Should Qatar Airways Give Up On its American Airlines Investment Idea?

Qatar Airways

Qatar Airways officially joined the oneworld alliance in happier times at a ceremony attended by Qatar Airways CEO Akbar Al Baker, center, in October 2013. Qatar Airways

Skift Take: With his disparaging comments, Qatar Airways CEO Akbar Al Baker could be dubbed the Michael O’Leary of the Middle East. If Al Baker’s strategy was to endure himself to American Airlines, then CEO Doug Parker beat back that overturn with a sledge hammer. Neither boss has distinguished himself.

— Dennis Schaal

Qatar Airways Ltd.’s bid to buy a stake in American Airlines Group Inc. is making less and less sense.

The state-owned carrier last month disclosed it wanted to build a 10 percent position in its U.S. counterpart. Qatar Air said it saw a “strong investment opportunity” and believes in American Airlines’ “fundamentals.” It’s not wrong.

But almost no one believed Qatar Air wanted to hold a big chunk of one of the largest U.S. carriers just because it liked the stock. Its true motivations are still a mystery. Presumably, it aims to expand its U.S. presence by deepening collaboration with American Airlines, while also bolstering its political leverage amid President Donald Trump’s travel-ban ambitions, a blockade of Qatar by its Middle Eastern neighbors and a push for a U.S. crackdown on alleged unfair competition by Persian Gulf carriers.

Welp, if that was the strategy, it’s going poorly.

American Airlines has now ended its pre-existing marketing agreement with Qatar Air, meaning the Gulf carrier is now even less connected to the U.S. than before this ordeal ended. This might have happened anyway; Abu Dhabi-based Etihad Airways was also booted from a codeshare agreement on the basis that the relationship just didn’t make sense in light of American’s leadership in the call for regulators to do something about the government subsidies Gulf carriers are allegedly using to aggressively lower prices and steal market share.

But Qatar Air’s overture probably hurt more than it helped. Who could have predicted this would backfire? David Fickling, that’s who.

And yet Qatar Air seems determined to dig in its heels, despite its missteps — and there have been a few. CEO Akbar Al Baker claimed American’s leader Doug Parker was “frightened” by his proposed investment, although it’s not totally clear what Parker would have to be frightened of given the bylaw and regulatory limits on how many shares Qatar Air can actually buy and the Gulf carrier’s own claims that it has no intention of interfering with management or governance.

Then Al Baker made disparaging comments implying U.S. flight attendants were subpar to those of Qatar Air, which seems particularly stupid in light of the flight-attendants union’s blasting of the stake deal as undercutting its efforts to “preserve good jobs for U.S. workers.”

It’s time to give it up. It’s not even clear that U.S. regulators will sign off on Qatar Air’s stake purchase to begin with, but even if they do, the Gulf carrier needs permission from American’s board to buy more than 4.75 percent. American has no reason to give that and every reason to stand by its fight against unfair competition and to back up its aggravated flight attendant and pilot unions.

So if Qatar Air persists on going forward with this, what then? It would own a hefty slice of American that may make it some money in the short term, but stakes in rivals that serve little strategic or political purpose often wind up being dead weight. Just ask Novartis AG, which is still sitting on a 30 percent-plus stake in Roche Holding AG more than a decade after amassing it in a failed attempt to acquire its rival. Disposing of it has presented all kinds of challenges.

In the meantime, going through with the deal will likely eliminate whatever shot Qatar Air has left at a strengthened relationship with American, not to mention weaken its political leverage. The flight-attendants union chose its language wisely when highlighting the job risk of Qatar’s investment, a sensitive issue for Trump.

Qatar Air should come up with a new strategy.

This column does not necessarily reflect the opinion of Bloomberg LP and its owners.

Brooke Sutherland is a Bloomberg Gadfly columnist covering deals. She previously wrote an M&A column for Bloomberg News.

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New Jersey Governor Vetoes Bill To Stymie Trump Travel Ban at Newark Airport

Mel Evans  / Associated Press

New Jersey Gov. Chris Christie addresses a gathering during a town hall meeting, in Cedar Grove, New Jersey on April 23, 2015. Christie just voted a bill that would have made it difficult for the Port Authority of New York and New Jersey to help the implantation of the Trump travel ban at Newark Airport. Mel Evans / Associated Press

Skift Take: The New Jersey governor definitely isn’t in the resistance camp, but we knew that. He is certainly ending his unpopular reign in style.

— Dennis Schaal

New Jersey Gov. Chris Christie has vetoed a measure that would have prohibited the agency that oversees Newark’s airport from assisting in enforcing President Donald Trump’s travel ban.

The Republican said Thursday that the measure passed by the Democrat-led Legislature was a “political stunt” and disregards lawmakers’ “duty to govern responsibly.”

Lawmakers wanted to prevent Port Authority of New York and New Jersey employees from helping enforce the rules and block access to Port Authority facilities.

The U.S. Supreme Court last month ruled the administration could mostly enforce its travel ban on citizens from six majority-Muslim countries.

Christie, a Trump supporter, says compelling the Port Authority to violate state or federal law “is the epitome of irresponsible governing.”

He says lawmakers should instead pass larger reform measures for the agency.

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Guests Are More Satisfied at Hotels That Are Mobile Friendly


The newest J.D. Power and Associates study on hotel guest satisfaction in North America suggests hotels should be paying more attention to mobile apps, bookings, marketing, and loyalty. Pictured is Marriott’s app on iOS. Skift

Skift Take: Where online travel agencies make it easy for guests to book hotel rooms from their smartphones, hotels need to do a much better job if they want more direct bookings. And they need to make better apps while they’re at it.

— Deanna Ting

J.D. Power and Associates has released its annual North America Hotel Guest Satisfaction Index Study and the biggest takeaway for hoteliers is this: pay more attention to mobile. Hotels that incorporate mobile apps and functionality into a hotel stay have higher guest satisfaction. And they are more likely to increase their number of direct bookings if they focus on mobile.

The catch, however, is that hotels also need to encourage more guests to download their mobile apps, as well as add more loyalty members to their respective programs.

“As mobile usage becomes increasingly ubiquitous for guests, the challenge for hotels becomes twofold: First, they must persuade guests to book directly with them, and second, they must encourage easy utilization of this technology,” Rick Garlick, practice lead, travel and hospitality at J.D. Power said. “By forging direct relationships, hotels can become guardians of the guest experience, but at the center of these relationships is an establishment’s mobile strategy.”

The study collected the responses of 63,866 adult hotel guests who stayed at a hotel between May 2016 and May 2017 and was conducted via an online survey.

Some key takeaways for hoteliers:

J.D. Power found that guests who’ve booked through an online travel agency or a mobile app not directly associated with the hotel are more likely to experience a problem, and to be less satisfied with their stay.

However, the number of consumers booking through an online travel agency (19 percent in 2017 versus 16 percent in 2013) is rising, despite major hotel chains’ efforts to push more direct bookings with large campaigns and discounted rates for loyalty members.

And the number of guests booking a hotel room using a smartphone or tablet is also rising. In 2014, 14 percent of online reservations were made on mobile; now it’s 25 percent and the majority of those booking via mobile tend to be younger or business travelers.

Hotel loyalty members were more likely to book direct with a hotel or on a loyalty member site than non-members (75 percent to 47 percent), and they also have higher levels of guest satisfaction.

Although hotels have made efforts to invest in their own proprietary mobile apps, the J.D. Power survey found that a significant number of guests (38 percent) don’t even use the apps during their hotel stays, which seems to suggest there could be room for improvement in how hotels develop their mobile apps. Only 4 percent have used those apps to check in and only 1 percent have used them to check out.

Many hotels are experimenting with adding messaging functionality to their proprietary apps in an effort to make the apps more useful and functional for their guests. Some hotel companies, including Marriott and Hilton, are also developing their apps in ways that allow them to gather more personalized information on their guests that can be used to customize their stays.

When guests do use the hotels’ mobile apps, however, they reported higher guest satisfaction and were more loyal. Only 19 percent of all guest respondents have downloaded a hotel app, but 70 percent of rewards members have downloaded a hotel’s mobile app.

Social media isn’t just a channel through which guests will complain about their experiences, but if a guest does experience a problem during his or her stay, 86 percent are extremely likely to post to social media.

Facebook’s head of travel, Christine Warner, told Skift that hotel companies, especially, can’t afford to miss out on the marketing opportunities afforded via mobile platforms as well, especially social media.

Guest who read and/or write hotel reviews on sites like TripAdvisor are also more likely to have higher guest satisfaction, but only slightly more than half (52 percent) have read a review of a hotel, industry news, or an online forum in the past month. And only 46 percent of respondents had written a review in the past six months.

Guest Satisfaction Rankings

To measure guest satisfaction on a 1,000-point scale, J.D. Power looked at eight different hotel segments: luxury; upper upscale; upscale; upper midscale; midscale; economy; upper extended stay; and extended stay. Factors that determined satisfaction included reservation; check-in/check-out; guest room; food & beverage; hotel services; hotel facilities; and cost & fees.

“While The Ritz-Carlton and JW Marriott rank highest in the luxury segment, both of these Marriott-affiliated brands appeal to different types of customers,” Garlick said. “It’s important to remember that this study measures guest satisfaction among a hotel brand’s own customers and doesn’t directly compare hotel brands to one another. Often, the type of guest becomes an important element in determining satisfaction rankings.”

The following hotel brands ranked highest in guest satisfaction in their respective segments:

  • Luxury: JW Marriott and The Ritz-Carlton (tied; Ritz-Carlton ranked highest for the third consecutive year)
  • Upper Upscale: Hyatt
  • Upscale: Hilton Garden Inn (for a second consecutive year)
  • Upper Midscale: Drury Hotels (for a 12th consecutive year)
  • Midscale: Wingate by Wyndham (for a third consecutive year)
  • Economy: Americas Best Value Inn
  • Upper Extended Stay: Staybridge Suites
  • Extended Stay: Candlewood Suites

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Uber Exits Russia Through Deal With Local Rival Yandex

Andrey Rudakov  / Bloomberg

Taxi cabs connected through the Yandex.Taxi online app, in Moscow in 2015. Yandex is an incumbent in a region that does not always welcome foreign businesses. Andrey Rudakov / Bloomberg

Skift Take: At one point Uber justified its sky-high valuation with promises of global expansion in China, Russia, and India. This is likely not how they saw it all playing out.

— Jason Clampet

Uber Technologies Inc. is handing over the keys to its business in Russia.

The San Francisco-based company and Yandex NV are merging their ride-hailing businesses in Russia. Uber will invest $225 million and take a 36.6 percent stake in a new, yet-to-be named venture that will be valued at $3.73 billion, the companies said in a statement Thursday. The shares of Yandex, which will invest $100 million and own 59.3 percent of the new enterprise, jumped as much as 15 percent in Moscow to 1,881 rubles, its highest level ever.

The deal with Yandex is Uber’s second retreat from a major market. Last year, Uber left China in exchange for a 17.5 percent stake in rival Didi Chuxing, after losing more than $2 billion battling its competitor. While Uber remains the dominant ride-hailing operator in the U.S., it has been on the defensive, beset by scandals that led to Travis Kalanick’s ouster as chief executive officer. The agreement with Yandex is part of Uber’s renewed effort to improve revenue, narrow losses and resolve its legal issues.

“This deal is a testament to our exceptional growth in the region and helps Uber continue to build a sustainable global business,” Pierre-Dimitri Gore-Coty, Uber’s chief for Europe, Middle East and Africa, said in the statement.

Tigran Khudaverdyan, head of Yandex.Taxi in Russia, will become CEO of the combined enterprise, Uber and Yandex said. Together, their businesses handle 35 million rides a month, and will also operate in Kazakhstan, Azerbaijan, Armenia, Belarus and Georgia. The deal is expected to close in the last three months of 2017.

Uber’s exit from Russia could be a precursor to more deals in other big, fiercely competitive ride-hailing markets. Investors have raised questions as recently as this month about Uber’s continued losses in India and Southeast Asia, asking privately whether the company would be better served by cutting deals with market leaders Ola and Grab, two people familiar with the matter said.

Uber’s loss before interest, taxes and stock-based compensation totaled $708 million in the first three months of the year, an improvement from the $991 million loss in the prior quarter. Losses narrowed further in the latest period, Uber recently told investors. Net revenue was $1.5 billion in the first quarter, according to its more conservative accounting method.

In Russia, Yandex.Taxi has gross bookings of $1.01 billion on an annualized basis, while Uber had $566 million, according to a presentation prepared for investors. The new, unnamed company “will have the right to use Yandex.Taxi and Uber brands in the region,” the companies said. Apps from both ride-hailing companies will continue to be offered, while the driver app will become a single platform. They will also operate the UberEATS food-delivery service.

“Many of us who work inside Yandex feel that everyone has already switched to ride-sharing, but in reality, we are just at the beginning of this journey,” Khudaverdyan wrote in a blog post.

With assistance from Ilya Khrennikov


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American Airlines Eliminates Codeshare Agreements with Qatar Airways and Etihad

Etihad Airways

American is cutting its marketing agreements with Abu Dhabi-based Etihad Airways, which has a small A380 fleet. It is also ending them with Doha’s Qatar Airways. Etihad Airways

Skift Take: Given the rhetoric American Airlines executives have used to describe their Gulf rivals, this is not a surprise. But the decision will hurt some of American’s customers, who rely on Qatar and Etihad to fly them to destinations North American and European carriers don’t serve.

— Brian Sumers

American Airlines Group Inc. ended marketing agreements with Qatar Airways Ltd. and Etihad Airways PJSC, citing a longstanding dispute over whether the Persian Gulf carriers use government subsidies to compete unfairly.

Qatar Airways and Etihad were notified of the decision June 29, American said in an emailed statement Wednesday. That was a week after American said Qatar Airways wanted to buy a large stake in the U.S. carrier. American Chief Executive Officer Doug Parker called that plan “puzzling.”

The end of the marketing deals known as codeshares added to a war of words that flared up again this week when Qatar Airways CEO Akbar Al Baker disparaged U.S. flight attendants as grandmothers. Al Baker later apologized “unreservedly” for that comment.

The Qatar Airways CEO said his remarks were made at “a time of strong rivalry” with the U.S. airlines. American and Qatar Airways are members of the Oneworld alliance of global carriers.

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Airbnb Moves Into Corporate Travel Mainstream With Concur Integration

Airbnb is set to partner with Concur to bring its listings to Concur Travel’s online booking tool. This is just the latest of many recent business friendly moves by the company.

Skift Take: As Airbnb becomes bookable through the online booking tools of corporate travel management companies, its acceptance in corporate travel policies will likely rise as well.

— Andrew Sheivachman

Airbnb has long been a big problem for corporate travel managers, leading to leakage and safety concerns when travelers decide to stay in an apartment or shared home instead of an approved hotel room.

It now appears, however, that Airbnb is primed to make major inroads into the corporate travel marketplace.

Concur will introduce Airbnb listings to its Concur Travel booking tool sometime in the next few months, marking a major milestone for the sharing economy giant.

Concur’s data show a 33 percent year-over-year increase in Airbnb usage among business travelers in the second quarter of 2017, and this new integration will make it easier for travel managers to track where their travelers are and for travelers to automatically expense their Airbnb stays.

“Our customers want to give their employees the ability to take advantage of Airbnb lodging, but within the framework and controls of their existing travel program,” said Tim MacDonald, chief product officer at Concur, in a statement. “We partnered with Airbnb to do exactly that. First with TripLink and now with Concur Travel integration, we are providing the control and visibility our customers require, while helping travel managers fulfill their duty of care needs.”

The other major global travel management companies already have connections with Airbnb, but the reach of Concur’s online booking tool is notable for business travelers. This will be the first time, according to Concur, that Airbnb will be bookable through a corporate online booking tool. Neither Airbnb  or Concur would disclose the financial relationship; whether or not commissions are being paid, and whether the host or Airbnb are paying any distribution costs.

Overall, research shows that most corporate travel policies still don’t include homesharing lodging options. Just 17 percent of travel policies allow homesharing, according to a poll of North American travel managers conducted by the Global Business Travel Association in early 2017.

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United Airlines Financial Forecast Rises Despite Dragging Incident

United Airlines

Customers wait to board a United flight in Houston. United had a rough second quarter for public relations, but its business is performing well. United Airlines

Skift Take: Did customers book away from United Airlines after security officers called by the airline beat up a passenger in Chicago? Probably not, considering how well the airline performed financially in the second quarter.

— Brian Sumers

Remember the experts and passenger-right advocates who claimed United Airlines might suffer financially after its employees in Chicago called airport security to forcibly remove a passenger from an overbooked flight?

The United States is a vast and wealthy country with only four massive airlines and hundreds of millions of potential travelers. Some, of course, look for the best overall experience, and on customer-satisfaction metrics, United may not match its peers, though it promises it’s trying to improve.

But many more travelers look at only two metrics when deciding which airline to book — price, and schedule. And as long as United can offer convenient flights at competitive prices, it will continue to win business.

United this week released strong preliminary estimates for its second quarter financial performance, suggesting that the dragging incident had little, if any, material affect on the carrier’s bottom line. In many cases, its estimates were better-than-expected.

United airline said its passenger revenue per available seat mile — an industry metric measuring how much an airline earns for each seat it flies one mile — will increase 2 percent, year-over-year.

United also told investors it expects second quarter pre-tax margin will rise between 12.5 and 13.5 percent. That was up from its April estimate, when United predicted a margin between 10 percent and 12 percent.

Importantly, United said unit revenues either matched or exceeded expectations in all markets except China and Hong Kong. The Chicago incident in April caused the airline considerable public relations problems in China, when video from it went viral on Weibo, the popular social networking site. At one point, Chinese state media suggested the doctor removed from the flight was Chinese American, though he was born in Vietnam.

But the airline blamed revenue problems in the region on “unfavorable supply and demand dynamics.” United is by far the biggest U.S. airline flying to Mainland China, with flights to Beijing, Shanghai, Xi’an, Chengdu, and Hangzhou. American Airlines and Delta Air Lines fly only to Beijing and Shanghai. All three airlines fly to Hong Kong, as well.

In a research note this week, Daniel McKenzie of Buckingham Research Group said China and Hong Kong might be improving, noting “recent booking trends point to stabilization,” though he added that “aggressive growth” from Chinese airlines presents a challenge. Andrew G. Didora of Bank of America said U.S. to China capacity will increase “double digits” in the fourth quarter of this year.

But most metrics are improving for United. Didora noted the airline is improving its earnings even while it is adding flights, with capacity increasing 4.2 percent, year-over-year. He called United’s estimated financial performance, “the highest growth rate for a legacy airline since 3Q14.”

Hunter Keay, an analyst with Wolfe Research, this week titled a research note “phew,” saying the airline’s investor update was, “was a relief and a positive surprise.” He noted United’s cargo volumes were “very strong” and that the airline’s new Basic Economy fares likely helped improve revenues.

American Airlines Also making money

United was not the only U.S. airline to delight investors this week. American, which had no major public relations flubs in the quarter, released its own investor update on Wednesday, estimating total revenue per available seat mile will increase 5 to 6 percent, year-over year.

American also told investors it will announce a pre-tax margin, excluding special items, of between 13 to 14 percent. It had earlier estimated a margin between 12 and 14 percent.

American was buoyed by a strong performance by its domestic and Caribbean markets, according to a report from Stifel analyst Joseph DiNardi.

U.S. airlines will begin officially announcing earnings on Thursday, with Delta Air Lines executives speaking with investment analysts. Delta is generally the most profitable of the three largest U.S. global airlines, as measured by margin.

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Brand USA Is Facing Declining Contributions From Travel Brands This Year

Brand USA

Brand USA partner contributions are down this year. Pictured are people on a Brand USA fam tour. Brand USA

Skift Take: Brand USA has a difficult task these days of appeasing a White House with unfavorable views of foreigners while still spreading a welcoming message in key international markets.

— Dan Peltier

After President Donald Trump released his proposed fiscal 2018 budget in May that called for the elimination of Brand USA, the United State’s national tourism marketing arm, president and CEO Christopher Thompson said that it was business as usual and that the organization wouldn’t get side-tracked.

To that effect, Brand USA launched its “One Big Welcome” campaign last month, in part, to help combat the mixed messages many international travelers have heard from the Trump Administration.

But a decline in partner cash and in-kind contributions – two key pillars of Brand USA’s funding model which come from tourism boards and other travel brands – for January through April indicate that some brands aren’t on board this year or are facing funding problems of their own.

Partner cash contributions, were down $6.7 million year-to-date through April compared the first four months of 2016. In-kind contributions, or donations of non-cash goods or services that help Brand USA with its marketing campaigns and programs, were also down year-to-date through April – $4.7 million less than the same period last year.

CFO Donald Richardson, speaking during the organization’s second quarter board meeting on June 28, said the partner contributions goal for fiscal 2017, which ends on September 30, was $55 million but has since been revised to $52 million.

In-kind contributions, however, have a more positive outlook as the organization had projected $50 million for fiscal 2017 but has revised that amount to $52 million.

Brand USA’s expenses, which include expenditures on marketing campaigns, were also $28 million behind budget year-to-date through April. Richardson said the lower expenditure amount is “primarily due to a shift in strategy and timing differences in marketing expenses.”

Richardson also said expenses have picked up in May and June and Brand USA is expecting to be about $2 million under budget for fiscal 2017.

Brand USA had $52.4 million in partner cash contributions and $41.6 million in in-kind contributions for fiscal 2016. At its first quarter March 22 board meeting, Richardson reported that partner cash contributions were $9.5 million ahead of budget year-to-date but didn’t report any in-kind contributions to date at the meeting.

In other words, partner cash contributions began to fall off in March and April and in-kind contributions were still falling behind through April.

Traveler Intent

During the June 28 board meeting, Anne Madison, Brand USA’s chief strategy and communications officer, said intent to visit the USA is down about five percent from the organization’s 60 percent target. “This is in-line with other international arrivals forecasts for this year,” said Madison.

Madison also told Skift that partner contributions year-to-date through the beginning of July are tracking on par with last year. “Again, all of this is related to the timing of program opportunities,” she said. “Our partner retention rate remains strong and on pace with the prior year.”

The funding for Brand USA, which is a non-profit private partnership, comes from a mix of donations from more than 700 partner organizations, and matching funds. Taxpayer money isn’t used to fund Brand USA’s marketing efforts. Instead, contributions from partners such as tourism boards are matched by fees international travelers pay to the Electronic System for Travel Authorization (ESTA) program.

Brand USA designates partner cash contributions in six categories: diamond ($1 million or more), platinum ($500,000 to $999,999), gold ($250,000 to $499,999), silver ($100,000 to $249,999), bronze ($10,000 to $99,999) and supporting (up to $10,000). The bronze category had the highest number of partners in fiscal 2016 (more than 100), the organization’s fiscal 2016 annual report shows.

Brands such as Expedia, Hilton Worldwide, TripAdvisor, Visit California, and Visit Florida contributed $1 million or more in fiscal 2016, for example.

For in-kind donations, two of the highest contributions for fiscal 2016 were from STA Travel, which donated $4.9 million worth of digital, print and out-of-home media space in 12 markets and from Telegraph Media Group which gave $2.2 million in print and digital advertising media space in the UK.

TravelNevada, Nevada’s state tourism board which has done many project campaigns and programs with Brand USA, isn’t part of the contributions shortfall. Bethany Drysdale, a spokesperson for TravelNevada, said the tourism board is upping its partner cash contribution this year by $100,000 to bring its total cash contribution to $250,000 and also plans to make in-kind contributions.

Drysdale said TravelNevada plans to revamp its presence on Brand USA’s consumer-facing website; continue multi-channel programs in Australia, China and India; participate in a sales mission to India; debut a film that features Nevada in German movie theaters and more.

“We’ve found the work we’ve done with Brand USA to be very fruitful, said Drysdale. “We know that by partnering with Brand USA we’re going to be partnered with other states in our part of the country. But I think that helps us because we’re not really an entry point and for the most part Nevada is not that first stop destination.”

Goals Are Going Forward

At last month’s IPW conference in Washington, D.C., Secretary of Commerce Wilbur Ross delivered an optimistic address about foreign visitation and the Trump Administration’s positioning of the travel industry despite Trump’s continued tough stance on immigration and foreigners.

Although that speech was delivered with a backdrop of President Trump simultaneously tweeting his support for his travel ban and the release of his proposed fiscal 2018 budget which outlined Brand USA’s funding cut.

Thompson, who like many others at the conference felt Ross’ remarks were some much-needed reassurance, said during the June 28 meeting that the commerce department supports Brand USA’s goals.

Among the most important goals is attracting 100 million international visitors and $250 million in visitor spending by 2021, a goal set by the Obama Administration in 2012.

“Part of our ongoing dialogue with our friends at the department of commerce and our new commerce secretary is one of the messages he gave to the travel and tourism advisory board during one of our earliest interactions was ‘stick to your goals,’” said Thompson.

“But we’re not necessarily trying to maximize the total number of visitors, we’re trying to maximize the spend,” he said. “Markets like China, India and Brazil will help with growing the spending.”

Drysdale, along with many other destination marketers, doesn’t understand why the president feels cutting Brand USA’s funding is a good idea. “Nevada’s Congressional delegation has historically supported the travel industry and continues to do so,” she said. “All the major travel bills passed in Congress have been supported by our Nevada delgation whether they’re Republican or Democrat and tourism is a non-partisan issue in Nevada.”

TravelNevada also has a dedicated staff member who specifically manages programs it does with Brand USA. “We support Brand USA’s funding model,” she said. “It’s only benefiting U.S. residents and I think taking it away would be a short-sighted move.”

Members of the Congressional Travel & Tourism Caucus recently met with tourism boards and other travel brands on Capitol Hill, among them the Southeast Tourism Society, which expressed concern about the president’s proposed elimination of Brand USA, said Halle Czechowski, a D.C.-based federal policy advisor and consultant for the Southeast Tourism Society.

Czechowski said she and the Southeast Tourism Society team don’t want history to repeat itself. “In 1994, Congress wanted to eliminate the Department of Commerce but ended up only eliminating the U.S. Travel and Tourism Administration,” she said. “That office was eliminated by the end of 1995 and was eventually reinstated as part of the National Travel & Tourism Office.”

It will ultimately be up to Congress – not President Trump – to decide the merits of Brand USA and save its funding when it’s slated to vote on the federal government’s fiscal 2018 budget later this year.

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What Travel to North Korea Says — And Doesn’t Say — About Adventure Travel

Koryo Tours

A scene from the Pyongyang Marathon in North Korea in April 2017. Koryo Tours

Skift Take: The death of a young American illustrates the continuing risk for niche operators committed to taking travelers to remote and risky parts of the world, including North Korea. They’re called risky for a reason.

— Steven Schwankert

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

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

Traveling to potential dangerous destinations can be fun – until tragedy strrikes.

The story of American Otto Warmbier is an adventure traveler’s nightmare, triggering an “I told you so” tale from conservative friends and worried parents. Going to a place that sounds like a dorm room dare – the Democratic People’s Republic of Korea (DPRK), or North Korea – looks audacious on paper, but probably shouldn’t have been in actuality.

Thousands of foreign tourists, including Americans, who are officially warned not to travel to the North Korea, visit the country every year, the lure of a little-seen, forbidden kingdom drawing the offbeat traveler and the backpacker bored of banana pancakes and muesli in paradise.

“The Department of State strongly warns U.S. citizens not to travel to North Korea/the Democratic People’s Republic of Korea (DPRK),” the U.S. State Department’s website states categorically. “At least 16 U.S. citizens have been detained in North Korea in the past 10 years. North Korean authorities have detained those who traveled independently and those who were part of organized tours. Being a member of a group tour or using a tour guide will not prevent North Korean authorities from detaining or arresting you.”

The Arrest

Warmbier was arrested at Pyongyang International Airport in January 2016 as he was preparing to depart the country, while traveling with a group organized by Xi’an, China-based Young Pioneers Tours. North Korean authorities accused him of attempting to steal a poster off the wall of a Pyongyang hotel.

In March 2016, Warmbier was sentenced to 15 years of hard labor for “hostile acts,” in a show trial in which the young American visibly trembled during a televised apology.

In June, he was returned to U.S. custody in a coma, which the North Korean government claimed was the result of a case of botulism complicated by Warmbier’s consumption of a sleeping pill. There was abundant skepticism about that claim.

He died in Ohio days after his return, inflaming an already volatile situation between the U.S. and North Korea which do not have diplomatic relations and have sparred over North Korea’s missile tests and bombastic rhetoric.

In 2009, it took a trip by former President Bill Clinton to free journalists Laura Ling and Euna Lee when they wandered over to North Korean territory from China and were arrested.

Countries such as North Korea are also unlikely to have easy access to modern medical care four tourists in case of emergency. Others may be in the throes of a civil war or similar unrest, where travelers may find themselves in areas out of government control – which may or may not cause additional risk.

Similarly, travel insurance for these destinations may be unavailable, and travel to those destinations may also impact normal insurance policies if they are seen as being too high-risk.

Both the Obama administration’s easing of travel restrictions on Cuba, followed by the Trump administration’s revision of those moves, demonstrates how a shift in political winds can lead to rapid changes in travel policy status. But while government to government relations with Cuba were hostile until recently, on the street level, only Americans with pointed political motives were likely to run into trouble. The same was true in places regarded as current or former enemies such as Vietnam, before the re-establishment of diplomatic relations in 1995.

Adventure Travel Isn’t Monolithic

Sometimes adventure travel — in terms of vacations off the beaten path — is in the eyes of the beholder. Tunisia might have been off the beaten path for many Americans but it had perennially attracted tons of British and Russians.

Millions of people travel to so-called out-of-the way destinations, everywhere from Myanmar to Iran, every year and have totally memorable experiences.

Of course, adventure travel isn’t just tied to out-of-the-way places; it can also be a bike tour or an Amazon trek.

But the Warmbier case shows why trips to “forbidden” and “wild” places still represent a significant risk, not just for the travelers, but especially the operators that arrange such outings. There’s little or no official cover for citizens and tour operators from countries that do not have diplomatic relations with the place being visited.

Although medical emergencies and their treatment can be a concern for any traveler, it is the special circumstances of political imprisonment, or non-political crime such as kidnapping, that are greater worries once one steps too far off the travel beaten path.

“Generally on all the trips we cover, and this includes Afghanistan, Pakistan, Chechnya, Iraq, Iran, Somaliland, Sudan, and Socotra (Yemen), the biggest risk we see are either road traffic accidents or risks due to trekking, skiing, horse riding, or other outdoor activity,” said James Wilcox, founder of Untamed Borders, which serves the aforementioned countries but doesn’t dabble in North Korea.

Following Warmbier’s death, Young Pioneers, which doesn’t have a stellar reputation, announced it would no longer accept Americans on their trips, despite no such official policy from the North Korea government side.

“Considering these facts and this tragic outcome we will no longer be organizing tours for U.S. citizens to North Korea,” Young Pioneers said in a statement posted to its website.

North Korea travel market leader Koryo Tours, founded in the early 1990s, made a similar online statement: “We are discussing this matter frankly with our Korean travel partners, and the foreign organizations active in Pyongyang that we liaise with, and are currently reviewing the issue of U.S. citizens traveling to North Korea.”

Despite their situation with U.S. citizens, both Young Pioneers and Koryo Tours continue to operate North Korea tours for other nationalities. Operated by nationals of European nations, in August Young Pioneers will organize six- and seven–day Liberation Day trips, celebrating the end of World War 2 in Korea.

Koryo will depart for its week-long Victory Day tour later in July.

Like show business, in travel, especially off-beat travel, the tour must go on.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

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Chefs+Tech: Tock CEO Says Restaurants Are Overpaying OpenTable

Jason Clampet  / Skift

OpenTable charges more per seated diner when the table is booked via its website or app, as opposed to the restaurant’s own website. Jason Clampet / Skift

Skift Take: Nick Kokonas has spoken out against OpenTable for years, but his latest claims could illustrate a serious flaw in OpenTable’s code. Whether intentional or not, this is a big deal for the reservations giant.

— Kristen Hawley

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

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

Bonus: We now publish C+T twice weekly.

Tock CEO Nick Kokonas says Many Restaurants Overpay OpenTable

Nick Kokonas has not been quiet in his criticism of OpenTable, but his Medium post this week takes it to the next level. Kokonas says he long believed OpenTable was overcharging its restaurant customers, and now it appears he can prove it. In short: OpenTable charges a restaurant per diner when that diner books a reservation through the OpenTable website. This charge makes sense when you consider that OpenTable powers that diner’s discovery of a particular restaurant — as a restaurant, you’re paying a small fee for additional marketing. If a diner goes directly to the restaurant’s website to book, OpenTable charges significantly less per diner. This only works, though, if the restaurant website adds a particular line of code to differentiate the two experiences — which, he says, many do not. An engineer on the Tock team wrote a program for restaurants to audit their website code to see if they’re overpaying for covers. “I’ve long suspected that this was common practice but now we have the data to prove it,” he writes. OpenTable has not commented on Kokonas’s assertions.

Food’s the Focus for the New Ando

Delivery-only restaurants haven’t gotten off to the best start in the press; startups billed as tech companies received a whole lot of funding but most couldn’t manage to get the concepts off the ground, losing serious cash in the process. (San Francisco’s Sprig, for example, raised over $50 million but was losing a reported $850,000 per month.) Focusing on the tech may have been newsworthy when the delivery services were the darlings in VC-land, but as these businesses try (and in many cases, fail) to disrupt restaurant delivery, it becomes clear that their technology and logistics aren’t the things that will set them apart. Instead, it’s the food. You can spend all the resources in the world perfecting algorithms and logistics, but at the end of the day if the food isn’t standout, no one is going to order from you, period.

In New York, David Chang’s Ando has revamped its menu offerings, focusing more of its energy on food and less on the logistics and technology of delivery. CEO Andy Taylor, who comes from Pret a Manger and Hale and Hearty, echoes what we’ve heard from those in the cooking-for-delivery business: “What we’ve learned is we’re going to let delivery experts figure [logistics] out, while we put our energy into the food. We’ll marry with delivery guys as these processes get tightened up and improved.” As delivery technology evolves, entrepreneurs like Taylor and restaurateurs like San Francisco’s Anthony Strong, of delivery-only Young Fava, see companies like Uber Eats as handling the logistics, so they focus on the food. Which is how it should be, really.

London Restaurant Provides Instagram Kits to Diners

If patrons are going to photograph their restaurant food, you might as well give them the tools to do it well, right? One restaurant in London agrees, and is lending diners “Instagram kits” to enhance their social media posts. The kits from restaurant Dirty Bones include a LED light, multi-device charger, clip-on wide-angle lens, tripod…. and a selfie stick, according to an article in Mic. The kits are available only at one of the four Dirty Bones locations, a new one apparently designed “with Instagram in mind.”

I get it, I do. Restaurants know that patrons are going to take photos of their meals, so they may as well control as much of the marketing message as they can. Tables, plates, glassware, dishes, drinks, everything is designed to be photographed and recognized. One one hand, this encourages individuality. On the other, I’d prefer to not eat dinner in a photo shoot. In a statement, the restaurant says they’ve intentionally kept the equipment small, but how is it possible that a selfie stick won’t cause some sort of disruption?


  • How restaurant week became restaurant week — New York Times
  • A restaurant in New York accidentally leaked its guest notes and they’re hilarious — @hannahgoldfield on Twitter
  • Men and Republicans are the best tippers, apparently — Bloomberg
  • Another brilliant Twitter stream, this one about Americans not using egg cups. —Twitter moments

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

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