent) of respondents expected to use a travel agency for their next trip. Corporate travelers too, continue to rely on the value travel agencies bring in simplifying complex travel itineraries that cover multiple segments within a single trip.

“Whilst there is more information readily available on hand, travelers and corporations alike want help in navigating complexity; more than half of respondents we spoke to in our research said that one of the biggest barriers to traveling is having too many travel options and information available, when it was the other way around three to five years ago,” Arthur said. “The opportunity, hence, arises for travel agents to position themselves as the trusted travel expert who can help their customers navigate this complexity and choose the best experience to fit their needs.”

Renewal in the City

Industry members in fact believe more new agencies will enter, pointing to changes to be considered in Parliament soon that they say will actually make it easier for new entrants. The proposed amendments to the Travel Agents Act and Regulation include license exemption for entities providing walking or bicycle tours, restricted license with a lower paid-up capital and net worth requirement for entities selling or arranging tours without accommodation, removal of the Banker’s Guarantee option in lieu of meeting the net worth requirement, and expansion of consumer safeguards.

Ong says STB believes the travel agent industry “holds much potential for further growth and can be an innovative and lean industry that continues to contribute to Singapore’s economy and provide high value jobs to Singaporeans.”

Based in Singapore, Raini Hamdi is a business journalist and has been covering the Asian travel trade and the hotel industry for more than 20 years.

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Skyscanner Is Seeing Growth in Its Hotel and Car Rental Business

Skyscanner

Skyscanner has seen revenue growth from hotel and car rental searches. This promotional image from the company highlights its flight, hotel, and car rental search capabilities. Skyscanner

Skift Take: While it’s interesting to note Skyscanner’s growth in hotels and car hire, commission from flight searches is still the source of most of its revenue. It seems likely that the company will look to take a bigger slice of the airline market rather than push too hard into other areas.

— Patrick Whyte

As the name suggests, Skyscanner has almost always been about flight metasearch but its latest set of results show how much it is improving its offering in other areas.

The company collected revenues totalling $205.7 million (£158.3 million) in 2016, a rise of 44 percent on the previous year. Of this total the company’s hotel and car hire products made up 9 percent, up from 6 percent.

While this is still a relatively small amount — only $16.8 million (£12.9 million) — it clearly shows the company’s intent in areas where it is relatively underserved.

Pre-tax profits fell by 33.4 percent to $9.5 million (£7.3 million).

This potential in other areas is likely one of the reasons Ctrip shelled out $1.74 billion for Skyscanner at the end of 2016, something CEO Jane Jie Sun spoke about in an interview with Skift.

“Skyscanner is strong in air,” she said. “So, air definitely is the important piece for their business. So we will be focusing on building global coverage of air ticketing first. And then add other services to it. For example, if you look at our inventory, we also have train product, we also have rental car, we also have local attraction tickets. Ctrip offers comprehensive products. In all of these, we will be able to open all these products to them.”

Expanding Geography

As well as diversifying away from flights, Skyscanner Ltd’s accounts show how the company’s geographical reach has also grown.

The UK and Ireland is now Skyscanner’s smallest market by revenue behind both Europe and the rest of the world.

In their strategic report, the directors said: “The company’s long term strategy is centered on owning a greater part of the travel journey from destination selection through to post travel engagement.”

Skyscanner’s vision was articulated in plenty of detail in a white paper published earlier this year, which talked about metasearch sites becoming market places for branded airline products.

Airlines are increasingly looking to sideline the old order of global distribution systems and Skyscanner hopes it will be able to take advantage through a new cheaper offering.

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The Skift Global Forum Two-Month-Out Update

Skift Take: You’ve waited this long already. Don’t wait another minute to get your ticket to this year’s Skift Global Forum. Tomorrow, we’ll officially be two months away.

— Rafat Ali

2 months. 9 weeks. 64 days. No matter which way you spin it, this year’s Skift Global Forum is rapidly approaching.

We’ve already updated you on our venue, our newest speakers and even the reasons why you absolutely cannot miss our event. With the remaining time we have left until the big day, you can expect more info in the coming weeks on:

  • Our minute-to-minute schedule
  • Our secret opening event location
  • And most importantly, the list of companies attendees are coming from (think the big ones)

Register While You Still Can

I know, we can’t wait either. To hold you over in the meantime, here’s a glimpse into what last year’s Skift Global Forum looked like and what you can expect for 2017. You know this year is going to be bigger, better and filled with travel’s (and the food industry’s) key players.

Time is running out to get in on the action and hear from speakers such as:

  • Nathan Blecharczyk, Co-Founder of Airbnb
  • Bonny Simi, President of JetBlue Technology Ventures
  • Mark D’Arcy, Chief Creative Officer of Facebook
  • And more!

Secure Your Spot

We couldn’t bring our event to life every year without the support of our incredible sponsors: Accenture, AIG, Amadeus Airlines, American Express, Button, Criteo, Fareportal, KDS, Mapbox, SmartlingSojern, The Points Guy, and Travelsify.

To become a sponsor or for any other questions you may have, email forum@skift.com.

 

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Travel Podcasts to Get You Through Your Summer Vacation

Prima Pagina/ANSA  / Associated Press

These podcast episodes will keep you entertained while you wait in line at your summer vacation destination. A man wearing a Roman Centurion costume stands near tourists lining up at the ticket office of Pompeii archeological site, Italy, Friday, July 24, 2015. Prima Pagina/ANSA / Associated Press

Skift Take: Leaving for your summer vacation? Take these podcast episodes with you to decode the travel trends you see on the road.

— Sarah Enelow

In all likelihood, your summer vacation will involve a boutique hotel, a low-cost airline, loyalty points, destination research, or booking something online.

So we selected some of our favorite 2017 episodes of the Skift Podcast to give you an insider’s look at those sectors. While you wait in the inevitable line — at airport security, at Disneyland, or at Shake Shack — maximize your time and give these a listen.

>>What Next-Level Hotels Have in Common

Travelers want a lot from hotels besides a cute boutique design. They want connected experiences that feed into the larger narrative of their journey. So how can hotels deliver all of this? We spoke with James Lohan and Tamara Heber-Percy, founders of Mr. and Mrs. Smith, and Claus Sendlinger, CEO and founder of Design Hotels.

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The Airports of the Future Are Taking Shape

Jewel Changi Airport

A new development at Singapore Changi Airport will feature something called a rain vortex. Airports — mainly outside of the United States — are investing heavily in passenger-friendly amenities. Jewel Changi Airport

Skift Take: U.S. airports have a lot of infrastructure problems, and many need be renovated. But we’re not sure American airports need indoor rainforests or virtual reality golf. That stuff is cute, but we think what travelers really want is on-time, reliable flights from clean, comfortable airports.

— Brian Sumers

No matter how well-regarded a particular airport happens to be, the slog from curb to cabin is pretty much the same wherever you go. A decades-old paradigm of queues, security screens, snack vendors, and gate-waiting prevails—the only difference is the level of stress. Transiting a modern hub such as Munich or Seoul is more easily endured than threading your way through the perpetual construction zones that pass for airports around New York.

The sky portal of the 2040s, however, is likely to be free of such delights. Many of us will be driven to the terminal by autonomous cars; our eyes, faces, and fingers will be scanned; and our bags will have a permanent ID that allows them to be whisked from our homes before we even set out. Some of these airports will no longer be relegated to the outskirts of town—they will merge with city centers, becoming new destination “cities” within a city for people without travel plans. Shall we get dinner, watch a movie, see a concert, shop? People will choose to go to the airport. Your employer may even relocate there.

These are the types of infrastructure investments and technologies that will, in theory, allow airports to largely eradicate the dreaded waiting. Travelers will migrate around the terminal faster and see fewer walls and physical barriers thanks to the abundance of sophisticated sensors, predicts Dallas-based architecture and design firm Corgan. The company recently assembled its concepts of how airports will evolve, based on extensive research of passenger experiences at various airports and the greater role technology may play.

One day, the airport will know “everything about everyone moving in the airport,” said Seth Young, director of the Center for Aviation Studies at Ohio State University. The goal will be to deploy “a security infrastructure that’s constantly screening people from the door to the gate, and not having this toll-booth mentality,” he said. “We know that 99.9 percent of the passengers are clean, so why are we wasting time screening all of those?”

Much of this technology is likely to be seen outside the U.S. first, given the advanced age of most American airports and the more robust infrastructure funding available in Asia, the Middle East, and Europe. In the 2017 Skytrax awards, only 14 airports in the U.S. even made the top 100.

One can look to Singapore for a glimpse of how airports will change over the next 20 years. Changi Airport, a pioneer of the industry, recently opened a “living lab” to pursue further innovation. In March, it was named the world’s best airport for the fifth consecutive year by Skytrax.

“It’s not a space to be in, it’s a space for you to move through”

One reason airports tend to look and function remarkably alike is that they’re designed to accommodate air travel infrastructure—security, passenger ticketing, baggage, ground transport—with the primary concerns being safety and minimal overhead for their tenant airlines.

“Today it’s what you call a transient space—it’s not a space to be in, it’s a space for you to move through,” said Jonathan Massey, the aviation leader for Corgan, which has overseen the design of major terminals worldwide, including Atlanta, Dallas, Shanghai, Dalian, China, and Los Angeles. “We need to evolve the terminals into being little cities.”

As part of the research, Corgan designers measured anxiety levels for different passenger types. The greatest offender among all groups was the security checkpoint, that confined space of shoe-doffing, laptop-extraction, and frisky government agents barking orders. “A lot of the stress in an airport is perceived, it’s spatial,” said Samantha Flores, a Corgan associate. But when it comes to the biggest infrastructure burden, one aspect of today’s airports stands out.

“The big, big issue,” said Dwight Pullen, is luggage. Pullen, national director of aviation at Skanska USA, a construction firm with numerous airport projects, including the renovation of New York’s infamous LaGuardia, said: “Think about how much infrastructure and technology and time is spent on bags. It’s a huge issue. It’s not one that has been figured out.”

Changi Airport’s new Terminal 4, which will open later this year, will feature an array of “fast and seamless travel” (FAST) technologies to speed people-processing without the need for human supervision, from face-recognition software to automated bag-tagging and checking.

Two U.S. carriers, Delta Air Lines Inc. and JetBlue Airways Corp., recently began trials of biometrics data as a way to speed your way. JetBlue is testing facial recognition equipment in Boston to match travelers with their passports and visa photos, while Delta just began trials of a similar system for bag drops at its Minneapolis-St. Paul hub. Delta is also trying out fingerprints as a potential future replacement for boarding passes and ID and, via its mobile app, now offers customers real-time maps showing their checked bags’ location.

“We’re rapidly moving toward a day when your fingerprint, iris, or face will become the only ID you’ll need for any number of transactions throughout a given day,” said Gil West, Delta’s chief operating officer.

“It’s like having a Super Bowl worth of people every single day”

Amid all this increased efficiency, airports are also keen to have people linger so they’ll buy more stuff—and that means a continuous focus on more upscale retail options. “The number of passengers that flow through airports really rivals any other mechanism out there that can congregate that many customers in one place,” says Ken Buchanan, executive vice president of revenue management for Dallas-Fort Worth International, the fourth-largest U.S. airport by passenger numbers. “It’s like having a Super Bowl worth of people every single day.”

But while technology helps make the airport experience more pleasant, the size of that captive audience may begin shrinking due to, well, technology.

One thing that may thin out the terminal crowds is cars. Ohio State’s Young and others see a day when autonomous vehicles—and air taxis of the sort Uber envisions—will siphon off a chunk of shorter flights that are 500 miles or less. For U.S. airports, the ascension of self-driving cars will create a costly conundrum: how to replace parking revenue, which typically represents a quarter of annual airport budgets.

To find new revenue, airport executives will need to attract dollars in other ways, via dining, shopping, and entertainment. Since that may not be enough, new business models will be needed for ground transportation and commercial office space; perhaps new revenue may accrue from baggage delivery service.

Amenities in an airport—movies, bowling, butterfly gardens, and virtual reality golf—are becoming de rigueur for many Asian and Middle Eastern hubs. Singapore’s Jewel Changi extension at Terminal 1, set to open in early 2019, will offer a five-story garden with thousands of trees and plants, along with a 40-meter (131-foot) “Rain Vortex” lighted water display. Similar themes are apparent in the designs for Helsinki Airport’s Terminal 2 expansion, set for 2021, which includes an indoor forest.

At Changi, concession revenues rose 5 percent last year to a record S$2.16 billion ($1.6 billion), while the world’s busiest airport, Atlanta’s Hartsfield-Jackson International, topped $1 billion in concession sales in 2016, also a record.

“Our efforts to grow Changi’s commercial business and provide an enjoyable shopping and dining experience is part and parcel of enhancing the overall airport experience for our passengers, and will continue in the years to come,” the airport said in an emailed statement.

“No matter what,” Young said, “airports want to make it efficient.” That means getting through quickly—be it arriving, departing, or transferring. “But they love it when people are at the airport,” he added, “because of the opportunities to spend money.”

 

—©2017 Bloomberg L.P.

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

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The Next Great U.S. Airfare Battle and 6 Other Aviation Trends This Week

Jackie Schear/The Trentonian  / Associated Press

In this April 8, 2013 file photo, the painted tail appears on a Frontier Airlines aircraft parked at a gate at Trenton-Mercer Airport in Ewing, N.J. Frontier recently advertised $39 one-way fares. Jackie Schear/The Trentonian / Associated Press

Skift Take: This week in aviation, airlines race to the bottom on price and flyers care less about loyalty, motivated more by whoever’s got those ultra-low fares.

— Sarah Enelow

Throughout the week we post dozens of original stories, connecting the dots across the travel industry, and every weekend we sum it all up. This weekend roundup examines aviation.

For all of our weekend roundups, go here.

>>With good management, this ultra low-cost airline strategy is profitable just about everywhere. The key? Airlines like Viva Aerobus must be fanatical about costs, and they must provide the cheapest fares, all the time. They also should treat their customers fairly: Interview: Viva Aerobus CEO on Why Half-Standing Seats Still Intrigue Him

>>The best CEOs know when to quit and Carolyn McCall’s decision to jump ship at a pivotal time for UK airlines is perhaps a sign that there might be tough times ahead: EasyJet CEO Carolyn McCall Quits to Join UK Broadcaster

>>In recent years, many Alaska Airlines frequent flyers liked to fly American, because they would receive loyalty benefits even when flying the competition. But starting next year, that perk will end, and that’s not great news for road warriors: The Business of Loyalty: Alaska and American Drastically Reduce Their Frequent Flyer Partnership

>>In-flight safety videos are fascinating in that they all must stick to the same script. What airlines decide to do with this locked-in time is always an extension of their brand: British Airways Turns to A-List Actors for New Safety Video

>>Many airlines have rewritten loyalty rules in recent years to make their programs more profitable and reward the most lucrative travelers. But our data show many U.S. travelers don’t want to play by those rules and aren’t loyal to any airline: Travel Habits of Americans: U.S. Travelers Shun Airline Loyalty Programs

>>Will United Airlines ever take the 35 Airbus A350s it has on order? At one point, it had an acute need for the new long-haul aircraft. But times change, and United already has a worthy successor for its Boeing 747 fleet — the Boeing 777-300ER: United Airlines Hits Pause on Delivery of Passenger-Friendly Airbus Jets

>>It’s not clear whether United or Frontier will win this battle in Denver. But what is nearly certain is that passengers will be the beneficiaries. They’ll likely find cheaper fares: Here’s Why the Next Great U.S. Airfare Battle Will Take Place in Denver

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American, Frontier and Delta Hit With Fines Over Consumer Complaints

A. Doumenjou  / Airbus

The U.S. Department of Transportation just announced it has fined Frontier, American, and Delta over consumer protection violations. A Frontier aircraft is pictured in this promotional photo. A. Doumenjou / Airbus

Skift Take: Some of the violations that led to these fines took place two or three years ago. We hope the airlines have long since adjusted the problematic policies.

— Hannah Sampson

Three U.S. airlines have agreed to each pay hundreds of thousands of dollars in fines to resolve government claims that they violated rules aimed at protecting consumers.

The Transportation Department detailed the violations and the fines levied against American Airlines Group, Delta Air Lines and Frontier Airlines in documents released late Friday.

The findings stem from separate investigations conducted by the Transportation Department.

The government fined American Airlines $250,000 after determining that the air carrier failed to make timely refunds to passengers in the first half of 2015.

Transportation Department officials began investigating the company last year after receiving multiple complaints from consumers over delays receiving refunds from the airline. Rules call for airlines to issue refunds within seven business days when a passenger pays with a credit card, for example.

“We took proactive steps to address refund delays some customers experienced in 2015 due to a systems integration issue after the merger with US Airways, including investments to improve processing times,” Shannon Gilson, an American Airlines spokeswoman, said Saturday.

American and U.S. Airways merged in late 2013, creating the world’s biggest airline.

Delta agreed to pay $200,000 to resolve the government’s finding that the airline underreported the number of mishandled baggage complaints it received from passengers. The Transportation Department requires airlines to report such complaints monthly and uses the information to compile airline rankings in reports aimed at consumers.

In a statement Saturday, Delta said it immediately updated its policy on damaged bags once it was flagged by the government last year and has invested in providing “full transparency to the status and location of checked bags” through its FlyDelta app.

Transportation Department officials hit Frontier Airlines with a heftier fine: $400,000.

Investigators determined that the airline involuntarily bumped passengers from overbooked flights without first seeking volunteers or providing proper compensation in a timely manner.

They based their findings on about 200 complaints received by the company in 2014 and 2015.

Airlines are required to pay passengers who have checked in and have a reserved seat on a flight, but are bumped involuntarily from an overbooked flight, what is known as “denied boarding compensation.” And the airline is required to pay passengers in cash or check the same day.

The probe also found that Frontier failed to provide disabled passengers with wheelchair assistance as needed to board or exit aircraft and get around the terminal.

Frontier did not acknowledge or deny the government’s findings in the consent order with the Transportation Department, but asserted that it makes “every effort” to provide assistance to passengers with disabilities. It also said that the vouchers it provides passengers who are bumped off its flights typically exceed the value of payouts required.

Frontier did not immediately respond to requests for comment Saturday.

 

This article was written by Alex Veiga from The Associated Press and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to legal@newscred.com.

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