United President: It’s Too Early to Know if Any Customers Are Boycotting Airline

Chris Sweda  / Chicago Tribune via AP

Asian community organizations from Chicago hold signs to protest after an April 10 United Airlines incident in which a doctor was removed from a flight. United said Tuesday that it’s too early to tell how bookings have been affected. Chris Sweda / Chicago Tribune via AP

Skift Take: United says it does not yet know if business was hurt by last week’s bumping drama in Chicago. It’s possible that the airline lost some customers on the margins, but United will be fine long-term. If the price is right, passengers will be back.

— Brian Sumers

Since United Airlines called Chicago O’Hare airport security officers last week to remove a passenger from one of its flights, leading to a violent altercation that was caught on video, the hashtag #BoycottUnitedAirlines has been trending on social media.

But speaking Tuesday on United’s first quarter earnings call, executives said they do not know whether the April 10 incident — perhaps one of the worst public relations debacles in U.S. airline history — has had a measurable affect on advanced bookings. So far, United President Scott Kirby said, the airline has not changed its forecasts.

“It’s really too early for us to tell anything about bookings,” Kirby said. “In particular, for last week, because it was the week before Easter. That’s normally a very low booking period. We just don’t have any quantifiable data.”

Asked specifically about bookings from China — the video went viral on Chinese social media site Weibo — Kirby said United does have enough data. United is by far the largest U.S. airline in China, though analyst Hunter Keay of Wolfe Research said ticket sales from Chinese customers probably represent only 3 percent of United’s overall revenue.

“It’s a small numbers problem,” Kirby said. “There’s a lot of volatility for bookings from point-of-sale China so it’s really too early to say anything about it.”

The incident, in which Dr. David Dao was dragged off a United Express flight from Chicago to Louisville, Kentucky when he refused to give up his seat for an airline employee, was among the word’s most viral and controversial stories last week.

Many United customers and potential customers asked how the carrier could forcibly remove a passengers who had already boarded and give that seat to an employee. Others acknowledged United has a right to ask passengers to leave, but asked how United could permit security officers to drag him off the plane so harshly.

“There have been some concerns from corporate accounts, which [is] totally appropriate,” Kirby said. “We feel like we have managed that pretty well and our corporate accounts are largely supportive. They want us to fix this. They want us to do the right thing. But they believe in us and believe that we will get this fixed and that at the end of the day we will be stronger and have better customer service.”

United CEO Oscar Munoz, who in a written statement last week first blamed Dao for being “disruptive and belligerent,” said Tuesday he takes full responsibility — “the buck stops here” — but added that he would keep his job. Munoz also said no one would be fired. “It was a system failure across various areas so no there was never a consideration for firing an employee,” he said.

Investment analysts not concerned

United’s stock has vacillated since the altercation but investment analysts who follow the carrier — and fret about nearly everything that could make shares less valuable — seem unconcerned the incident will change the carrier’s long-term financial prospects.

On Tuesday, analysts questioned United’s top executives for an hour, yet only one asked a about Dr. Dao’s experience. The analysts were far more concerned about United’s plans to add more flights, with some fearing more capacity might lead to market share battles, which could lead to lower revenues for airlines. The executives said it makes sense for United to add routes, since as recently as early 2015, before Munoz and Kirby joined the company, United tried to cut its way to improve profitability — without any success.

In note published April 14, Keay said he expects this issue eventually will fizzle. He noted that Spirit Airlines had a similar viral incident in 2012, when it refused to refund a ticket for a dying military veteran who was too sick to fly. “Spirit stock sold off on heavy volume,” Keay said. “It was a PR disaster… until people forgot about it.”

Keay said whatever legal settlement United reaches with Dr. Dao likely will not have a material effect on the airline’s finances. And he said most customers should return.

“Switch away from United for repeated bad service – sure, many have done that in recent years – but boycotting United in sympathy for an incident for which there is minimal, if any, specific precedent and for one that will likely drive policy change and some crow eating by management?” he said. “That seems dramatic.”

Changing policies

United has already outlined two changes to its procedures, and Munoz told analysts the carrier will use a “more common-sense approach” in dealing with passengers.

The airline said it will not call police or security unless a passenger is a threat to safety or security. The airline also said employees who must fly will need to book at least an hour before departure. This will ensure that, if a paying passenger loses a seat so an employee can fly, the customer will learn about it in the gate, rather than after boarding.

United has not said it will stop bumping passengers, but Munoz said the carrier will share more policy changes by April 30.

In his note, Keay suggested airlines offer more generous compensation to passengers it removes from flights.

Last year, he said, United involuntary bumped 3,765 passengers. Airlines are required to pay each bumped passenger no more than $1,350, but Keay asked whether airlines may want to pay more, perhaps as much as $3,000. “This seems easy,” he said, “And it might be underway.” He said the cost to the airline would be negligible, and it would help the carrier avoid future public relations hits.

Strong quarter

This viral event overshadowed a strong first quarter from United. The airline reported net income of $96 million, with a pre-tax margin of 1.7 percent.

Its passenger revenue per available seat mile, or PRASM, a closely-watch metric that measures how much revenue an airline makes for each seat it flies one mile, was flat on a year-over-year basis. This is a big deal, as most airlines have been reporting year-over-year declines in recent quarters, as average ticket prices have declined in many markets.

In the second quarter, United expects its PRASM to increase, year-over-year, for the first time since early 2015. The airline predicted PRASM will increase between 1 and 3 percent.

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Skift Video: How Meeting Planners Can Rethink Event Design

Skift Take: SkiftX went to Bellagio and ARIA in Las Vegas to get a behind-the-scenes look of how a major corporate event comes to life and how smart meeting planners are thinking about the future of event design.

— Matt Heidkamp

In an age where information and entertainment is never more than a smartphone click away, conference planners face the difficult challenge of keeping audiences engaged. How should the future of attendee-first event design take shape? Skift went to Las Vegas to see first-hand how event experts at Bellagio and ARIA worked with Adobe to develop multidisciplinary programming, immersive environments, and seamless experiences during Adobe’s Worldwide Sales Conference.

We also met with SkiftX Editor Greg Oates, who deciphers these strategies into the emerging 2017 Megatrend: the Festivialization of meetings and events.

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The Hidden Costs of Those Cheap Transatlantic Flights

Simon Wright  / Norwegian

A Norwegian 737-800 aircraft at Gatwick. The carrier is one of a number to offer low-cost transatlantic flights. Simon Wright / Norwegian

Skift Take: It’s probably not a shock to find out that those bargain-basement fares aren’t quite as attractive as they seem. Still, the likes of Norwegian and Wow Air are at least offering customers more choice and at the same time making the transatlantic market even more competitive.

— Patrick Whyte

Chicago to Reykjavik for $99. Los Angeles to Barcelona for $149. Denver to London for $199. It’s never been cheaper to fly across the Atlantic.

According to the hype, at least.

In recent years, relatively new low-cost carriers such as Norwegian Air Shuttle ASA and Iceland’s Wow Air have begun offering eye-poppingly low fares connecting the U.S. and Europe—rather than sticking to a single, compact region. The latest transatlantic player to join the fray is Level, from the European parent company that owns British Airways, Aer Lingus, and Iberia. It will begin flying in June with four routes from its new hub in Barcelona to Los Angeles, Oakland, Buenos Aires, and Punta Cana, Dominican Republic, with advertised prices starting at $105-$149 one way. Air France is following with a low-cost subsidiary, Boost, later this year.

But are these flights really as cheap as advertised? Sometimes with low-cost fares, you get what you pay for: inconvenient schedules, maybe, or arrivals at less-than-convenient airports (like London Gatwick instead of Heathrow, or Hartford instead of New York’s JFK). Other times, you’re suckered into a myriad of hidden fees.

We took a look at three existing budget airlines offering trans-Atlantic flights and tallied up what they really cost, after fees and necessary options like baggage surcharges. We also tried to see if the lowest advertised fares were really available, and then compared the totals to offerings from rival, full-cost airlines. Here’s what we found:

Level: A Newcomer With a Promising Offer

The promise: €99 ($105) fares between Spain and the U.S.

The perks: Each seat has its own 9-inch personal entertainment system, and in-flight Wi-Fi is available for purchase. Spring $500 (each way) for Premium Economy to get roughly 6 inches of extra legroom plus a three-course meal, noise-canceling headphones, and two free checked bags.

The hidden fees: Basic fares include just a single piece of hand luggage, and the airline charges extra for checked bags, onboard meals, and amenity kits with a blanket and pillow.

What it really costs: As much as $1,030. The cheapest advertised fares from Oakland to Barcelona ($254 round-trip) were sold out as far as we could find; the best deal we spotted was a $450 round-trip ticket for next February. Fares for this June and July were twice as much, at $900. Adding a checked bag and a meal cost $65 in each direction, generally speaking.

How much you save: Compared with similar flights on American Airlines, British Airways, Iberia, and Vueling, you’ll save from $300 to $600.

Norwegian: A Trailblazer With Serious Fees

The promise: A comprehensive network of routes that start at just $65 between New York and Dublin or Edinburgh. The latest addition: $199 from Seattle to London Gatwick.

The perks: Service out of 13 U.S. airports and into 123 European cities gives Norwegian the broadest route coverage of any trans-Atlantic low-cost carrier. And a fleet made up mostly of Boeing 787 Dreamliners means you’re likely to get free video on demand and built-in power outlets.

Sticker shock: The lowest economy fares don’t include checked bags ($65), seat selection ($45 each way), drinks ($4-$15), blankets ($5), snacks ($4-$11), or meals ($45). You can, however, buy those extras as bundles to save money overall.

What it really costs: We successfully tracked down $199 fares from Seattle to London, but return legs started at $279 on most days from September to November. Tally up the extra costs, and you’re looking at $660 round-trip, minimum.

How much you save: Not much. British Airways and Virgin Atlantic operate on this route, and their lowest average airfares in the same time frame come in at … $628. Seat selection is extra on both airlines (up to $75)—a small price to pay to earn more valuable frequent-flier miles on a bigger carrier.

Wow Air: Not That Great of a Deal

The promise: $200 round-trip fares from seven U.S. cities (now including Chicago) to Reykjavik.

The perks: Planes are no-frills, with universal power plugs instead of onboard entertainment systems. (Bring your iPad.) But frequent fare sales make it relatively easy to score a bargain.

Sticker shock: Convoluted “optional” fees vary depending on your route and include everything from carry-on bags ($39.99-$49.99) to selecting a seat ($8.99-$11.99 in each direction) to checked bags ($49.99-$69.99). You can also pay more for extra legroom, meals, cancellation protection … the list goes on (and on).

What it really costs: Chicago-to-Reyjavik fares were available for $99, albeit briefly—now the lowest round-trip fare is hovering around $390. Add luggage, food, and a decent seat, and you’ll spend $660 on that same ticket.

How much you save: Zilch. Icelandair services the same route for $628, including checked luggage, carry-on, seat selection, and even a full meal.

The Silver Lining

Despite fees and fares that can be hard to navigate, the growing number of low-cost carriers operating trans-Atlantic flights is an overall boon for travelers.

Among other things, their shockingly low airfares have forced traditional carriers to restructure and reprice their own fares on once-monopolized routes, keeping fares lower in general. (On the flip side, they’ve also set a precedent for major airlines to start nickel-and-diming you for every last detail—which means you get less for less across the board.)

A growing range of more-transparent booking options on affordable carriers is also making it easier to bundle ancillary fees for a reduced total price. (A “WOW Plus” fare including a checked bag and carry-on will save you $10 on the respective fees, for instance. Not much, but it helps.) And who can complain about a world in which sub-$600 flights between the U.S. and Europe are regularly within reach?

©2017 Bloomberg L.P.

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

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Peek Acquires Zozi’s Assets in Further Consolidation of Tours and Activities Tech Sector

Peek

Peek and Zozi offer software to tours-and-activities merchants, whose market is estimated at more than $100 billion a year in sales to travelers and locals although it is a very fragmented market. Peek

Skift Take: The market for software to tour merchants is fragmented without a single clear leader. Yet Peek now has an advantageous position, thanks to the acquisition of the assets of one of its chief rivals.

— Sean O’Neill

Two of the most heavily funded, venture-backed reservation services and marketplaces for tours and activities are essentially merging, as the healthier Peek acquires the assets and employees of Zozi.

Peek, which has raised $16 million in publicly disclosed funding, is acquiring the assets of Zozi, which has raised more than $44 million. The terms and nature of the transaction are not being disclosed.

Ruzwana Bashir, the chief executive of Peek, claims that “this merger will make Peek the largest platform for tours and activities in the world,” although Skift couldn’t verify that.

Bashir is referring to the backend techology part and not the consumer-facing element. TripAdvisor’s Viator and GetYourGuide, both of which were heavily funded, do not sell backend reservation software.

Over time the Zozi brand will be phased out. Customers of Zozi’s enterprise software platform, Advance, will be moved to Peek’s Pro platform. “There will be no changes in cost, but there will be exciting enhancements in service,” says Bashir.

Peek, founded in 2012, will also move merchants using Zozi’s direct to consumer marketplace to Peek’s site, Peek.com, and will phase out Zozi’s consumer offering.

Documents recently filed say that Zozi in the past year raised more than $10 million. Is that money going to be rolled over into Peek’s hands? Bashir said she couldn’t disclose the structure of the deal.

In March, Zozi had to lay off 38 percent of its employees.

Tours platform startup Zozi, which, as noted, had raised more than $44 million in publicly disclosed investment since its creation in 2007, became mired in trouble as its founder, TJ Sassani, and its investors increasingly disagreed on both the company’s direction and his performance.

Last month he filed a lawsuit against Zozi’s investors. Peek wouldn’t comment on the state of that suit. But in response to a question, Bashir says, “We don’t believe Peek is exposed to any legal risk.”

Consolidation has picked up in the software sector for tour merchants. In July, Zerve, another well-funded tours platform, shut down, due to a cash flow crunch. It accepted an approximately $100,000 payment from FareHarbor, which claims it has since on-boarded “up to 90 percent” of Zerve’s clients to its system.

As of today, FareHarbor says it has more than 4,200 merchants using its system and that it has been adding 100 to 150 new accounts per week.

In 2015, Swiss-based Palisis, which provides software solutions for ticket operators, acquired TourCMS, a reservation system and distribution service. The combined entity says it processes more than $1 billion in transactions a year.

Palisis/TourCMS mostly depends on its work for Gray Line, one of the largest tour providers worldwide. Yet many Gray Line operators do even use the software to manage their business and the company does not seem to be active in technological investment or gaining market share.

Bashir says Peek grew “10x in the last 2 years” although the company didn’t reveal from what base.

Crowded Market

Peek and Zozi have been adept at receiving venture capital. But there are other players in the software market for tours merchants. That’s because the $100 billion tours-and-activities market is still fragmented when it comes to enterprise software. Other companies that offer B2B tours and activities tech systems for suppliers and marketplaces, in addition to the ones noted above, include Bookeo, BookingBoss, Checkfront, Coras, Reservation Genie, Rezgo, Treksoft, Varitrip, and Xola.

The consolidation will assist the drive by tours and activities to finally come into their own, one of the megatrends that Skift is watching this year. Until now, tour merchants have been reluctant to embrace online reservations, as noted in the Skift Research Report on the State of Tours and Activities Tech 2017.

Due to the deal, “many” of Zozi employees will join Peek’s team, the company states. “We’re excited to bring in Zozi’s team members who have incredible expertise.” The companies will be deciding which features of the combined software tools might be merged into the final product, such as the ability of Zozi’s iOS mobile app to allow merchants to reduce fraud risk by accepting mobile payments with an EMV-compatible chip reader.

Although Peek is not keeping all Zozi employees, it says that it is hiring or has recently hired top talent in sales, product, and engineering.

Bashir says she sees Peek as primarily a technology company and that it will continue to prioritize technology investment this year.

For more, see Bashir talk on stage with Skift founder Rafat Ali at November 2016’s Skift Global Forum New York: Video: Why Peek Still Sees Opportunity in the Tours and Activities Market

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Launching Today: Skift New Luxury Travel Newsletter

Skift Take: All luxury is not created equal, and understanding the modern luxury travel market requires a new approach and a deep appreciation of the sophistication of modern consumers and providers.

— Jason Clampet

Skift is expanding its scope of coverage into various sectors of travel, and we are now looking at the business of modern luxury travel.

The Skift New Luxury newsletter is our weekly newsletter focused on the business of selling luxury travel, the people and companies creating and selling experiences, emerging trends, and the changing consumer habits around the sector. We’ll keep in mind the needs of the specialist travel agents who sell these products as well as the sophisticated consumers who shop for them.

Skift has covered elements of luxury travel — from agents to hotels to airlines and even retail — for many years. In addition to providing this weekly digest with stories that are relevant to the sector, Skift is expanding its coverage of the sector with stories like the ones you’ll find below.

We will build on our earlier successful coverage with the addition of two dedicated freelancers who will contribute to supplement our existing coverage. These expert contributors will also author the weekly newsletter, which will be our fifth specialist newsletter.

Veteran travel journalist Laura Powell has covered the industry for more than two decades. She helped develop CNN’s original travel program and covered the beat for the network for nearly five years. Her work has appeared in The Washington Post, Forbes and several airline magazines. She regularly appears on Washington, D.C. television to provide commentary on the travel stories of the day.

Former Skift reporter Samantha Shankman will be contributing stories from her base in Barcelona, Spain. As one of Skift’s early reporters, Shankman has contributed stories on trends, tourism, and spending across all sectors of the industry. She’ll be looking at the luxury sector through the lens of research reports, interviews, and more.

This Week’s Coverage

This first week Powell looks at the attraction of isolation for high-end travelers. With “Isolation Is the Next Big Thing in Luxury Travel,” we see travelers who don’t necessarily want to go off the grid, but they do want to go where access and wealth can make many distances insurmountable.

With “China’s Luxury Travelers Are Young and Spending More Than Ever,” Shankman dives into a Deloitte report on luxury spending that seeks to delineate between the shopping power of Chinese tourists to specifically say what high-spending millennials are after.

The Future

In future weeks, we’ll look at luxury through specific lenses, from products, to consumer behavior, to lessons from retail and food, and beyond, in addition to traditional travel sectors such as hospitality, cruises, airlines, and tourism.

If you want to share your expertise or insights into luxury travel, please don’t hesitate to email me at jc at skift dot com.

Sign up for Skift’s New Luxury Newsletter

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Emirates Copes With U.S. Traffic Drop From Trump Travel Bans

Emirates

Emirates is seeing a drop-off in passengers to the United States but a surge in China is making up for the falloff. Pictured is a promotional photo from the airline. Emirates

Skift Take: For Emirates, what the U.S. taketh away, China giveth back given its rise in outbound tourists. The Gulf carriers will survive through Trump’s travel bans but it shouldn’t have to be this way.

— Dennis Schaal

Emirates has seen U.S. traffic slip following President Donald Trump’s efforts to ban travel from six Muslim-majority countries and restrict electronics on flights from Mideast airports.

The world’s biggest international airline, which routes passengers from across the globe through its hub in Dubai, is ready to shift travelers to other parts of its 155-destination network to “cope” with demand changes, Thierry Antinori, Emirates’ chief commercial officer, said Tuesday.

“We see people waiting a bit, especially in Iran,” with some knock-on effect in India, where Emirates is a key conduit to the U.S., Antinori said in Dubai. Passenger flows between these countries and the U.S. are “moderately slow.”

Meanwhile, growth in China is helping Emirates offset headwinds in the U.S. With double-digit increases in demand, the country has been “a good growth story for Emirates,” Antinori said.

The comments show how Gulf carriers are weathering the squeeze stemming from Trump’s travel policies by leveraging their massive networks and upgrading services. Qatar Airways on Monday said it saw demand for U.S. flights decline by less than 10 percent, which Chief Executive Officer Akbar Al Baker called a “manageable” drop. The state-owned Gulf airlines, including Etihad Airways, responded to the electronics ban by offering some passengers loaner laptops or tablets in a bid to hold on to lucrative international business travelers.

Those responses appear to be helping to absorb the brunt of the impact. After Trump’s first travel ban, Emirates President Tim Clark said the rate of booking growth dropped by as much as 35 percent.

 

©2017 Bloomberg L.P.

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

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Bangkok’s Famed Street Food Will Now Be Scarce When Tourists Visit the City

Sakchai Lalit  / Associated Press

In this April 7, 2017 photo, people eat noodles at a street food shop during their lunch on Thonglor road in Bangkok, Thailand. Officials see street food as an illegal nuisance and have warned hawkers in Thonglor to clear out by April 17. Sakchai Lalit / Associated Press

Skift Take: The military junta wants to take the soul out of Bangkok by ridding the city of street-food vendors. Do they know they are shooting themselves in the foot tourism-wise?

— Dennis Schaal

Efforts by authorities in military-ruled Thailand to impose order on the chaotic capital city have a fresh target: cheap and tasty pad thai.

The latest crackdown by Bangkok city officials is going after the vendors whose carts sell everything from Thailand’s signature noodles to spicy tom yum goong soup have become institutions on the capital’s hot and humid sidewalks. The stalls with their metal folding tables and rickety plastic stools serve as a gastronomic go-to for budget-conscious locals and adventurous tourists alike.

“Street food is a big part of daily life,” said Nont Nontiskul, 29, a stockbroker who has lived in the city’s trendy Thonglor area for more than a decade. “Even people who eat at pricy restaurants every day can’t avoid street food. It’s faster, tastes better, and costs less than half the price.”

Officials see street food as an illegal nuisance and have warned hawkers in Thonglor to clear out by April 17. They’ve said the evictions soon will expand to other neighborhoods. Officials have been emboldened by the military junta that has ruled the country since a 2014 coup and has stressed the need to clean up Thai society, whether it is corrupt politicians or crowded footpaths.

That has led to sometimes ham-fisted crackdowns on everything from street markets to beach umbrellas to overpriced lottery tickets. Observers say the poor, many of whom were supporters of the ousted government and its populist policies, have borne the brunt of many of the junta-backed campaigns and that the clean sidewalk effort will hit the vendors and their working-class customers hardest.

Thai crackdowns on corruption, prostitution, pollution, road safety and what-have-you — even those by the junta — are notoriously ephemeral, but officials are talking tough.

Boontham Huiprasert, a Bangkok district chief tasked with clearing out the sidewalks under his jurisdiction, said street food vendors are being evicted to fight traffic congestion and the accumulations of garbage.

About 90 Thonglor vendors and their carts will have to leave by Monday, after which the crackdowns will expand to neighboring streets, Boontham said. Violators could be fined up to 2,000 baht ($57).

“Just don’t sell on the sidewalks,” Boontham said. “People who sell stuff on the sidewalks, they don’t pay rent. There are so many out there now, so we have to organize society.”

In fact, the food sellers say they do pay rent in the form of small monthly under-the-table payments to city officials. It’s an open secret that Bangkok’s sprawling shadow economy is made possible by payoffs to powerful figures, often with ties to police or the military. Boontham said he was unaware of any payoffs and that it was not official practice.

Suchin Wannasutr has been selling khao kha moo — stewed pork leg — for 40 baht ($1.15) a plate on Thonglor’s sidewalks for more than 20 years. The 47-year-old said he has been diligent about keeping up his monthly payoffs of 1,000 baht ($28.60), which is the same sum neighboring vendors say they have been charged.

He is now preparing to open a real restaurant, about 1.5 kilometers (a mile) away from his sidewalk spot. He will share the rent of 35,000 baht ($1,000) a month with three fellow street vendors.

“I have to stay in the area because I have regular customers here,” Suchin said. “I’m doing whatever I can just to send my kid through school. Once she graduates, I will move out of Bangkok. It’s tough here.”

Critics say the government needs to do more to help vendors and to help preserve some the unique chaos that gives Bangkok its soul, which is rapidly being lost to government regulations and redevelopment for condos, shopping malls and office towers.

If the campaign against street food sticks, tourists will no longer stumble upon fried worms, grilled pork intestines or the legendarily smelly fruit durian. And it’s unlikely the hip bars and fancy restaurants will be handing out food in plastic bags sealed tight with a knotted rubber band.

“I feel like I am losing my job and I have no idea what to do next,” said 39-year old Ubolwattana Mingkwan, who sells coffee for 30 baht (85 cents) a cup. “I can’t afford to pay Thonglor’s rent prices.”

“I’ve asked city officials for help and understanding,” she said. “All they say now is ‘No, no, no.’ They said they’ve already received their orders.”

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

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Visa Program for Skilled Workers to Get Tighter under President Trump’s Executive Order

Morry Gash  / Associated Press

In this Dec. 13, 2016 photo, President-elect Donald Trump holds up Green Bay Packers jersey given to him by House Speaker Paul Ryan at a rally in West Allis, Wisconsin. Trump is slated to sign an executive order on April 18, 2017 to tighten up the H-1B visa program. Morry Gash / Associated Press

Skift Take: Highly skilled workers seeking to travel to the United States for work, and tech employers, in particular, will see some big changes as President Trump revamps the H-1B visa program. This is yet another program that would limit immigration — in this case for students and other job-seekers.

— Dennis Schaal

President Donald Trump is planning to sign an executive order that seeks to make changes to a visa program that brings in high-skilled workers.

Trump is heading Tuesday to Kenosha, Wisconsin, where he plans to sign an order dubbed “Buy American, Hire American,” said administration officials who spoke on the condition of anonymity despite the president’s frequent criticism of the use of anonymous sources.

The officials said the order, which Trump will sign at the headquarters of tool manufacturer Snap-on Inc., would direct the departments of Homeland Security, Justice, Labor and State to propose new rules to prevent immigration fraud and abuse. Those departments would also be asked to offer changes so that H-1B visas are awarded to the “most-skilled or highest-paid applicants.”

The White House said the program is currently undercutting American workers by bringing in cheaper labor and said some tech companies are using it to hire large numbers of workers and drive down wages.

Administration officials said the order also seeks to strengthen requirements that American-made products be used in certain federal construction projects, as well as in various federal transportation grant-funded projects. The officials said the commerce secretary will review how to close loopholes in enforcing the existing rules and provide recommendations to the president.

The order specifically asks the secretary to review waivers of these rules that exist in free-trade agreements. The administration said that if the waivers are not benefiting the United States they will be “renegotiated or revoked.”

During his campaign, Trump said at some point that he supported high-skilled visas, then came out against them. At one debate, he called for fully ending the program, saying: “It’s very bad for our workers and it’s unfair for our workers. And we should end it.”

The officials said the changes could be administrative or legislative and could include higher fees for the visas, changing the wage scale for the program or other initiatives.

About 85,000 H-1B visas are distributed annually by lottery. Many go to technology companies, which argue that the United States has a shortage of skilled technology workers.

But critics say the program has been hijacked by staffing companies that use the visas to import foreigners — often from India — who will work for less than Americans. The staffing companies then sell their services to corporate clients who use them to outsource tech work.

Employers from Walt Disney World to the University of California in San Francisco have laid off their tech employees and replaced them with H-1B visa holders. Adding to the indignity: The U.S. workers are sometimes asked to train their replacements to qualify for severance packages.

On the planned order by Trump, Ronil Hira, a professor in public policy at Howard University and a critic of the H-1B program, said, “It’s better than nothing.” But he added, “It’s not as aggressive as it needs to be.”

The tech industry has argued that the H-1B program is needed because it encourages students to stay in the U.S. after getting degrees in high-tech specialties — and they can’t always find enough American workers with the skills they need.

Congress is considering several bills to overhaul the visa program. One, introduced by Illinois Democratic Sen. Dick Durbin and Iowa Republican Sen. Chuck Grassley, would require companies seeking H-1B visas to first make a good-faith effort to hire Americans, a requirement many companies can dodge under the current system; give the Labor Department more power to investigate and sanction H-1B abuses; and give “the best and brightest” foreign students studying in the U.S. priority in getting H-1B visas.

Trump’s stop at the world headquarters of Snap-on Inc. would come as the president faces an approval rating of just 41 percent in Wisconsin, a state he barely won in November. The visit also would take him to the congressional district of House Speaker Paul Ryan, who won’t be joining the president because he’s on a bipartisan congressional trip visiting NATO countries.

Trump has traveled to promote his agenda less than his recent predecessors. White House spokesman Sean Spicer said Trump wanted to visit “a company that builds American-made tools with American workers.”

Trump carried Wisconsin in November by nearly 23,000 votes — less than 1 percentage point — making him the first Republican to win the state since 1984. He campaigned on the promise of returning manufacturing jobs that have been lost in Upper Midwest states.

Founded in Wisconsin in 1920, Snap-on makes hand and power tools, diagnostics software, information and management systems, and shop equipment for use in a variety of industries, including agriculture, the military and aviation. Its headquarters are in Kenosha and it has eight manufacturing sites in North America, including one in Milwaukee. The company employs about 11,000 people worldwide.

___

Associated Press writer Paul Wiseman contributed to this report.

This article was written by Catherine Lucey and Scott Bauer 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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Los Angeles Wants Its ‘Everyone is Welcome’ Campaign to Connect With Global Millennials

Discover Los Angeles

Los Angeles hopes its new campaign will help international travelers’ U.S. travel fears subside. Pictured are tourists taking a photo in Los Angeles. Discover Los Angeles

Skift Take: Los Angeles is part of a trend across major global cities as they attempt to distance themselves from less welcoming parts of their countries. Most cities can’t claim to be as diverse as Los Angeles, which helps its message appear honest yet measured.

— Dan Peltier

Los Angeles’ tourism industry may be riding the coattails of the “two-hour advertisement for Los Angeles” that is the Academy Award-winning film “La La Land,” said Discover Los Angeles CMO Don Skeoch. But the city is also doubling down on its message that it’s a welcoming and inclusive place to visit to help combat negative perceptions of the United States from President Trump’s travel ban and the U.S. political climate.

This week, Discover Los Angeles, the city’s destination marketing organization, will launch its “Everyone is Welcome” multi-million dollar global marketing campaign that focuses on reaching primarily millennial travelers in five international markets — Mexico, Canada, China, Australia, and the UK — as the city projects weaker growth in international visitation during the next three years if President Trump’s current rhetoric and policies continue.

International arrivals in Los Angeles are still projected to climb through 2019 but that growth won’t be as steep if policies such as the six-country travel ban remain in effect and negative opinions of the U.S. grow (see charts below).

Discover Los Angeles expected to hit 7.4 to 7.5 million international visitors in 2017 before the November 2016 election. Skeoch said the organization, using Tourism Economics data, altered its projections recently and expects 2017 international visitor totals (seven million) to be virtually unchanged from 2016. Tourism Economics projects the city could potentially lose 830,000 international visitors during the next three years which breaks down to about 240,000 arrivals this year, nearly 300,000 next year and about 290,000 in 2019.

International travelers in Los Angeles, on average, spend $1,000 per trip. “That’s about $800 million of potential lost tourism dollars over three years, said Skeoch. “More specifically, that’s $35 million in tourism tax revenue lost. No one wants to see those funds dry up and it’s really critical for us to try to mitigate the situation.”

Los Angeles Visitor Forecast January 2017

With Exec Orders/travel ban (in millions)

2014 2015 2016 2017* 2018* 2019*
Total International Visits 6.52 6.84 7.08 7.09 7.33 7.63
Leisure 5.28 5.57 5.74 5.76 5.95 6.2
Business 1.24 1.27 1.33 1.34 1.38 1.42
Canada 0.74 0.73 0.71 0.71 0.73 0.75
Mexico 1.73 1.74 1.76 1.67 1.69 1.73
Overseas 4.05 4.37 4.61 4.71 4.91 5.16
China 0.69 0.82 1.01 1.11 1.23 1.36
Japan 0.31 0.31 0.34 0.34 0.35 0.36
South Korea 0.25 0.3 0.3 0.3 0.31 0.33
India 0.09 0.11 0.12 0.13 0.13 0.15
Australia 0.4 0.43 0.43 0.43 0.44 0.45
UK 0.33 0.35 0.36 0.35 0.35 0.36
Germany 0.23 0.24 0.25 0.25 0.25 0.26
France 0.28 0.28 0.29 0.28 0.29 0.3
Scandinavia 0.15 0.17 0.18 0.18 0.18 0.18
Brazil 0.13 0.13 0.1 0.1 0.11 0.11
Middle East 0.13 0.16 0.16 0.15 0.15 0.15
Other Overseas 1.06 1.07 1.08 1.1 1.12 1.16

Los Angeles Visitor Forecast January 2017

Without Exec Orders/travel ban (in millions)

2014 2015 2016 2017* 2018* 2019*
Total International Visits 6.52 6.84 7.08 7.33 7.63 7.93
Leisure 5.28 5.57 5.74 5.95 6.19 6.45
Business 1.24 1.27 1.33 1.38 1.44 1.48
Canada 0.74 0.73 0.71 0.72 0.74 0.76
Mexico 1.73 1.74 1.76 1.79 1.83 1.87
Overseas 4.05 4.37 4.61 4.81 5.06 5.3
China 0.69 0.82 1.01 1.12 1.24 1.37
Japan 0.31 0.31 0.34 0.35 0.36 0.36
South Korea 0.25 0.3 0.3 0.3 0.31 0.33
India 0.09 0.11 0.12 0.12 0.13 0.14
Australia 0.4 0.43 0.43 0.44 0.46 0.48
UK 0.33 0.35 0.36 0.36 0.38 0.39
Germany 0.23 0.24 0.25 0.26 0.27 0.28
France 0.28 0.28 0.29 0.3 0.31 0.33
Scandinavia 0.15 0.17 0.18 0.18 0.19 0.2
Brazil 0.13 0.13 0.1 0.1 0.11 0.11
Middle East 0.13 0.16 0.16 0.15 0.15 0.16
Other Overseas 1.06 1.07 1.08 1.11 1.14 1.16

*Denotes projected international arrivals totals.
Source: Tourism Economics

GETTING THE MESSAGE RIGHT

Getting involved in the culture wars, which this campaign is in part responding to, is a slippery slope and has backfired for some brands that had good intentions. Discover Los Angeles’ “Everyone is Welcome” one-minute, 30-second campaign video (watch below), however, doesn’t feature any protestors or demonstrations but does highlight locals with disabilities, various racial backgrounds and sexual orientations, for example.

Everyone in the video appears natural and blends into the background of the city all while showing that these are the lives they live in Los Angeles and that they’re accepted.

Skeoch said the organization isn’t trying to be political with the campaign and instead approached the U.S. political climate as a business problem that needs to be addressed. “Someone has to take a leadership role because people think that safety and security are mutually exclusive,” he said. “They’re not. They’re complimentary but people take different positions there.”

Appearing tone-deaf in the campaign isn’t a concern with the video, said Skeoch. “We watched this spot over and over and over and I’d say we overanalyzed it,” he said. “We kept saying to our agency, Mistress, it’s got to be authentic. It will not read well if it’s not authentic.”

At the same time, the campaign’s aim isn’t to hide the reality that the U.S. is in a period of deep political divide and uncertainty or to advocate one position or the other, although the video ends with the message of “we welcome everyone” in eight languages including Arabic, Spanish and Japanese.

“I think what needs to be reinforced is that what you see in this spot and what you see when you come cannot be vastly different,” said Skeoch. “If you saw it and you were hanging around Venice you’d have to say ‘yeah, this is pretty accurate to what I’m experiencing as a visitor.’”

While local Angelenos are the stars of the video, such as two African American women doing yoga on a beach or a gay couple holding hands, there’s another noticeable character — a paper airplane. “If we didn’t have the paper airplanes as a metaphor, this wouldn’t have read as a tourism spot,” said Skeoch. “Our challenge was how do you tie diversity and open-mindedness to tourism? A paper airplane is a symbol of innocence and we start the video with a Mexican boy who might have aspirations to travel to Los Angeles.”

“If we didn’t have the paper airplanes as a metaphor, this wouldn’t have read as a tourism spot,” said Skeoch. “Our challenge was how do you tie diversity and open-mindedness to tourism? A paper airplane is a symbol of innocence and we start the video with a Mexican boy who might have aspirations to travel to Los Angeles.”

Everyone is Welcome — Especially Millennials

The six-week campaign will wrap-up at the end of May and will play out as digital and social advertising on platforms including Facebook, for example, which the organization chose because that’s a growing news source for millennials.

The video will run through paid boosts on Facebook and Instagram and will also appear on WeChat and Weibo in China. Skeoch said the organization expects to receive more than 100 million impressions with this campaign and more than half of the millennial (18 to 35) population in the five markets are expected to see the video at least three times.

Discover Los Angeles held focus groups last year in Vancouver, Mexico City, London, Shanghai, Beijing, and Sydney with millennial travelers to learn about their interest in travel and what would make them choose Los Angeles as a destination. “We learned that a millennial is a millennial is a millennial,” said Skeoch. “We thought someone in London would be different than someone in Shanghai. In terms of travel, they behave very similarly. We found that it’s our lifestyle and mindset in Los Angeles that appeals to them.”

The tourism board will also roll out a video for industry trade partners from CEO Ernest Wooden Jr that’s subtitled in Arabic, German, Japanese, Korean, Spanish, Portuguese, and Traditional and Simplified Chinese.

International Travelers’ U.S. Concerns

Millions of marketing dollars are unlikely to erase many international travelers’ fears of U.S. Customs and Border Protection and Transportation Security Administration officers in light of the Trump Administration’s immigration policies.

Tourism boards don’t have jurisdiction over airports and immigration — two factors that have many international travelers spooked. “That doesn’t mean we’re not concerned with visitors’ guest experiences whether that’s at the airport or moving around the market,” said Skeoch.

Skeoch said his team is particularly worried about losing market share from gulf markets such as the U.A.E. and also from Mexico, the latter more of a consumer sentiment, he said. “People may have sentiments towards the U.S. but that doesn’t mean they have negative sentiments towards Los Angeles,” he said.

Los Angeles also had the largest number of Chinese visitors of any U.S. city in 2016 (1.01 million) but China and India aren’t a concern for potential decreased market share, Skeoch said. A recent survey from Brand USA, for example, found that Chinese travelers were the only market more likely to visit the U.S. because of the political climate. “With the La La Land effect we’re finding some markets, and especially China, want to do precisely what they saw in the movie.”

Discover Los Angeles isn’t the first tourism board to roll out a marketing campaign to promote diversity and inclusiveness since the 2016 election. NYC & Company, which is also forecasting slower growth in international arrivals for 2017, has updated overseas billboard advertisements with “Welcoming the World” messaging and creative.

Los Angeles’ campaign, however, will likely reach more travelers because of the campaign’s social and digital focus on platforms they frequently use.

The city also has another advantage in its effort to portray itself as a welcoming, tolerate and progressive place with its general liberal reputation and the fact that former Democratic presidential nominee Hillary Clinton won the state by more than million votes in the general election. But not every city has what Los Angeles can claim — residents from 140 countries who speak some 224 languages making it one of only two U.S. cities without a majority population.

And being one of the major gateways into the U.S. makes it easier for the city to have this message. Los Angeles faces a loss in arrivals from nearby Mexico, an economy that’s increasingly improving as more Mexicans choose Canada for their vacations this year, and it’s one of the nearest U.S. gateways for Asia-Pacific markets that it can’t afford to lose as outbound travel from the region swells.

Watch the full video from the campaign below.

Ryan Wolkov

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Author: Ryan Wolkov

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What’s Really Behind the Hotel Industry’s Plans to Combat Airbnb

J. Scott Applewhite  / Associated Press

The American Hotel & Lodging Association is lobbying federal, state and local governments to clamp down on Airbnb. The U.S. Capitol is seen at dawn in Washington, D.C. in this April 4, 2017 photo. J. Scott Applewhite / Associated Press

Skift Take: There’s not David and Goliath battle happening here. Its more like new money versus old money, and we expect to see some excellent public relations work on every side.

— Deanna Ting

Over the weekend, The New York Times published an article, “Inside the Hotel Industry’s Plans to Combat Airbnb,” which included pages from a 2016 internal American Hotel & Lodging Association (AHLA) document, detailing the organization’s plans for limiting the growth of short-term rentals and the platforms that enable them, namely Airbnb.

That action plan includes the launch of a new ad campaign called “My Neighborhood” that would feature testimonials from people negatively impacted by short-term rentals, as well as funding research that purports to demonstrate how Airbnb and other platforms are predominantly used by commercial operators, not everyday middle-class Americans.

Is it a battle for the future of the middle class, as Airbnb consistently positions this? Or is it just another business battle between multi-national hotel chains and a venture capital-backed company valued at around $30 billion?

The AHLA’s Job

The New York Times article described AHLA as “a trade group that counts Marriott International, Hilton Worldwide and Hyatt Hotels as members,” interchangeably using “AHLA” and “the hotel industry” throughout its piece. Fighting illegal hotels is just one of many issues AHLA tackles. It also has campaigns aimed at preventing human trafficking, stopping online hotel booking scams, encouraging more youth to have careers in hospitality, and fighting increasing wage legislation that targets the hotel industry specifically.

The organization also runs its own political action committee, which spent $2.43 million on lobbying efforts in 2016, an increase of nearly 31 percent from the $1.86 million it spent on lobbying in 2015.

AHLA’s chief executive, Katherine Lugar, has been at her post since 2013, and formerly served as a top lobbyist for the Retail Industry Leaders Association. She is also the daughter-in-law of former Senator Richard G. Lugar (R-Indiana).

The more than 24,000 members that AHLA advocates for do not only include the Marriotts, Hiltons, and Hyatts of the world, but the roster also extends to hotel owners, real estate investment trusts, independent hotels, beds and breakfasts, and everyone from hotel company CEOs to the person staffing the front desk.

What the Document Revealed

For people who work in the travel and hospitality industry, The New York Times article and the internal document no doubt reaffirmed what many already know: That the AHLA and Airbnb are combatants fighting with one another in the arenas of public policy and public perception.

AHLA wants the federal and local governments to be tougher on short-term rentals, a number of which can be classified as illegal hotels, and limit the growth of a business that is, no doubt, having some impact on its members. All of this is taking place, however, as data from various sources have conflicting analyses on the real impact Airbnb is having on hotel business. How big a threat Airbnb is to the hotel business is unclear, but what’s certain is that the industry, and AHLA, see it as a viable one.

“Though we welcome the practice of true home sharing, where the owner is present during the guest’s stay, we’ve found that accounts for less than 20 percent of Airbnb’s business,” said Maiettta. “While 81 percent of Airbnb’s revenue nationwide – $4.6 billion – comes from whole-unit rentals where the owner is not present. That’s not home sharing, that’s a business.”

She added, “We call on Airbnb and short-term rental companies to stop misrepresenting their platform as one that simply supports the middle class when it’s clear the bulk of Airbnb’s revenue is coming from commercial activity. They have the power to report their data, remove commercial activity when appropriate, adhere to commonsense safety and security measure and pay their fair share of taxes. And they refuse to take even simple steps to do any of that.”

Airbnb Is Working for Legalization

Airbnb wants to gain legalization in jurisdictions around the world and it’s worked hard for the past few years trying to convince mayors and other lawmakers that homesharing is a win-win for all — that it’s an economic empowerment tool for the middle class. The company is also trying to convince those same lawmakers that having laws of any sort to regulate the sharing economy is misguided.

Airbnb spokesperson Nick Papas’ responsed to The New York Times article:  “With more than 250 government partnerships over the last year we have shown our seriousness of purpose when it comes to putting in place fair rules so everyday people can use their homes to make extra income, but from opposing raising the minimum wage to attacking home sharers, it’s clear the hotel cartel is intent on short-sheeting the middle class so they can keep price gouging consumers.”

“The hypocrisy is almost unbelievable: the hotel cartel wanted Airbnb to collect taxes and when we implemented a way to do so, they changed their position and lobbied cities to leave millions of dollars on the table. And their ‘model legislation’ would charge a middle class family $2,500 if they wanted to share their home for even one night.”

While AHLA’s strategy was the main focus of The New York Times article, Airbnb likewise has its own similarly multi-pronged strategy for battling the hotel industry that is gaining steam under the leadership of Chris Lehane, Global Head of Public Policy, and backed by significant spending on lobbyists in state capitals around the U.S., as well P.R.-driven stories about citizenship at Airbnb Citizen. For instance, in February, Airbnb launched “a campaign tracking the big hotels’ fiscal flip flops.”

In another case, Airbnb has sponsored self-described “national watchdog blog,” Checks and Balances Project as it publishes articles portraying the “hotel lobby” and any opponents — from academics to city council members — of homesharing in a negative light. Its primary target? A Penn State professor who authored a research study about Airbnb that received funding from AHLA.

In other words, both AHLA and Airbnb are doing whatever they can to advance their respective missions in the back halls of Washington, as well in the hearts and minds of the American people. It’s an ongoing battle, and one that isn’t going away anytime soon.

Ryan Wolkov

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