Airlines Tie CEO Pay to Customer Satisfaction

Southwest Airlines

Airline CEOs Gary Kelly of Southwest (shown above), Oscar Munoz of United and Ed Bastian of Delta have part of their compensation linked to how customers view their airlines. Pictured is Kelly at a Metro Atlanta Chamber Insights on Leadership Luncheon August 22, 2011. Southwest Airlines

Skift Take: Well, this is something that airlines do right: Linking their CEO pay to customer satisfaction. Perhaps the linkage should be even greater although perhaps Southwest has a bit more respect for its customers than some of the others.

— Dennis Schaal

Angry United Airlines customers can now vent their fury at a juicy target: the chief executive’s pocketbook.

United ties about $500,000 of CEO Oscar Munoz’s annual bonus to customer satisfaction questionnaires. The manhandling of a doctor dragged off an overbooked flight in Chicago– and Munoz’s response, widely viewed as ham-handed — doesn’t figure to help his cause.

Each day, United collects about 8,000 customer surveys on items such as legroom and the quality of in-flight coffee. Fliers were already pretty disgruntled. In 2016, researcher J.D. Power rated United dead last of traditional North American carriers. Early returns are now even less promising.

“United Airlines just sent me a customer survey about my flight yesterday,” Meredith Tucker deadpanned on Twitter after the overbooking episode. “Looking forward to sharing my thoughts.”

Of course, Munoz won’t be begging on street corners if he’s docked the half a million. The CEO has 2016 target compensation of about $14.3 million, according to his employment agreement. The actual amount for last year is expected to be disclosed by month’s end.

In a filing, the company’s board said executive pay is “designed to further our objective of aligning the interests of our employees with those of our stockholders and customers.” United declined to comment.

Hashtag: Awkward

Southwest Airlines Co. also ties part of CEO Gary Kelly’s bonus to a measure of customer loyalty. Delta Air Lines Inc. links a part of CEO Ed Bastian’s annual long-term stock award to customer service.

At the airline officially known as United Continental Holdings Inc., the board mentions “customer satisfaction” in the pay filing no less than 20 times. The company didn’t specify exactly how that’s calculated, though the bonus is tied to improvement of the survey results.

Presumably, dragging customers out of their seats won’t help. A Twitter wag named Joe Householder wrote, under the hashtag, #awkward: “Based on experience, the guy on the #united flight is getting his, ‘tell us about your trip,” email survey about now.”

Another Twitter commentator said he actually received one, which asked, “According to you, why do we consider ourselves the best airline to fly with?”

His answer: “beats me.”

–With assistance from Michael Sasso

©2017 Bloomberg L.P.

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

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Skift Podcast: What Hotels Are Doing to Win Your Loyalty

prayitnophotography  / Flickr

The Hyatt Regency Orange County is shown in this photo. prayitnophotography / Flickr

Skift Take: Tune in to hear how hotel loyalty programs are changing — and what that means for the traveling public.

— Hannah Sampson

skift-podcast-logoThis is the year that travelers might have to start questioning their hotel loyalties, if only because hotel loyalty programs are changing so much.

Marriott is merging its program with Starwood’s SPG. Hyatt’s new program just launched. And Hilton recently announced a slate of new features.

And all of these changes are taking place as online travel agencies continue to lure many travelers driven by price rather than points, and up-and-coming accommodations providers like Airbnb win fans without even offering a loyalty program.

On today’s episode of the Skift podcast, we’re talking hotel loyalty: who’s doing it right, who’s still trying, and how it is continuing to evolve.

Our guest is Gary Leff, founder of the View from the Wing blog and an expert on points programs. He joins podcast host Hannah Sampson and Skift hospitality editor Deanna Ting.

We’ll also hear from some interviews that Ting did at the Americas Lodging Investment Summit in L.A. with Scott Berman, U.S. hospitality and leisure practice leader at PwC; Best Western Hotels & Resorts president and CEO David Kong; and Langham Hospitality Group CEO Robert Warman.

 

Start listening to The Skift Podcast, today. Subscribe via iTunesSoundcloud or RSS.

Listen to all the Skift podcasts here.

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Everything AccorHotels Has Acquired and Invested in Over the Past Year

AccorHotels

AccorHotels’ $2.7 billion purchase of Fairmont Raffles Hotels International was the biggest of many investments and acquisitions the company made within the last year. AccorHotels

Skift Take: AccorHotels is buying up and/or investing in a lot of other companies in its pursuit to become an entirely new breed of hotel company.

— Deanna Ting

If it feels to you as though AccorHotels has made a new deal every few weeks or days for the past year, you wouldn’t be far off the mark.

Indeed, the Paris-based hospitality company has completed a number of investments over the past year, snapping up other hotel brands or entering into partnerships with them, getting into alternative accommodations, and acquiring adjacent businesses that can supplement its core hospitality business.

It’s only April now, and already the company has announced five deals and partnerships for 2017. In 2016, the company had approximately eight of those transactions, the largest of them being its $2.7 billion purchase of the Fairmont, Raffles, and Swissotel brands.

What follows is a closer look at each of AccorHotels’ most recent acquisitions and/or investments, including some insight into why and how each one plays a part in the company’s plans to be a new kind of hotel company.

Joining the Alternative Accommodations Revolution

Unlike its peers, AccorHotels hasn’t been shy about actively investing in or even buying alternative accommodations providers. While the rest of the hotel industry is content to say that sharing economy businesses like Airbnb and the like aren’t much of a threat, or that they cater to a different clientele, AccorHotels CEO Sebastien Bazin thinks that kind of thinking isn’t just bad but “irresponsible.”

“It would be absolutely foolish and irresponsible to fight against any new concept, offer, or services like this, let alone fighting against the sharing economy,” Bazin told Skift shortly after the company announced its $168-million purchase of onefinestay. “This is where the world is leading us. All of those new services are very powerful and very well implemented and executed. You need to embrace it.”

In addition to buying onefinestay last year, Accor also made a 49-percent investment in Squarebreak, a French-based high-end vacation rental platform that specializes in Europe, and 30-percent investment in Oasis, a Miami-based platform for “home meets hotel” lodging.

Earlier this year, Accor also announced its intent to buy Atlanta-based Travel Keys, a private vacation rental broker with more than 5,000 villas worldwide. Accor has said it expects to close this deal by the second quarter of 2017.

With each of these investments, it’s clear that AccorHotels is positioning itself for a long-term advantage over its peers, and even Airbnb itself, especially now that Airbnb also owns its own private, luxury vacation rental platform too. When combined, each of AccorHotels’ investments fill out a comprehensive portfolio of alternative accommodations, from upper upscale (Oasis and Squarebreak) to luxury (onefinestay and Travel Keys).

Source: AccorHotels financial filings

Expanding Its Luxury Portfolio

Another area in which it’s clear AccorHotels wants to grow its portfolio is its collection of luxury hospitality brands, a sector where Bazin has admitted AccorHotels has previously lacked strength and expertise. Now, however, with AccorHotels’ multi-billion-dollar purchase of the Fairmont Raffles Hotels International (FRHI) in 2016, as well as its strategic partnership and 5-percent investment in Banyan Tree, the company is proving it’s a formidable player in the luxury space.

Last year, the company carved out its own luxury division, AccorHotels Luxury Brands collection, to be led by veteran luxury hotelier Chris Cahill who previously served as COO of FRHI until 2012. This division includes the Fairmont, Raffles, Swissotel brands, as well as the Sofitel, Pullman, and MGallery brands, among others.

And while AccorHotels’ partnership with Banyan Tree could prove challenging, the company is already seeing success since its acquisition of FRHI last summer. During AccorHotels’ full year 2016 earnings presentation, Bazin said, “Within barely seven months we have signed 20 new contracts at Fairmont, Raffles — more than they had signed over the last two years in fact.”

Forming Very Strategic Hotel Partnerships

In addition to AccorHotels’ partnership with Banyan Tree, the company has also made a number of focused investments in other hotel companies — Huazhu, 25hours Hotels, and Rixos Hotels — in an effort to grow the company’s presence in these global regions (China, Germany/Europe, and Turkey).

The first of these was with China-based Huazhu, which is listed on Nasdaq as China Lodging. In January 2016, Accor struck a deal with Huazhu to work with the company to grow its portfolio in China and in doing so, it signed contracts for 70 hotels in 2016 alone in China, three times more than the company did in 2014, and with another 150 in Accor’s pipeline. As part of Accor’s partnership with Huazhu, Accor also took a 10-percent stake for $193 million in the share capital of Huazhu, and Bazin joined Huazhu’s board of directors. That investment, Bazin said, has more than doubled to be worth $390 million as of February of this year.

“That’s because this market cap has increased from €1.9 billion to €3.9 billion on the NASDAQ, the market cap,” he said. “And the last year in China, we probably made much more than we made in China over the last 35 years. That was exactly what we told you we would do a year and a half ago when we talked with you about this partnership in China.”

In November 2016, AccorHotels announced it had made a 30-percent investment in Hamburg-based boutique/lifestyle chain, 25hours Hotels, in an effort to help that brand grow globally. 25hours Hotels CEO Christoph Hoffmann told Skift that AccorHotels wants to help his brand grow in markets that include Asia and the U.S. and to increase the brand’s distribution channels.

In March 2017, the company also announced a long-term joint venture with Antalya, Turkey-based Rixos Hotels, which operates 20hotels primarily in Turkey and the Middle East. Under this partnership, AccorHotels will eventually own a 50-percent stake in the joint venture management company and will integrate 15 Rixos properties into its network. The remaining five city center hotels will be reflagged to AccorHotels brands and will be managed by Accor.

Adding Complementary Services

AccorHotels’ ambitions of being a new breed of hospitality company are also reflected in its investments into complementary service providers like concierge service John Paul, and soon enough, events specialist Potel & Chabot.

During the company’s most recent investor presentation, Bazin said the addition of John Paul, in particular, would play a major role in how people interact with AccorHotels as part of its efforts to provide services for locals who live and work near the company’s hotels. Accor bought an 80-percent stake into John Paul in November 2016.

“What can I offer them by way of service?,” Bazin asked the audience. “Food and beverage? Dry cleaning? Key service? Leave their luggage? Recover a rental car? Drop it off? When you enter that universe, you say, ‘My God, I have everything that the digital world wants.’ I have John Paul [concierge services] where I can interact with them. [We’re] changing, radically, your mindset, and entering revenue that can grow 20 to 30 percent a year.”

In March, AccorHotels announced it would partner with Edmond de Rothschild Investment Partners to buy French events company Potel & Chabot, which operates major sporting events like the French Open tennis tournament and the 24 Hours of Le Mans endurance race. If Accor is successful in the deal, it will own 40 percent of the company, its partner will own 51 percent, and the remaining 9 percent will be retained by current majority stakeholder 21 Centrale Partners.

AccorHotels has said that an investment in Potel & Chabot would help the company develop new food and beverage offerings for MICE (Meetings, Incentives, Conferences and Events) guests, as well as locals through a concierge service. Investing in the company would also open up opportunities for Accor to offer exclusive experiences at these events for its loyalty members.

Driving Bookings

Following AccorHotels 2015 acquisition of Fastbooking, which allowed the company to open up its booking platform to independent hotels who are not otherwise affiliated with AccorHotels, the company has also made a number of recent investments into driving even more hotel bookings, both for its own properties and those independents whom it works with via Fastbooking.

Both of these very recent investments include the April 3 acquisition of VeryChic, a website platform that specializes in flash sales for hotel rooms, and the April 5 purchase of digital specialist Availpro for an undisclosed amount.

All three of these investments (Fastbooking, VeryChic, and Availpro) demonstrate Accor’s commitment to being a trusted third-party provider of services for independent hotels, and not just the hotels it directly operates or manages.

Graphic Design: Ping Chan

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The State of Global Tourism Competition in 6 Charts

computix  / Flickr

Destinations have made progress on sustainability and visas but more work lies ahead. Pictured are tourists on a river cruise on the Seine in Paris. computix / Flickr

Skift Take: Travel brands have an economic incentive to push policy makers and private sectors in their destinations on sustainability and leaner visa policies because tourists will reward them with higher spending and likely repeat visits.

— Dan Peltier

While many travel industry brands have introduced more eco-friendly practices and made it easier for travelers to enter a destination, tourists around the world are increasingly concerned with their carbon footprints and destinations’ level of openness as the U.S. travel ban weighs on minds of global travelers.

Tourists spend more in destinations when they perceive them to have sustainable or environmental-friendly practices in place, according to the World Economic Forum’s 2017 Travel & Tourism Competitiveness Report.

“Although this relationship is complex, and there is no evidence of direct causality, the more pristine the natural environment of a country, the more tourists are inclined to travel there, and the more they are willing to pay to access well-preserved areas,” the report states. “Consequently, as the natural capital depletes, destinations lose revenue.”

But according to the Executive Opinion Survey which is based on a survey of about 100 business executives in each of the 136 countries analyzed for the report, many business executives and travelers perceived the travel industry as less environmentally friendly in 2016 than they did in 2006.

Some 17 of the top 20 countries ranked for environmental sustainability are in Europe including Switzerland, Norway, and Iceland. “Globally, there is little sign of
improving travel and tourism development standards,” the report states. “In
particular, the footprint of the sector has been reduced in the majority of countries of Northern and Western Europe while it has increased in most developing nations, especially in Asia.”

Visa Requirements

Visa requirements also weigh heavily on travelers’ decisions to visit destinations. In 2015, tourist destinations worldwide required 61 percent of the world’s population to obtain a visa prior to departure — an improvement from 2008 when 77 percent of the world’s population needed a visa to visit a given destionation.

Speaking at Skift Forum Europe in London last week, Gerald Lawless, head of tourism and hospitality for Dubai Holding and chairman of the World Travel & Tourism Council, said a global trusted travel program is something the travel industry should pursue. “You could go through the fast lane in these blocks of countries that participate, why shouldn’t we try to combine this? said Lawless. “India just introduced visa on arrival and Duba just gave visa-free travel to China.”

Electronic visa systems have proven effective and should be widely implemented, Lawless said. “15 years ago we persuaded visa authorities in Dubai to give visa waivers to 32 countries that weren’t threats,” he said. “But we asked them not to ask for reciprocity from the other countries and it’s taken 10 to 15 years for reciprocal visa policies from the Schengen block to the UAE.”

U.S. and Canada, for example, don’t want to recognize some European countries for their visa waiver programs. “Therefore the EU by its own laws needs to take reciprocal action,” said Lawless. “We ask politicians to be sensible and it takes effort and will on both sides. Don’t do things just for political reasons.”

Below are six charts that display how 136 countries compare to business executives’ and travelers’ perceptions of hotel infrastructure, airport infrastructure, destinations’ degrees of openness and how the travel industry is working to combat negative side effects of tourism.

Interestingly, the U.S. and European countries scored high rankings for tourism infrastructure and aviation infrastructure but scored lower for perceptions of openness as waves of populism have swept across both regions in the past year.

Destinations such as France and Belgium also ranked lower than Latin American, Asian or African destinations in some cases such as safety and security following terrorist attacks in both countries in the past year.

Chart 1: Western Europe is perceived to have high-quality tourism infrastructure including hotels, car rental availability and solid financial institutions that tourists rely on.

Quality of Tourism Infrastructure (hotels, car Rentals, ATMs, etc.)

Rank Country Score (1 to 7, 7= highest)
1 Austria 6.67
2 Spain 6.66
3 U.S. 6.59
4 Portugal 6.37
5 Croatia 6.26
6 Switzerland 6.2
7 UK 6.16
8 Australia 6.06
9 Germany 6
10 Canada 5.97
11 Italy 5.96
12 Luxembourg 5.91
13 Iceland 5.82
14 Bulgaria 5.8
15 Ireland 5.76
16 Thailand 5.76
17 France 5.7
18 Greece 5.7
19 New Zealand 5.69
20 Cyprus 5.3

 

Chart 2: U.S. airports have gotten a bad rap for their aging and deteriorating conditions but U.S. airports and airlines still managed a number two ranking when considering each country’s airport infrastructure and airline connectivity.

Quality of Aviation Infrastructure (airport infrastructure and air connectivity)

Rank Country Score (1 to 7, 7=highest)
1 Canada 6.76
2 U.S. 5.96
3 UAE 5.84
4 Australia 5.69
5 Hong Kong 5.52
6 Singapore 5.29
7 Norway 5.28
8 UK 5.2
9 Spain 5
10 Netherlands 4.95
11 Switzerland 4.94
12 Germany 4.92
13 France 4.9
14 Turkey 4.74
15 New Zealand 4.7
16 Panama 4.69
17 Iceland 4.69
18 Japan 4.6
19 Sweden 4.59
20 Thailand 4.56

 

Chart 3: Singapore ranks highest for its ease of visa requirements and general perception of openness to travelers. Other Asia-Pacific destinations such as Australia, Japan and Indonesia ranked higher than France or the UK, for example. Chile, Colombia, El Salvador and Panama in Latin America also ranked in the top 10.

Perception of International Openness (visa requirements, bilateral aviation agreements, regional trade agreements in place)

Rank Country Score (1 to 7, 7=highest)
1 Singapore 5.21
2 Australia 4.77
3 Chile 4.65
4 Colombia 4.64
5 New Zealand 4.52
6 El Salvador 4.51
7 Ireland 4.51
8 Panama 4.44
9 Iceland 4.4
10 Japan 4.38
11 Denmark 4.36
12 Peru 4.3
13 Nicaragua 4.29
14 Korea 4.28
15 Luxembourg 4.27
16 Netherlands 4.27
17 Indonesia 4.27
18 Germany 4.26
19 France 4.24
20 UK 4.24

 

Chart 4: Global visa policies are becoming more lenient — some 85.5 percent of countries have a more liberal visa policy in 2017 compared to 2015.

 

Chart 5: Overall, global travelers’ perceptions of the travel industry’s environmental impact on destinations have worsened during the last decade as millions of more tourists cross borders each year. Research suggests that tourists tend to consume around three to four times more water per day than permanent residents, the report states.

 

Chart 6: The report found that the environmental strength of a country is directly related to tourism revenue and tourists spend significantly more if a country is perceived as environmentally-friendly.

 

Source: World Economic Forum

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United to Compensate All Passengers on Flight That Stirred Controversy

Chris Sweda  / Chicago Tribune via Associated Press

People with Asian community organizations from Chicago hold signs to protest after Sunday’s confrontation where David Dao, 69, of Elizabethtown, Kentucky was forcibly removed from a United Airlines airplane. Chris Sweda / Chicago Tribune via Associated Press

Skift Take: Compensating all 70 passengers on the flight that Dr. Dao was bumped from is a small gesture from United. It might serve the airline well to reform its contractual relationship with customers and to establish a passengers’ rights commitment.

— Dennis Schaal

United Continental Holdings Inc. will compensate all passengers for the cost of the flight in which a man was forcibly removed by security officers.

Megan McCarthy, a spokeswoman for the airline, declined to say Wednesday if the payment would be in cash, frequent-flier miles or other forms. Video posted to Facebook and Twitter showed the passenger, David Dao, as he was dragged out of his seat and down the aisle of the plane after refusing to give up his seat.

The extraordinary move comes following an extraordinary event. Rarely has an airline — or any company — faced the kind of global condemnation that has buffeted United over the last several days. After the blunder of the initial incident was compounded by a series of botched public responses, the Chicago-based carrier is stepping up the effort to get back in consumers’ good graces.

Chief Executive Officer Oscar Munoz’s initial response made the company a punch line on social media as far away as China. He said United had to “re-accommodate’’ the man, who was bloodied in the encounter with security officials. In a subsequent letter to employees, the CEO called the customer “disruptive’’ and “belligerent.’’

It wasn’t until Tuesday that Munoz was more contrite.

“I deeply apologize to the customer forcibly removed and to all the customers aboard,” he said. “No one should ever be mistreated this way.”

Dao was treated in a Chicago hospital for his injuries, according to a statement from lawyers who said they represent him. The lawyers sought a court order Wednesday in Chicago to preserve evidence, including surveillance videos, crew lists and other information, that could be used in litigation. A lawsuit hasn’t been filed.

 

©2017 Bloomberg L.P.

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TowneBank acquires Railey Mountain Lakes Vacations

Virginia-based TowneBank has acquired Railey Mountain Lake Vacations in McHenry, Maryland. Railey Mountain Lake Vacations manages 280 vacation homes and 2 hotels in the Deep Creek Lake area. According to Lakefront Magazine, “after graduating from Garrett College, Nancy Railey planted roots and began a family in Garrett County, Maryland in the 1980s. Nancy took $300, and […]

The post TowneBank acquires Railey Mountain Lakes Vacations appeared first on VRM Intel.

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Cathay Pacific Names New CEO After Financial Setback

Cathay Pacific

A Cathay Pacific B777-300ER aircraft. The airline named a new CEO after notching its first loss in eight years. Cathay Pacific

Skift Take: Faced with competition from low cost carriers and Chinese airlines amidst a decline in business travel, something had to give at Cathay Pacific — and it just did with a change in CEOs.

— Dennis Schaal

Cathay Pacific Airways Ltd. named Rupert Hogg as its chief executive officer, replacing Ivan Chu, as Asia’s biggest international airline struggles to revive earnings after reporting its first annual loss in eight years.

Hogg, 55, chief operating officer since March 2014 and a 30-year veteran at parent Swire Group, will take over May 1, Hong Kong-based Cathay said in a statement to the stock exchange Wednesday. Chu will become chairman of John Swire & Sons (China) Ltd., according to the statement.

The change at the top, which usually occurs every three years at the carrier, comes in the midst of the biggest business revamp Cathay has embarked on in two decades to help reverse the decline in performance. The premium carrier has been under pressure from low-cost rivals in the region and Chinese airlines that are offering direct routes, even as demand for business travel dips.

While sharing sketchy details of its review in January, Cathay said changes “will start at the top” and it would eliminate some positions as part of the reorganization, with key changes taking effect by mid-year. The airline has set a target of 30 percent savings in employee costs at its Hong Kong head office, it said last month.

Chu was appointed CEO on March 14, 2014, taking over from John Slosar, the current chairman of Swire Group. The carrier’s three most recent CEOs — Chu, Slosar and Tony Tyler — were all operating chiefs before assuming the top post, with each holding the job for about three years.

“Succession plan is well orchestrated,” said Will Horton, a Hong Kong-based analyst at CAPA Centre for Aviation. “By the time someone is COO, there’s effective support from the board for that person to be the next CEO. Rupert is pragmatic that it’s beyond time for Cathay to move on and seek a stronger future.”

Shares of Cathay dropped about 30 percent since Chu became CEO, compared with a 12 percent gain in the benchmark Hang Seng Index in the same period. The carrier last month reported a net loss of HK$575 million ($74 million) for 2016.

Asia’s largest international airline has announced a three-year “corporate transformation” plan to reduce costs by as much as 3 percent, while seeking to increase passenger capacity by as much as 5 percent a year through measures including nonstop flights to new markets.

Hogg joined Swire Group in 1986 and became a director and COO of Cathay when Chu took over as CEO. He was previously director for cargo and sales and marketing at the airlines.

Cathay Pacific Group employed more than 33,700 people worldwide, including about 23,400 for the main airline, according to the interim report for the half year ended June 2016.

To contact Bloomberg News staff for this story: Kyunghee Park in Singapore at kpark3@bloomberg.net, Dong Lyu in Beijing at dlyu3@bloomberg.net.

To contact the editors responsible for this story: Anand Krishnamoorthy at anandk@bloomberg.net, Sam Nagarajan

©2017 Bloomberg L.P.

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Is the Meetings Industry Finally Understanding Its Value? — Meetings Innovation Report

C2 Montreal

C2 Montreal is introducing new smart badges this year to help attendees meet who they need to meet. C2 Montreal

Skift Take: The meetings industry is beginning to evaluate the long-term impact of conferences on a host destination’s economic growth, and the business outcome for both local and visiting participants, with much more intention than in the past. It’s going to get bumpy, but it’s time for the industry to start taking itself seriously.

— Greg Oates

The Future of Meetings & Events

The Iceberg project is a new initiative developed by the Joint Meetings Industry Council (JMIC) to educate the meetings industry about the long-term economic impact of conferences, especially in high-priority, advanced industry sectors.

The theme itself is not necessarily new but there’s a definite groundswell of interest in 2017 to better evaluate and codify the impact of events on a destination’s economic development and the business outcomes for participants. That’s easier said than done, but at least the meetings industry at large is finally beginning to elevate the conversation around why it exists on a global scale.

“The difficulty here is that every single event has a different set of objectives, so therefore every single event is going to have different kinds of legacies and leave-behinds in the community to measure,” Rod Cameron, executive director of the JMIC, told me. “We need to make sure that we advance in the area of getting more credible value measurements around the economic policy benefits [derived from events], as opposed to simply spending benefits.”

Stay tuned for more about this theme. My upcoming Skift Research Report, Defining Conventions as Urban Innovation and Economic Accelerators — produced in collaboration with Meetings Mean Business — will publish at the end of this month. Read the full JMIC story here.

— Greg Oates, meetings & events editor

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Social Quote of the Week

#MPI Pulse: #WEC17 general session speaker @RonTite discusses thriving in the expression economy: eepurl.com/cJRmmb

@TheMeetingPro on Twitter

Skift Trends Q&A

How the Meetings Industry Is Attempting to Redefine Its Value Proposition: The Joint Meetings Industry Council’s “Iceberg” project is ambitious in terms of defining the value of the meetings industry more holistically, but there are a lot of challenges to provide the in-depth case studies required to quantify that successfully. Read more at Skift

NEXT GENERATION EVENT UX

This Is What Medical Meetings Will Look Like in the Future: The innovative education model at the University of Texas at Austin’s new Dell Medical School is designed to be a blueprint for the future of medical meetings. The process begins with understanding that the U.S. healthcare system is completely broken, and doctors need to collaborate more intelligently using next-gen connectivity platforms to design a better future for the healthcare industry. Read more at Convene

Leave Your Business Cards At Home With C2 Montreal’s New Smart Badge: PixMob is launching a new attendee badge at C2 2017 that connects with the online platform klik. Participants can use klik to consult their event schedule, register for activities, and plan their agenda, but more importantly, attendees will be able to “klik” their contacts so they appear on the platform’s online journal, right next to the daily schedule. Read more at C2 Montreal

The Secret Formula Of Successful Hybrid Meetings [Case Study]: Austria Center Vienna created this case study explaining how conference organizers at UEG Week advanced the field of digestive science through an integrated approach combining online and offline content. Read more at Event Manager Blog

Key Trends at SXSW 2017: The J. Walter Intelligence crew prioritized the biggest trends at South by Southwest in Austin this year, including: the pitfalls of tech, creative artificial intelligence, the rise of biotech, the rise of diversity in tech, dystopian activations, and the need for greater “cyber empathy.” Read more at J. Walter Thompson Intelligence

DeSTINATION DISRUPTOrs

Podcast: Why Convention Centers Are Becoming Town Squares: BizBash founder David Adler and Steve Goodling, president and CEO of the Long Beach Area Convention & Visitors Bureau, dig into the growing role of public spaces and event venues to drive long-term community and economic development. There needs to be more conversation around placemaking and activating underserved neighborhoods and venues specifically relating to the meetings sector. There’s a lot of fluff in this podcast but at least it’s a start. Listen at BizBash

VisitPittsburgh Creates Millennial Committee to Develop a 2022 Vision Plan: More convention bureaus like VisitPittsburgh should develop a millennial task force to envision the future of their cities’ visitor economy. Those vision plans could then be culled together to share with the broader industry. Read more at Meetings & Conventions

Tourism Montreal’s New ‘Generation Series’ Tackles Communication Challenges Among Different Age Groups: The best takeaway here is about bridging age gaps: “Mentoring programs should go both ways: the handing down of experience from older to younger and updates on trends and tech tips from younger to older.” Read the first, second and third stories in Tourism Montreal’s series.

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The Skift Meetings Innovation Report is curated by Skift editor Greg Oates [go@skift.com]. The newsletter is emailed every Wednesday.

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Delta Execs Downplay Importance of Basic Economy

Delta Air Lines

Delta Air Lines reported a strong first quarter for 2017. In this photo, Delta Air Lines’ Cuba crew celebrates the launch of flights to the island nation. Delta Air Lines

Skift Take: Delta says it is using basic economy fares to help better differentiate its products. The jury is still out on whether it will help them compete on routes where they face low-cost competitors.

— Andrew Sheivachman

Delta Air Lines executives downplayed the importance of basic economy fares on the airline’s quarterly earnings call Wednesday and said the jury is still out on how competitors’ bargain fares will affect its business.

Delta was the first major U.S. carrier to offer fares aimed at undercutting its low-cost competitors. Rivals American and United have also recently introduced the no-perks fare class.

“I think its early for us to be able to communicate what their implementation is going to do to us,” said Glen Hauenstein, president of Delta Air Lines.

He said consumers are paying attention to what they’d lose with basic economy and not automatically choosing the lowest price.

“When people are presented with the option of basic economy, they’re [then] selecting something else,” Hauenstein said. “That’s the real value: to define a product and match it to what they want. If we’re not able to do that, then we’re only playing to the lowest common denominator and you end up being commoditized.”

Delta still sees strong demand for flights to and from London, and remains bullish despite the popular sentiment that weakness in the UK economy will lead to struggles on transatlantic routes. While airlines such as Virgin Atlantic have reported softness in transatlantic demand, Delta said it is seeing continued strength from these routes. Delta owns a 49 percent stake in Virgin Atlantic.

“The declines and the reason for the decline in forecasted profit for Virgin Atlantic are more related to currency,” said Hauenstein. “The British economy so far has held up better than anticipated post-Brexit. We respond to the demand and I think we have a lot of levers until we see that materialize….It would be premature to announce what we might do if demand declined; it’s never been a better time to go to the UK or Europe for U.S. travelers.”

Delta is already anticipating a $125 million hit to it’s pre-tax income for the second quarter based on the 4,000 flights disrupted by rough weather last week during spring break, but reported a strong first quarter overall.

Business travel, as well, is tracking slightly higher in the second quarter of 2017 than in any previous quarter.

“Corporate customers who are planning to spend more are at a record high,” said Hauenstein. “The couple of standouts that are very positive are energy and banking and finance. There’s probably good reasons for both of those to be optimistic for the rest of the year.”

Overbooking

Delta’s leadership was skeptical when asked whether the scandal over a passenger’s forced removal that has embroiled United Airlines this week could lead to new federal regulations. Delta only denied boarding to 1,200 flyers in 2016, ten times less than some other carriers, according to its figures.

“Overbooking is a valid business process,” said Delta CEO Ed Bastian. “There’s operational consideration behind it. It’s not an option of whether you overbook, it’s how you manage your overbooking….I don’t think it’s a significant challenge for us. It’s very much [about] giving our front lines the tools to empower them at the first line of contact.”

When pressed again later in the call regarding the prospect of federal regulations limiting overbooking, Bastian refused to comment.

Ryan Wolkov

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Author: Ryan Wolkov

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Marriott CEO: New Digital Technologies, Not Walls, Are Key to the Future of Travel

Skift

Marriott CEO Arne Sorenson (R) was interviewed on stage at the Skift Global Forum in New York City in September 2016. Sorenson has been vocal about making travel safer and more accessible for all travelers. Skift

Skift Take: Sorenson hasn’t been afraid to speak up for more common sense approaches to travel safety and security, especially during an age where travel bans, and even bans on certain electronics, are taking place.

— Deanna Ting

Skift Editor’s Note: Marriott International CEO Arne Sorenson has never been afraid to speak up on issues of importance that relate to the travel industry, including recently imploring then-President Elect Donald Trump to “disprove [his] critics” by investing in travel and transportation infrastructure and crafting “sensible” immigration legislation.

Sorenson recently penned the following opinion piece for the World Economic Forum about the need for governments to implement smarter ways to deal with safety and security during travel. It’s an especially timely topic given President Trump’s recent attempts to enforce bans on travel and on electronic devices on flights from certain countries in the Middle East. This article was originally published by the World Economic Forum and was also featured on LinkedIn. It is published here with permission.

The world is on the move. People from across the globe are traveling more than ever before. By 2030, a global population of 8.5 billion people will take nearly 2 billion international trips. Most of the growth will come from outside the United States – in Africa, Asia and the Middle East. Travel drives economic growth and job opportunities – it’s good for my company’s business – and it promotes peace and understanding across cultures.

But all this increased travel is taking place in an antiquated system built in the 1960s – and the strain on the system shows. Today, more than 1.2 billion international travelers go to great costs and lengths to obtain a visa, waste time waiting in lines, all with old-fashioned paper documents in hand. We face new challenges that can’t be addressed by legacy systems. The real threats – like terrorism and disease – go beyond borders and the ability of any one country to control.

We cannot confront these modern challenges with medieval tactics like building walls to separate us. With modern technologies and the right tools, we can construct a new framework for the future of travel to keep us connected and make us all safer.

Digital Authentication

The right to travel should be based on who you are, not where you were born or the color of your passport. The current system is outdated; it’s not just unfair, it’s inefficient. Over the past decade, we’ve seen would-be terrorists traveling with passports from countries long seen as low risk.

We are beginning to move to a future where travel is facilitated by your digital identity, built with unique biometrics and “pushed” out to governments and companies, with permission, to ease travel. The private sector can – and already is – helping to build these capabilities, through innovative companies working on completely digital passports and visas. But we need to move faster.

Biometrics need to be regularly collected so that global citizens can travel and engage more seamlessly in countries around the world. India’s ambitious countrywide biometric collection program passed the 1 billion mark in April 2016 and is beginning to serve as a model for other forward-thinking countries.

Privacy is paramount and customers have the right to “own” their digital identity and decide which governments and companies to share it with, and in exchange for sharing more personal data, travelers will experience safer, more streamlined travel.

Global Communication

Governments will also need to adopt new policies that enable greater information and data-sharing across national borders. Building these digital bridges will enable security agencies to integrate many disparate national systems and better protect their borders and citizens by allowing them to focus resources on the true threats. Many countries have already taken steps to increase information-sharing with trusted allies and partners. We need to build off of the success of existing bilateral and regional verified traveler programs (like the UK’s Registered Traveller Service or TSA Pre-Check in the United States) to create a truly global system. Governments would have access to more and better information through a new integrated platform.

Such digital integration will also allow countries to use the data to assess a traveler’s level of “risk,” perhaps through a system similar to how a credit score assesses a borrower’s financial risk. More accurate information will enable governments to more effectively pre-vet the majority of passengers and devote more resources to identify and vet travelers who require further investigation. According to Interpol, between 2002 and 2013 almost 40 million travel documents were reported as lost or stolen. False and stolen passports are often linked to terrorists and criminals. Moving to a fully digital process built on biometrics will help to protect and verify a traveler’s identity and significantly reduce the risk of stolen papers falling into the wrong hands.

Revolutionizing the way we travel beyond our national borders won’t be easy. It will require governments working together with the best the private sector has to offer in order to build a secure, successful system that citizens will use and trust. But if we’re going to get the world ready for 1.8 billion international travelers in a little over a decade, we’ll need to disrupt the status quo and work together to erect smart bridges, not outdated walls.

Join me and other travel insiders on LinkedIn at Overheard@MarriottThis article was originally published by the World Economic Forum and was also featured on LinkedIn.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

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