Skift Global Forum 2017: Hear From Marriott, Airbnb and the Biggest Names in Hospitality

Skift

Marriott CEO Arne Sorenson, speaking on stage at the Skift Global Forum 2016. Skift

Skift Take: From direct booking campaigns to the growing popularity of Airbnb, there’s a lot to talk about with the most influential decision-makers in hospitality.

— Deanna Ting

Marriott International CEO Arne Sorenson, just days after completing his company’s long-awaited $13.3-billion acquisition of Starwood Hotels & Resorts, spoke at length about Marriott’s plans for linking both companies.

Former Starwood Hotels & Resorts CEO Frits van Paasschen said he didn’t think the timing of the Marriott acquisition wasn’t in his former company’s favor, especially for its shareholders.

Veteran hotelier Chip Conley, founder of Joie de Vivre Hotels and former global head of hospitality and strategy for Airbnb, told the audience what hotels could learn from Airbnb, and vice versa.

Former Two Roads Hospitality CEO Niki Leondakis, now CEO of Equinox Fitness Clubs, said that real innovation in hospitality comes from internal disruption.

Standard International CEO and managing partner Amar Lalvani, along with Bunkhouse COO Liz Lambert, said that hotels with a lifestyle edge will continue to thrive, even in the sharing economy age.

And former Generator Hostels CEO Fredrik Korallus listed the many reasons why the hotel industry should be paying more attention to hostels.

Those were just a few tidbits from Skift Global Forum 2016 (all of which you can revisit in the videos below). But get ready for 2017.

Arne Sorenson, CEO of Marriott International, is speaking at Skift Global Forum 2017. Get Tickets Now

From fighting the online travel agencies like Booking.com and Expedia in their efforts to get more direct bookings, the state of the mergers and acquisitions scene, developments in both artificial intelligence and mobile technology, and the ever-looming threat of Airbnb, the most influential CEOs in hospitality will all be at Skift Global Forum 2017.

They include:

  • Airbnb co-founder and chief strategy officer Nathan Blecharczyk
  • Marriott CEO Arne Sorenson
  • Hilton CEO Christopher Nassetta
  • Wyndham Hotel Group CEO Geoff Ballotti
  • InterContinental Hotels Group CEO Keith Barr
  • Vacasa co-founder and CEO Eric Breon.

All of them will step up to the stage at Skift Global Forum 2017 in New York City September 26–27 to state their cases about where they think their companies and the travel industry are heading.

Rounding out the field of hospitality veterans will be LaQuinta Inns & Suites EVP and CMO Julie Cary and Aman COO Roland Fasel.

Attend Skift Global Forum 2017

What Happened in 2016

To get a sense of what you can expect from speakers and the event, watch these conversations that took place at last year’s event.

Marriott CEO Arne Sorenson

Attend Skift Global Forum 2017

We couldn’t bring our event to life every year without the support of our incredible sponsors: AccentureAdobeAIGAmadeus AirlinesAmerican Express, Away Luggage, ButtonCriteoFareportal, Hobo Bags, HotelTonightITP, KDS, Luggage HeroMapboxProColombia, SimulmediaSmartlingSojernThe Points GuyTravelsify and Visit Jordan.

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

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Chefs+Tech: How UberEats Works with Restaurants

Jason Clampet

The work UberEats has done with McDonald’s has influenced its software for all restaurants. Jason Clampet

Skift Take: Hungry people will be loyal to the delivery app that gets them their food fastest, period. UberEats touts algorithms, analytics, and a little bit of the human touch in its work with restaurants.

— Kristen Hawley

chefslogo_use-for-socialEditor’s Note: In September we announced that Skift was expanding into food and drink with the addition of the Chefs+Tech newsletter. 

We see this as a natural expansion of the Skift umbrella, bringing the big-picture view on the future of dining out, being fanatically focused on the guest experience, and at the intersection of marketing and tech.

We publish C+T twice weekly.

How UberEats Works with Restaurants

UberEats started nearly three years ago as an experiment in Los Angeles. The service, then called UberFresh, started differently than other delivery apps and offered a selection of only five items per day, on demand, as part of the Uber app. The experiment went so well that Uber decided to increase its offerings, pivoting toward a more traditional food delivery model — as it turns out, the dining public prefers food selection to pure speed. In late 2015, the UberEats app launched in Toronto, and has since grown to include over 60,000 restaurants in 112 cities. “Now that we’re at scale, there’s a big opportunity to continue to push the boundaries of food delivery forward and a lot of that has to do with building trust with restaurants and helping advance this world of restaurant and technology,” Chetan Narain, senior product manager for UberEats, told Chefs+Tech.

UberEats offers two pieces of software to its restaurant partners: Restaurant Dashboard, which runs on a tablet inside the restaurant, and Restaurant Manager, a tool for owners and managers to see analytics including dish popularity and performance over time. Restaurant Dashboard and the associated app for couriers look a whole lot like the Uber app you’re used to (the courier app is actually the exact same that a traditional Uber driver uses). Uber drivers can be couriers but not all couriers are Uber drivers; couriers don’t need a car and can walk, bike, or scooter to deliver food, too. Uber’s process of delivering food from restaurant to your door uses much of the same technology that matches you with a driver: When a restaurant signifies an order is ready, Uber searches for the closest available couriers. In an interview with Chefs+Tech, Narain explains the technology, its recent changes, and all of the opportunity to innovate in the space moving forward. Read the full interview here.

There’s a Restaurant Chain Digital Arms Race. Really.

This headline made me giggle, but it’s true: Restaurant technology may have started as a novelty, but has moved from its position in the nice-to-have category to the absolutely-must-have-or-else category. The industry has always been competitive, but now that reviews, ratings, recommendations, and listings fly around the Internet with unprecedented speed, it’s up to restaurants to prove their tech savviness in order to maintain a happy and engaged customer base. Bloomberg reports on the many options available to restaurants, including new payment options, new ordering options and how restaurants are, in a sense, similar to the traditional retail outlets that have been experiencing trouble thanks to the prevalence and ease of ecommerce.

Also interesting: Restaurants — even the most established ones — are partnering and aligning themselves with existing technology companies like Amazon and Facebook to prove they’re still relevant. In that sense, the convenience of delivery is taking over restaurant visits as businesses like Domino’s and even McDonald’s rework their physical locations to accommodate order pick-ups instead of order-ins. In another sense, this has changed the way that restaurants design and run their physical locations. Restaurants become destinations, not just a place to sit at a table and eat. Decor is designed to stand out and look great on Instagram. Sharable plates, small dishes, and family-style meals aim to make the dining out experience different than the eating in experience. Restaurants use the marketing power of social media to draw you in the door to the experience. But just as much as a restaurant — especially a chain restaurant where food is a commodity — must focus on food quality and execution, it now must focus on technological execution to survive in the evolving market.

The Super Fast, Shockingly Impressive Rise of Craft Breweries

What does craft beer have to do with the changing face of a neighborhood? A lot, apparently. According to a fascinating piece in City Lab, between 1985 and 2010, the number of craft breweries in the U.S. jumped from 27 to 1,754. In 2015, the number grew to 4,225(!), making it impossible to ignore the rise of craft brewing as a larger statement about the country’s food and beverage industry.

The piece details a recent study of craft breweries, yielding some interesting info about how so many of these businesses were able to rise and thrive. They cluster together in order to take advantage of shared equipment, ingredients, staff training, and even patron foot traffic. The strongest predictor of where a craft brewery would open was the presence of another craft brewery in the neighborhood. And instead of offering similar products to “big beer” (like Anheuser-Busch), craft breweries purposely differentiated themselves, offering a huge variety of flavors and styles. And of course, there’s the millennial effect — sheer popularity has increased beer tourism in plenty of places across the country.

In this way, the craft brewery industry has mirrored restaurants: Smaller, independent restaurants have clustered in larger cities offering more diverse options than the large chains and conglomerates of my childhood. It’s worth watching, though, what happens if either of these industries reaches a tipping point. Much has been written in recent weeks about the restaurant industry and whether or not it can sustain such growth. How much beer is too much beer — and what comes next?

Digestifs

  • Bon Appetit announces its list of the best new restaurants in America, and it’s a good one— Bon Appetit
  • This lab analyzed tweets and found out (among other things), Colorado residents tweet the best caloric-intake-to-activity-level ratio. (Mississippi has the worst.) — Outside Magazine
  • Brooklyn’s Ample Hills wants to be the next Ben & Jerry’s — Bloomberg

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Puerto Rico Isn’t Really Having a ‘Despacito’ Tourism Boom Yet

Lynne Sladky  / Associated Press

Singers Luis Fonsi, left and Daddy Yankee perform during the Latin Billboard Awards in Coral Gables, Fla. Lynne Sladky / Associated Press

Skift Take: Simple lesson here is that young people who love a pop song are not always the first people to book a trip to a new destination.

— Jason Clampet

Since the song Despacito, by the Puerto Rican artists Luis Fonsi and Daddy Yankee, came out last January, its YouTube video has been viewed more than 3.2 billion times, demonstrating that all you need to succeed in pop music is a catchy hook—plus nearly five minutes of incredibly hot men and women dancing sexily in the colorful, if gritty, beachside neighborhood of La Perla. (It also helps if you have Justin Bieber; a remix featuring him is officially the most streamed song of all time, barring Malaysia.)

But is that enough for Puerto Rico, battered by the Zika virus and an island-wide bankruptcy, to succeed in tourism? Well, possibly! According to sources quoted in Travel Weekly, search queries for the island have risen year on year across major travel sites. “We know that popular culture has a strong influence on our travel decisions,” Taylor Cole, a spokesman for Hotels.com, told the publication. “Puerto Rico is the home of the singers Luis Fonsi and Daddy Yankee, and it gets a big shout-out in their hit song. Our search data suggests that Despacito is encouraging more people to explore this destination.”

Search queries, of course, are not the same as actual bookings or visits. An analysis by the Washington Post last month disputed breathless claims of a “45% hike in tourism.” And the island’s tourism statistics, which have only been updated through February, do not yet show much of an uptick.

“We are closely monitoring official data sources to evaluate how the increase in searches and interest correlates to the number of visits and sales,” Jose Izquierdo, executive director of the Puerto Rico Tourism Co., told Travel Weekly. “We know that Despacito has been more than just a catchy summer tune.”

The connection between pop culture and tourism, however, may be a deceptive one. Sure, it seems natural: Tourists want to participate in the pop culture of the places they visit. In Croatia, where Game of Thrones is partly shot, so many visitors have been coming to Dubrovnik, which stands in for the show’s King’s Landing and where you can take GoT tours, that the city is using surveillance cameras to limit their entry.

You can’t get off the plane in New Zealand without considering a trek to the “Hobbit” village where Lord of the Rings was shot. And when European friends visit me here in New York, for instance, they always seem to want to go to jazz clubs; and Roman Holiday is fantastic inspiration for anyone who feels like traipsing around the Italian capital pretending to be a commoner.

But does anyone actually choose a destination based on pop culture? The best example we have of this is South Korea, which in the late 1990s, after the Asian financial crisis, embarked on a campaign to modernize and export its music, movies, and soap operas, and thereby increase the nation’s international cultural standing. This “hallyu wave,” as it’s known, really got going around 2010, and tourism statistics show that over the next five years arrivals increased by almost 50 percent, from 8.8 million to 13.2 million (2015 is the most recent year for which there are numbers). But that might not all be due to Gangnam Style, the Despacito of 2012.

“If I had to guess, I’d say that food and surgery are a far bigger draw,” said Euny Hong, author of The Birth of Korean Cool: How One Nation Is Conquering the World Through Pop Culture. Though Korea’s pop-culture campaign was certainly successful, Hong says tourism didn’t necessarily appeal to those who fell deeply in love with K-pop. They “aren’t that curious about visiting Korea,” she said. “Because, I mean, what’s their plan, hoping to run into G-Dragon on the streets of Seoul?”

Good Korean food (like oysters) would be a stronger draw, she said. It’s the kind of thing that’s harder to reproduce abroad, whereas a YouTube video is the same no matter which country you play it in.

And when it comes to analyzing statistics, Hong said one must be skeptical. “There is no real way to quantify the effect of K-pop culture—it would be a post hoc, ergo propter hoc fallacy,” Hong said. “I even spoke to the Ministry of Culture some years back, and they admitted (rightly!) that it was impossible to quantify the effect.”

(For that reason, I’m skeptical of Slovenia’s recent claim that its 15 percent increase in tourist arrivals from the U.S. during the first half of 2017 is due to Melania Trump. Again, let’s look to the food.)

If Korea has a lesson for Puerto Rico in here, it might be this: You can play up Despacito all you want (not that there’s any avoiding it right now), but tourists are going to continue to come for the same reasons as always: beaches, seafood, and salsa dancing. Catchy summer tunes may come and go, but hot locals are forever.

©2017 Bloomberg L.P.

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

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Meeting Planners Are Struggling With the Fast Evolution of Event Technology

etouches

The etouches group at IMEX America 2016. The company recently acquired another company to provide AI-powered, personalized event experiences. etouches

Skift Take: Innovation in event technology today relates as much to how planners use the platforms that already exist, as compared to new advancements in the technology itself.

— Greg Oates

Almost one out of two meeting planners today says that event technology is a primary pain point, according to a new study published by etouches.

Another new report from Cvent revealed similar sentiments among planners relating to cloud-based event management platforms, stating, “Planners cite poor transparency and accuracy over pricing, along with lack of clarity and poor response rates, as their main pain point with venue selection.”

In the etouches report, the top concerns among planners pre-event are: selecting the right content (56 percent) and managing attendee registration (51 percent). During the event, the biggest pain points are: communication with attendees (44 percent) and registration/check-in (42 percent).

Post-event, 65 percent of planners say that they’re using technology to measure the overall return on investment (ROI), but at the same time, how they analyze and use that data to inform future event programming and design remains a challenge.

In the Cvent study, the overwhelming pain point for planners is the length of time it takes to receive responses from hotels for their digital requests for proposals (RFPs), and the often inaccurate and/or omitted costs supplied within those responses.

Speaking at the annual Global Business Travel Association (GBTA) conference in Boston last month, representatives at both etouches and Cvent addressed the ongoing challenges with event technology adoption, and how their services are evolving to make tech more user friendly and effective for the planner community.

“In the media and event space, technology was for so long an efficiency play, in terms of it’s just a better way to do business when you can capture some data automatically,” said Mike Mason, VP, sourcing and hospitality solutions with etouches.

“I think it’s now evolved, and what you’re seeing is the importance of the onsite experience. During the event, attendees need more than just content. It’s really about, how do you engage that attendee at a level with them they’ve never had before? Because, you know, everyone’s fighting for attendees.”

Earlier this year, etouches acquired the Loopd platform to deliver new solutions for on-site engagement, using artificial intelligence to provide a more personalized event experience.

Loopd integrates bi-directional wearable smart badges, a mobile event app, and a cloud-based analytics engine. When attendees are using the Loopd badges, which can transmit contact information and any other kind of digital content, event organizers can track how attendees are moving through the event, and which programming is most popular.

Attendees also have a record of every vendor they approached and who they met, and based on commonalities across the spectrum of those event and vendor contacts, Loopd’s machine learning provides suggestions for similar participants that may be of interest for the individual attendee.

“If the device understands that you’re talking to me and we’re sharing information, and it looks at what is important to me and what’s important to you, it can begin to build a profile of who you might be interested in talking to,” said Mason.

“Tie that into the mobile app where event managers can now feed you information that might be important to you based on where you are,” said Mason. “You might be walking by a session that you didn’t think about, and [the app] will say, ‘Hey listen, you mentioned this before. You might want to step inside here. This is what they’re talking about right now.’ So it’s real time, and we’re just on the front end of that.”

However, Mason added that it’s incumbent on event tech firms across the industry to do a better job managing expectations and delivering the support necessary to help planners use technology more effectively.

“With technology companies, we need to play a much more concentrative role in the process to help you benefit from it, because unless you benefit from it, and see the ROI, it’s just gonna be a pain in the butt,” he explained. “So, we have an ROI tool that we launched at the end of last year, and we’ll sit down and spend time with our customers to establish their baseline key performance indicators, metrics, and goals. So they can see at any point, before, during and after an event, because it’s all real time, how they’re impacting the trajectory of an event.”

Fixing the Dreaded RFP Process

With the exponential rise of digital RFPs, hotels are challenged with prioritizing the onslaught of proposals they receive, which is the root cause for the lengthy time it often takes to respond to planners.

“There’s no doubt that the increased volume in the RFPs is putting pressure on hotels to respond,” said Brian Ludwig, SVP of sales at Cvent. “One of the things that proves to be most effective in getting awarded business is how quick and responsive you are to the planners that are submitting that proposal. So for hotels, it’s about how do we effectively process all these incoming leads. And then how do we deal with the smaller meetings that might be able to be done in an automated fashion, so that we can focus the manpower on the more complicated pieces of business.”

Toward that end, Cvent launched a new Group Business Intelligence tool this summer, designed to provide real-time data and analytics of hotels’ group business leads, and those of their competitors, in a single platform, helping hotel sales staff prioritize incoming queries and score leads.

The tool is also intended to make it easier for hoteliers to examine leads, dissected by specific time periods, customer segments, competitor rates, response times, and peak night volume, helping calculate the potential value of each piece of group business with more context and business insight than before.

“It’s really about bubbling up that data in a way that can be used and leveraged by organizations more intelligently,” said David Quattrone, chief technology officer at Cvent. “It’s really taking it up a level where you get some insights into how you’re competing and where you’re effective versus not, and how you can adjust things.”

Ludwig added that the Business Intelligence tool is also designed to help hotels schedule group business more strategically to maximize their open dates, soft weeks, and overall event calendars.

“So, for a hotel rep now, you’ll compare what your turnaround time is versus your competitors, whether you’re adding in the right information around alternative dates, whether you’re able to shift business,” Ludwig said. “For example, you could have a piece of business that might from a lead-scoring perspective not look that attractive, but if you expand out to an alternative date, all of a sudden it becomes a very lucrative piece of business.”

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UK Is Trying to Find a Solution to the Irish Border Problem Ahead of Brexit

Alex Morales and Peter Flanagan  / Bloomberg

Irish Prime Minister Leo Varadkar and his British counterpart Theresa May. What is going to happen with the Irish border is one of the biggest Brexit issues. Alex Morales and Peter Flanagan / Bloomberg

Skift Take: There is a huge amount of movement between the Republic of Ireland and the UK via the border with Northern Ireland. Nobody wants to see this restricted as a result of Brexit but coming up with a solution that satisfies both sides is going to be very, very difficult.

— Patrick Whyte

Britain said it wants to avoid any physical border or customs checks with Ireland as part of any Brexit deal with the European Union, as tensions mount over the terms of the U.K.’s departure from the bloc.

British and European negotiators need to show “flexibility and imagination” to devise post-Brexit arrangements on the island of Ireland that preserve free movement of people and goods across the border, the Brexit Department said. The U.K. government is due to publish a document fleshing out its proposals at noon on Wednesday in London.

“The solution cannot be based on a precedent,” the department said. “But it’s right that as we shape the unprecedented model, we have some very clear principles. Top of our list is to agree upfront no physical border infrastructure — that would mean a return to the border posts of the past and is completely unacceptable to the U.K.”

The 310-mile (500-kilometer) crossing will form the bloc’s only land border with the U.K. after Brexit and it’s shaping up to be one of the trickiest parts of the talks. While both sides want to avoid obstacles to trade, Britain’s desire to leave the EU’s customs union makes that tough. Irish Prime Minister Leo Varadkar has warned that he won’t help the U.K. set up border checks and ordered officials to scale back examining technological solutions to minimize disruption along the frontier.

Final Shape

The final shape of the border will depend on the deal the U.K. reaches with the EU on its future trading relations. Under one proposal advanced by the U.K. on Tuesday, called a “new customs partnership with the EU,” a customs border wouldn’t be needed because each side would enforce the other’s customs rules. This would satisfy Ireland’s demand to maintain the current situation.

Under a second suggestion, dubbed “a highly streamlined customs arrangement,” Britain would extend customs declaration requirements currently in place for other nations to EU trade. The document “dismisses the idea of a customs border in Irish Sea as not constitutionally or economically viable,” the Brexit Department said.

The U.K. will propose:

  • Remaining a member of the Common Transit Convention to facilitate the movement of goods
  • New “trusted trader” arrangements would facilitate trade for larger companies, while smaller ones, accounting for more than 80 percent of cross-border trade, would be exempt from customs processes

The U.K. bounced the border question back to the EU, saying it now “looked forward to seeing the EU’s position paper on Ireland.” The border is one of three key issues, along with citizens’ rights and money owed by the U.K., that require “sufficient progress” toward a resolution during the Brexit negotiations before the EU will allow talks to move on to Britain’s future relationship with the bloc.

The Northern Ireland peace agreement “must not become a bargaining chip” in Brexit negotiations, the Irish government said in an emailed statement. The statement added that Ireland “welcomes” the U.K. emphasis on a common travel area, maintaining the peace agreement and avoiding a so-called hard border.

Businesses both north and south of the border in Ireland have been calling for clarity on the border issue. The Confederation of British Industry said ahead of the release of the government’s full paper on Wednesday that “firms are making long-term investment decisions now and need to see much more detail from these papers.”

The EU and the U.K. will seek to agree on broad principles on the issue in coming months to prevent the search for a solution holding up the wider Brexit talks, according to four officials familiar with the matter.

The principles will go a little further than the negotiating directives published by the EU in May, and could refer to the special circumstances facing Northern Ireland as a result of the U.K.’s decision to exit the bloc, according to the officials, who spoke on the condition of anonymity to discuss confidential talks.

The possible return of security and customs checks on the frontier has raised the specter of a return to the violence which blighted Northern Ireland from the 1960s to the 1990s, claiming more than 3,000 lives. Border checks largely melted way after a peace agreement in the 1990s, and the Irish government estimates cross-border trade is worth more than 3 billion euros ($3.5 billion) per year. Disrupting that could have a devastating impact on the economy on both sides of the crossing.

If the U.K. wants to “put forward smart solutions, technological solutions for borders of the future and all of that, that’s up to them,” Varadkar said last month. Ireland will not “design a border for the Brexiteers.”

 

©2017 Bloomberg L.P.

 

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

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Hotel CEOs Discuss Recent Cancellation Policy Changes and Hint at More to Come

Skift

Marriott CEO Arne Sorenson, speaking at last year’s Skift Global Forum. Sorenson said response to Marriott’s new 48-hour cancellation policy in the U.S. and Canada has been “encouraging.” Skift

Skift Take: As hotels tighten up their revenue management practices, expect more of these cancellation policy changes to take place in the near future.

— Deanna Ting

Marriott and then Hilton made a lot of news in the past two months when they both announced changes to their cancellation policies, shortening the amount of time to cancel a reservation to 48 hours prior to check in, instead of the industry standard of just 24 hours.

Marriott was first, announcing on June 15 a new policy that impacts its hotels in the Americas across all brands with the exception of Design Hotels and Marriott Vacations Worldwide. Hilton followed suit on July 31 with a new policy impacting its hotels in the U.S. and Canada, implementing 48-hour and, in some cases, 72-hour cancellation policies for its hotels.

Initial reaction expressed major concern, especially among the corporate travel community, but some said the new policies won’t hurt corporate travelers or their companies as much as originally thought.

Soon after Marriott and Hilton announced their changes, InterContinental Hotels Group (IHG) announced its new 24-hour cancellation policy.

Here’s what a few hotel CEOs had to say about those cancellation policies during their companies’ recent second quarter earnings calls.

Marriott: It’s Been Encouraging

“What we’ve heard back has been encouraging,” said Marriott CEO Arne Sorenson. “And we’re not surprised by that. We did some beta testing in some markets before rolling it out as a brand standard, to see how customers responded to it. Nobody likes incremental restrictions on the flexibility of reservations, but I think most customers understand that we’ve got a need to manage our inventory and avoid walking people and doing those sorts of things. And as a consequence, the response has been just fine and we think really no impact on the business.”

Hilton: Expect More

Hilton CEO Christopher Nassetta hinted that Hilton may pilot more types of flexible rates and different cancellation policies going forward.

“We announced [the new policy] to our owners a month ago,” he said. “And in select markets, 10 or 20 markets around the country, we’ll go to 72 hours where we think it’s appropriate. The reasons I think are obvious for why we’re doing that. Not just because of new technologies, but just because customers, many of them, ultimately have been trained to do multiple bookings and do things that have created a scenario where cancellations have, in some markets, skyrocketed. They’ve got, they’ve gone way up.”

He added, “It makes it very hard for us to manage inventory, particularly close-in inventory in a way that makes sense. And the net result of that is it costs everybody, because if we can’t manage inventory, there is ultimately a cost to that, that at some point gets borne by the consumer. And so, the idea is we got to be able to understand what people want to do a little bit earlier, a little bit closer in. We have – we can’t have it be within 24 hours, just because we can’t manage that last-minute inventory. It’s just not – it’s very difficult to do. And so that’s why we’re doing it. We’ve had generally talked to a lot of our corporate customers and otherwise, and I think, people understand it. The reception has been perfectly fine.”

And he hinted at more “testing.” “We are, to your comment, testing some other things,” Nassetta said. “I’m not going to get into it in detail because we’re deep in the middle of it. But hopefully sometime in the second half of the year we will layer some incremental opportunities on top of that, that would really start to bifurcate. Then really thinking about from the 48-hour, 72-hour mark out to seven days, creating fully flexible pricing structures and semi-flexible pricing structures that would require potentially even cancel seven days, within seven days. Again, with the effort being to be able to manage inventory more intelligently, what we find as we’re testing it is the large majority of our customers actually do know within those time frames whether they need to cancel or not. It’s just they haven’t had to do anything about it. So, they haven’t. But if you can create the right incentive system where you give them an incentive to let you know earlier, it’s good for them because they ultimately probably can get a little bit better deal. It’s much better for us because we can manage that close-in inventory more intelligently to make sure that we both price it right, but more importantly, we fill as much as we can and don’t leave rooms unoccupied.”

Hyatt: Our Hotels Can Decide What’s Best for Them

Hyatt CEO Mark Hoplamazian stressed that Hyatt wants to leave the “decision making” on cancellation policies up to its hotels.

“First and foremost, I just want to make it clear that, we as a company have an operating philosophy, where decision-making is delegated in large measure to our hotel teams,” Hoplamazian said. “We do that, because, we think it allows us to be more nimble, more responsive real-time and appropriately localized to the local market requirements and so forth.”

He also noted, “about 40 percent of our total full service hotels in the Americas have already moved their cancellation policies to be at 48 hours or more. There is a significant portion of those hotels, over 60 of them, that have cancellation policies in excess of 48 hours.”

He also added. “With respect to whether we look to – look to establishing a change in corporate policy, it’s something that we will evaluate over time, but please note that we’ve been already active in the marketplace.”

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Summer of Overtourism: 4 Lessons for the Travel Industry

Manu Fernandez  / Associated Press

Overtourism is becoming a problem in Europe, and many cities are at a loss for how to solve it. In this Wednesday, May 25, 2016 photo, people sunbathe at the Barceloneta beach in Barcelona, Spain. Manu Fernandez / Associated Press

Skift Take: Destinations around the world need to wake up and realize that social problems related to tourism aren’t going to solve themselves.

— Andrew Sheivachman

This summer, overtourism has grown into a major global issue that has transcended both local politics and the grasp of individual sectors of the travel industry.

Venice and Barcelona, in particular, are in the spotlight. Overcrowding in these cities, and backlash from local residents, has dominated news reports and helped shine a spotlight on the negative ramifications of increased tourism in urban locations.

Skift has been tracking this phenomenon for years, having recently focused on the adverse effect of tourism on destinations like Iceland, New York City, and Amsterdam. A documentary about Barcelona overtourism was released earlier this month.

Here are four takeaways on this summer of overtourism based on our past reporting.

1. Price Is Part of The Problem

When I visited Iceland last year to find out more about how tourism has affected the life of its residents, one factor stood out above all others: travelers originally started visiting Iceland because it was cheap.

The expansion of low-cost carriers around Europe has made it cheaper and easier than ever to reach cities that were usually expensive. The proliferation of additional cruise ship stops in cities like Venice and Barcelona, as well, have exacerbated the problem.

As travel becomes more commoditized, local communities tend to suffer from the consequences as travel companies reap the rewards.

2. New Neighborhoods Create New Problems

City centers and other attractions are used to an influx of tourism during summer months. Cities like New York have encouraged tourists to visit neighborhoods off the beaten path to reduce crowding at the quintessential tourist hotspots. But there is a dark side to tourists spending time in new neighborhoods.

Locals can no longer go about their lives without being disturbed by throngs of tourists, and often avoid patronizing local businesses during times when tourists are present. Over time, this leads to a new crop of businesses popping up that cater to tourists, not locals. While vital for tourists, hotels don’t really add any form of value that improves quality of life for residents. The utility of tourism to the average people who live in a neighborhood is, in reality, minimal, besides the creation of new service jobs.

3. Travel Companies Need to Own Up

Travel is one of the world’s largest industries, but doesn’t always act in a responsible manner during periods of growth. Hotel chains, airlines, cruise lines, and roomsharing services have each played a role in creating a hostile environment for locals in the destinations they serve.

Yet, there seems to be little honesty from the leaders of these sectors about the role they play in directly and indirectly altering urban environments to better fit the needs of tourists instead of locals. Tourism is an especially parochial industry, and needs to better incorporate values that don’t perfectly align with its own growth and self-interest.

4. It’s Up to Government Leaders To Solve Overtourism

Cities have grappled with how to deal with increased tourism for years at this point, and it should be crystal clear now that action should be taken. Local governments must insist on limitations on tourism, which can be accomplished through taxation and tourist caps.

Government-backed tourism boards and travel companies, of course, are able to influence policy-making in many cases. But as we’ve now seen in cities and destinations around the world, a robust approach to encouraging tourists and enabling travel companies to grow their business has had serious negative consequences.

Ryan Wolkov

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Air Berlin’s Slow Collapse Into Bankruptcy, Explained

Air Berlin

Air Berlin’s Airbus fleet might find a home elsewhere after the company said this week it has filed for bankruptcy. Its main backer, Etihad Airways, was no longer going to prop it up. Air Berlin

Skift Take: Over in Italy, no one wants to let Alitalia go. The Italian national carrier is also bankrupt, but keeping the airline is a matter of national pride. There’s no such love for Air Berlin. It’ll probably disappear, and that’ll be OK.

— Brian Sumers

For an airline that has struggled for the best part of a decade, Air Berlin has managed to stick around for a surprisingly long time.

Although the writing has been on the wall since 2006’s lackluster IPO, which was followed by years of losses, it was kept afloat thanks to shareholder Etihad Airways, whose expansion attempts had seen it invest in a series of struggling European carriers.

With a new chief executive in Abu Dhabi, Etihad’s patience has finally run out, and, having had its funding pulled, Air Berlin had no choice but to file for bankruptcy.

The collapse of Germany’s second-largest airline will no doubt please its biggest, Lufthansa, and others with an interest such as TUI Group, Ryanair, and EasyJet.

These airlines have long complained about overcapacity in the German market. Several attempts to alleviate this problem have failed over the years.

“It’s been likely to happen for some time. A relatively high cost market for operators, excess capacity, falling yields, a distant unsupportive shareholder and let time take its course would seem to be the recipe for what has happened,” said aviation consultant John Grant.

Below is our analysis of what’s going on, what it means for European competition, and how we got here.

What happens next?

Instead of all its flights being grounded, Air Berlin has secured a bridge loan from the German government, so it will continue flying for the foreseeable future.

Had this loan not been forthcoming, thousands of passengers would have been stranded abroad in peak European holiday season.

Lufthansa has been trying to buy parts of Air Berlin for past year or so and in January was given clearance to lease some aircraft for its subsidiaries, including Eurowings. EasyJet is supposedly keen on acquiring some of Air Berlin, Reuters reported.

Lufthansa Group said in a statement: “Lufthansa is already in negotiations with Air Berlin to take-over parts of the Air Berlin Group and is exploring the possibility of hiring additional staff. Lufthansa intends to conclude these negotiations successfully in due time.”

Ryanair is also engaging in some strategy. The Irish airline might not be a great fit to acquire Air Berlin’s assets, because it flies Boeing aircraft, not Airbuses like Air Berlin. But it is already furious about the closeness of the German government and Lufthansa.

“This is clearly being set up for Lufthansa to take over Air Berlin which will be in breach of all known German and EU competition rule,” a Ryanair spokesman said. “Now even the German government is supporting this Lufthansa-led deal with €150m of state aid so that Lufthansa can acquire Air Berlin and drive domestic air fares in Germany even higher than they already are.”

Analysts at RBC said that any move by Lufthansa would be “defensive” as it would be “blocking other more competitive airlines from expanding.” RBC has also speculated that after Air Berlin, investor focus will move to Norwegian and Alitialia.

“In theory both may offer opportunity for consolidation and a more rational European backdrop,” RBC analysts noted.

Wasn’t Etihad Airways supposed to save Air Berlin?

That was the spin in 2011, when Etihad bought 29.2 percent of the struggling German airline, becoming its largest shareholder.

The idea was simple: Etihad would gain access to the lucrative German market, while Air Berlin would receive needed cash. Etihad also would lessen its dependence on revenue from the Middle East, where it fought for share with Emirates Airline and Qatar Airways. Etihad hoped the deal would help it win corporate customers in Germany.

But it hasn’t worked. Last year, Air Berlin reported 781 million euros in losses, or about $916 million U.S., its eighth loss in nine years. According to CAPA, an aviation analysis firm, the airline’s only profit came in 2012, after it sold its loyalty program to Etihad. 

Instead of giving up, Etihad kept investing. In May, with the airline ailing, Bloomberg reported Etihad had invested another $350 million Euros, or about $410 million U.S., into Air Berlin. At the time, it was estimated Etihad had invested almost 2 billion Euros ($2.35 billion U.S.) into the company.

However, Air Berlin had some massive structural challenges, and they weren’t Etihad’s fault. One basic problem: The airline never settled on a strategy. For a long time, it wanted to be a discount airline focused on attracting leisure customers. But it never could get its costs to match other low-cost carriers in Europe.

In recent months, it changed course, saying it would focus on business passengers and on long-haul flights across to the Atlantic from Düsseldorf and Berlin. It’s a little early to judge the strategy, but the transatlantic market is difficult, with discounters like Norwegian Air and established legacy airlines fighting for the same passengers. Many European and U.S. airlines have anti-trust immunity with each other, allowing them to operate legal monopolies on lucrative routes, but Air Berlin does not have immunity with any U.S. carriers.

Etihad had hoped its cash infusion this spring would help Air Berlin stay solvent for long enough for the German airline to explore “strategic alternatives,” such as a sale.

“However, Air Berlin’s business has deteriorated at an unprecedented pace, preventing it from overcoming its significant challenges and from implementing alternative strategic solutions,” Etihad said in a statement Tuesday.

Etihad added that it had given up trying to prop up Air Berlin, saying it “cannot offer funding that would further increase our financial exposure.”

Did anyone see this coming?

Yes.

Industry insiders were repeatedly surprised by Etihad’s investments into struggling foreign carriers. Air Berlin was just one of them. Over a roughly five-year period, Etihad also bought stakes in Air Serbia, Air Seychelles, Alitalia, Jet Airways and Virgin Australia, usually owning 24 and 49 percent of the airline — not enough to run it.

Etihad’s former CEO, James Hogan — he was let go this year after it became apparent that this strategy was not working — hoped to create a fourth global airline alliance, led by Etihad. As an alternative to Etihad joining one of the established players — OneWorld, Star Alliance and SkyTeam — Hogan was building Etihad Airways Partners, a group of eight airlines with ties to Abu Dhabi.

None of the investments has been particularly successful, and some, including Air Berlin and Alitalia, have been disastrous. The Italian airline is also in bankruptcy, and in May, Etihad, which owned 49 percent of Alitalia, said it would no longer fund the airline. 

Since almost the beginning of Etihad’s strategy, analysts have wondered whether the company was set for disaster, asking if Etihad would meet the same fate as Swissair. In the 1990s, Swissair, after receiving advice from the consulting firm McKinsey, bought pieces of several airlines, including South African Airways, Belgium’s Sabena, Poland’s LOT, and France’s Air Liberté.

Swissair had two things in common with Etihad. It bought less than controlling stakes, and it invested in weaker airlines. By 2002, Swissair had disappeared, replaced by Swiss International Air Lines, a company with a clean balance sheet. It is now owned by Lufthansa Group.

“Most people look at that and think the golden rule is either you control it or you don’t do it,” Andrew Charlton, managing director of Aviation Advocacy, a Geneva-based advisory firm, told the Wall Street Journal four years ago in a story asking if Etihad would meet the same fate as Swissair.

But in an 2013 interview with Flight Global, an industry publication, Hogan said he had little choice. Etihad’s home market, he noted, was small and competitive. The airline needed to branch out.

“My fiercest competitors are here in the Gulf,” Hogan said. “This strategy is part of how I differentiate and build a network to compete.”

How will Etihad Proceed?

Hogan was dismissed on July 1, and less than a month later, Etihad reported a massive $1.87 billion annual loss for 2016. About $800 million of the loss were attributable to failed investments in other airlines, especially Alitalia and Air Berlin, the company said.

Under interim CEO Ray Gammell, Etihad may try to reduce its investments in foreign carriers. It still hold stakes in six, though in July it sold its 33 percent piece of a Swiss regional airline to a private equity firm that also owns Slovenia’s Adria Airways. The airline is called Darwin Airline, but Etihad had rebranded it as Etihad Regional.

In announcing the deal, Etihad said it was conducting an “ongoing strategic review” of its investments.

But while it’s possible Etihad will seek to limit its investments abroad, the carrier’s home market is also in turmoil.

The airline has struggled as the global oil economy has slowed. Last month, when it announced earnings, it said fewer passengers were buying business class tickets because “corporate travel policies continued to encourage flyers to downgrade to Economy.” It also noted that yields — a rough measure of ticket prices – were under pressure in all cabins.

And Etihad’s brand in the United States has taken a hit recently, as the nation’s three largest carriers — American Airlines, Delta Air Lines and United Airlines — have engaged in a coordinated campaign to try to block it and its two Gulf neighbors, Emirates and Qatar Airways, from further U.S. expansion.

American, Delta and United argue Emirates, Qatar and Etihad are stealing their passengers — especially travelers bound for India, Africa and the Middle East. While U.S. airlines fly to few destinations in those regions, they share revenue with European airlines that do. For example, American makes money if a traveler flies from Los Angeles to London on American, and then onto New Delhi on British Airways.

The U.S. majors allege the three Gulf airlines receive subsidies from their governments, which they say is a violation of Open Skies agreements negotiated by the United States with Qatar and the United Arab Emirates. The agreements permit Gulf carriers to launch as many U.S. flights as they want, but they bar most government subsidies.

The Gulf carriers deny the charges. Like all airlines, they say, they receive government assistance. But it is not illegal, they insist.

Ryan Wolkov

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5 Factors That Influence Millennials’ Luxury Spending Habits

Bobby Yip  / Reuters

A customer checks a luxury handbag at a Milan Station outlet in Hong Kong September 2, 2013. Bobby Yip / Reuters

Skift Take: There is no one strategy to win over millennials. Brands should focus on what they offer in terms of quality and then communicate that through as many channels as possible to increase their awareness among this diverse but growing demographic.

— Samantha Shankman

Most brands are chasing the coveted millennial buyer — especially luxury brands which hope to endear loyalty early and gain life-long customers in the process. Millennials, however, do not have a simple set of behaviors and habits change based on gender, age and location.

Deloitte dove into millennials’ luxury purchasing behavior in its new unfortunately named report Bling It On, which surveyed more than 1,000 consumers between 20 and 30 years old in the U.S., UK, Italy, and China. These markets represent the world’s largest consumer markets and producers of luxury goods. We highlight the five findings most relevant to travel brands:

1. Following a trend of experiential preference, millennials were slightly more likely, 53 percent, to choose a luxury experience over a product when buying a present on a generous budget.

Millennials in more mature markets such as the U.S. and UK were as much as 66 percent more likely to do so while only 34 percent of consumers in China make the same decision. Women in all markets were more likely to select the experience over product.

2. Although brands often think of millennials as conscious consumers, the report found that cost is not as influential when it comes to luxury purchases. A half or three-quarters of respondents from all markets said they rarely or only sometimes consider the sustainability and ethics of a brand before making a purchase decisions.

It is possible that consumers do not perceive their luxury purchasing decisions having the same impact on the environment or communities as everyday purchases since they occur more sporadically. Consumers from the U.S. and China were more likely to consider the sustainability of a brand than European consumers.

3. It is not surprising to find that more respondents discover new luxury products and trends through social media (20.5 percent) than a brand’s website (15.1 percent) or magazines (14.4 percent). And although social media is important, respondents say they make buying decisions based on information from multiple sources.

This might seem like a disaster for luxury brands: Millennial communicate through several mediums, have loose brand loyalties, and buy more for themselves than based on public opinion. Digital is the one constant.

As the report reads: “Reliance on ‘above-the-line’ advertising on the high street and in traditional print media, and the persuasive power of in-store beauty consultants, is giving way to a much more amorphous marketing environment which embraces online opinion sharing, and rating and influencing from a diverse group of product authorities who create a conversation between brands and potential customers through social multimedia, with Instagram now seen to be the most influential social channel for luxury brands.”

4. It might be surprising to some retailers that impressing friends or family and influencers were the among the least popular reasons for making a luxury purchase. Millennials were more likely to make a purchase because it made them feel good but also look good. Therefore, the perceived quality of a brand has a stronger impact than outsiders’ opinion.

5. Millennials are not consistent or regular buyers of luxury items or experiences. They are most likely to make a purchase when they receive extra income or have a special event. Brands must learn to trigger their customers into a buy rather than rely on a steady set of behavior.

This sporadic behavior is due in part to a lack of wealth. The U.S. Federal Reserve’s most recent Survey of Consumer Finances found that the average net worth of U.S. millennials 20 to 30 years old was between $2,093 and negative $38,915.

Most luxury brands, however, are not going after the average millennial. There is a segment of millennials, generally located in more urban areas who spend more on luxury products.

Ryan Wolkov

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Florida Tourism Is Growing But International Visitor Numbers Are Down

martinvarsavsky  / Flickr

Florida saw the number of visitors increase in the first six months of the year, mostly from other parts of the U.S. Pictured here is the Wynwood neighborhood of Miami, which has become a tourist draw. martinvarsavsky / Flickr

Skift Take: It’s hard to pinpoint why fewer international visitors are coming to Florida this year, but Visit Florida has some work to do to spur overseas tourism. Good thing they got fully funded this year.

— Hannah Sampson

The number of tourists visiting Florida continues to grow.

Gov. Rick Scott will announce Tuesday that an estimated 60.7 million tourists came to the state during the first six months of the year. That’s a 4.1 percent increase over the same time period in 2016.

Scott plans to highlight the new numbers during a visit to the Florida Aquarium.

A breakdown shows that the increase is due primarily to a growing number of visitors coming from other states. But the number of tourists coming from overseas countries and Canada has dipped slightly.

Scott has backed budget increases for Visit Florida, the state’s tourism marketing agency. Earlier this year GOP legislators had threatened to cut funding by two-thirds but reached a deal with Scott to keep the agency budget intact.

 

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

Ryan Wolkov

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