Airwallex Closes $15 Million Round for Payments Tech: Travel Startup Funding This Week


Airwallex launched to the public in 2017 and was founded from (left to right) by Max Li, Xijing Dai, Jack Zhang, Lucy Liu, and Max Li. Airwallex

Skift Take: This week, startups raised funding to help simplify cross-border transactions, lend consumers money to book travel, offer airport valet services, map interior spaces, automate back-office processes for rental property managers, and split the book of multiple-night hotel stays. They’ll have a happy New Year for sure.

— Sean O’Neill

Each week we round up travel startups that have recently received or announced funding. The total publicized this week was more than $37 million.

>>Airwallex, a financial technology startup that enables companies to make cross-border payments efficiently, said it had it had closed its Series A round at $15 million.

Square Peg Capital, Tencent, Sequoia Capital China, Gobi Partners, and MasterCard participated as investors in the round, raised in stages over the past year.

The Melbourne-based business doesn’t exclusively focus on travel, but many of its early customers are travel agencies and online marketplaces providing travel, especially in Asia Pacific.

Co-founder and CEO Jack Zhang previously led revamp of payments solutions at Air New Zealand.

Launched this summer, the cross-border payments platform uses machine learning to analyze each transaction that comes through to choose the optimal route for delivering payments from several options, depending on factors like speed and cost.

For example, someone running a tour guide marketplace for Southeast Asia may have a local guide who wants to be paid in Indonesian rupiah and a traveler who wants to pay for the tour with a debit card at an Australian bank. Today’s cross-border tech solutions often take hours or sometimes days to complete a transaction like that. AirWallex claims to speed up the process while trimming interbank fees.

>>UpLift, a financial technology startup that helps consumers buy travel in installments, closed a $15 million equity round.

PAR Capital, Draper Nexus, and Highgate Ventures participated in the round, as did  investor Erik Blachford, a former CEO of Expedia.

UpLift also expanded its lending capacity to $200 million and closed additional liquidity, via a credit facility, to backstop its layaway plan product.

American Airlines Vacations, United Airlines, JetBlue Airways, Southwest Airlines are clients who use it to extend credit to U.S. consumers, enabling travelers to pay for their trips over time rather than up-front.

This year, UpLift’s average 12-month travel loan through travel brands was $2,420, said CEO Brian Barth in an interview. For “highly-qualified” borrowers, it has typically charged an 8.99 percent annual percentage rate, he said.

Paying in monthly payments primarily appeals to consumers with average credit ratings who are willing to accept short-term, interest-based loans. But consumers with high credit scores also appear to be getting tempted into splurging on luxury trips if companies lend them credit on attractive terms, UpLift said.

Other companies offering similar installment plan products include Affirm and Airfordable.

>>Splitty, a consumer-focused online travel company, raised $2.4 million in a seed round. Techstars Accelerator, Techstars Ventures, AOL, and BIP Capital are key investors.

Launched in 2015, Splitty combines differing rate plans from multiple travel wholesalers and online travel agencies to create a new type of hotel product.

Consumers using its hotel search can in a single booking split their stay into multiple reservations. That move can save money because hotels sometimes charge more for a multiple-night reservation than they would collectively for selling the same room as several one-night reservations.

The Tel Aviv-based company with 10 full-time employees has partnerships with American Airlines, Trivago, AOL, Deloitte, Cox Enterprises. Carl Sparks, former president and CEO of Travelocity, is a Splitty advisory board member and vocal advocate.

Splitty said that hotel revenue managers should like it for helping hotels claw back share from alternative accommodations providers that may be priced more competitively than hotels for multi-night stays.

But a couple hotel industry executives told Skift they dislike the product’s potential for complicating their back-office operations.

>>Futurestay, a management automation platform for vacation rentals, said that this autumn it raised an equity seed round of $2.3 million.

New York Angels & Newark Venture Partners led the round, with private investors also contributing.

The New Brunswick, New Jersey-based company, founded in 2012, said it being used in more than 180 countries by 78,000 properties overseen by more than 20,000 managers.

Several digital marketing platforms and channel managers claim to automate parts of the digital marketing of vacation rentals for so-called “instant bookings” on platforms like HomeAway and

Futurestay said that it does that but it stands apart from rivals by also automating much of the back-office work necessary after a reservation is completed.

The property manager market is fractured, which presents either an opportunity or a challenge for companies attempting to sell software tools — depending on how you look at it. CEO Philip Kennard said, “We’re currently adding 1,500 properties a month and expect to double that pace to 3,000 properties a month by the third quarter of 2018.”

>Valeet, a curbside airport valet parking service and mobile app, has raised $1.8 million last month in convertible notes. Plug&Play and Aurorial led the investment.

Founded in Spain in December 2016, Valeet is now live at Los Angeles, Oakland, and San Francisco Bay-area airports — in addition to Barcelona and Madrid. Its customers, unlike Uber or Lyft, drive their own cars as they would do when dropping family or friends.
>>Situm, a startup building an indoor global-positioning system that can help visitors navigate unfamiliar indoor spaces such as airports and train stations via their smartphones, has received a seed round.

The company did not disclose the amount. Amadeus Ventures, the investment arm of travel technology giant Amadeus, Unirisco, and Xesgalicia are key investors. For reference, Amadeus Ventures investments in seed rounds typically range between about $500,000 and $4 million.

The Spanish company said that thousands of buildings worldwide use its technology for indoor mapping by tapping into sensors in smartphones, such as for Wi-Fi and Bluetooth. It provides its services for resale by other information technology companies.

The startup, founded in 2014 by three engineers with doctorates in robotics, finds itself in a suddenly competitive market.

Earlier this year, LocusLabs, a San Francisco-based company that’s creating centimeter-accurate indoor models of dozens of airports worldwide, received a $3.5 million Series A round. Its investors included SITA, the research-and-development arm of the airline industry.

Ultimately, the companies in the space may hope to be acquired by larger competitors such as Alphabet’s Google, Mapbox, or Nokia’s mapping business.

Check out our previous startup funding roundups, here.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

Executives Mull Another Complex Year — Corporate Travel Innovation Report

James Petts  / Flickr

A plane takes off at London City Airport. The year brought additional uncertainty, some surprises, and more evolution for corporate travel. James Petts / Flickr

Skift Take: Yet again, events around the world caused upheaval for business travelers in 2017. Uncertainty has become the norm, and corporate travel executives would be wise to plan for more of the unexpected.

— Hannah Sampson

Late last year, when we spoke to executives across the corporate travel industry about the year that was coming to an end, one theme that came up again and again was how much uncertainty the industry had to cope with.

At the time, we said: “Business travel rolled with a whole lot of punches in 2016. Buckle up for next year.”

That was good advice. Some of the previous year’s uncertainty was gone, but there were many new and unexpected developments in the U.S. and overseas, as well as lingering questions over earlier disruptions such as Brexit.

Our contributor Amy Merrick posed questions to several executives about corporate travel in 2017 and wrote about the highlights, surprises, and challenges they discussed.

Speaking of the end of 2017, this newsletter will take a break next week for the holidays. Business travel editor Andrew Sheivachman will return the first week of January for more of the corporate travel news you’ve come to rely on.

— Hannah Sampson, News Editor

Business of Buying

Corporate Travel Got Even More Complicated in 2017: Business travelers coped with a range of surprises, including disruptive natural disasters and sudden shifts in government policy. Expect more uncertainty.

Travel Management and Event Consolidation Is Edging Out Departmental Turf Wars: Convergence is trending among travel and event departments at big companies. Fueled by technology, it will only become more important to both sectors in the future if old-school thinking doesn’t get in the way.

Delta Air Lines Is Going After Future Business Travelers — While Still in College: Delta has a name for millennials — “Emerging High Value Customers” — and a strategy to turn them into the business class customers of tomorrow. It’s an interesting, multi-layered approach.

Safety + Security

Amtrak Accident Leads to Trump Call for Infrastructure Improvements: It’s a relief to see the president push for legislation that actually makes sense and that would benefit the travel industry. But if the U.S. tax bill passes this week, it will be more difficult to find the funding for such a massive infrastructure investment project.

Smart Luggage Makers Criticize New U.S. Airline Battery Guidelines: For road warriors, a suitcase that doubles as a power source might seem like a great fit. But it’s not so great if that bag is going to cause a holdup while traveling. Luggage makers need to ensure their products will meet new guidelines if they want to see widespread adoption.

Disruption + Innovation

Brands Must Rethink Engagement With the New Digitally Connected Traveler:
Widespread digital connectivity has created a generation of travelers who are more impatient, demanding, and savvy than ever before — and that applies extra to business travelers. Travel brands must adapt to meet those needs.

Apple Maps Adds Airport Terminal Guide for Travelers: Built-in maps of airport terminals are certainly useful for iPhone users. But this new feature has a long way to go in terms of airports included and the granularity of information available, before it becomes a mainstay for frequent travelers.

Airbnb Is Getting a $200 Million Boost to Build Its Hotel-Like Apartment Business: As homesharing gets big backers — and a better relationship with landlords — will corporate travel consider it more of a mainstream option?


Skift Business Travel Editor Andrew Sheivachman [] curates the Skift Corporate Travel Innovation Report. Skift emails the newsletter every Thursday.

Subscribe to Skift’s Free Corporate Travel Innovation Report

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

Boeing is Interested in Taking Over Rival Embraer

United Airlines

Boeing seeks closer ties with Embraer, a Brazilian company that makes regional jets. Its E175s fly as United Express, American Eagle and Delta Connection, among other brands. United Airlines

Skift Take: Yes, a tie-up between Boeing and Embraer might make solid business sense. But don’t discount national pride. Embraer is important to Brazil, and it’s possible — likely even — that the country’s politicians won’t want to give up the company.

— Brian Sumers

Boeing Co. is discussing a “potential combination” with Brazil’s Embraer SA, the companies said, a blockbuster deal that would expand the U.S. aerospace giant’s lineup of commercial and military aircraft.

The talks have centered on a takeover, with Boeing offering Embraer a substantial premium over its $3.7 billion market value, the Wall Street Journal said Thursday. Any tie-up would need to be approved by the Brazilian government, the companies said in a statement.

The acquisition would be Boeing’s largest since it bought U.S. rival McDonnell Douglas Corp. in 1997 and would advance a consolidation wave sweeping through the aerospace sector. Boeing would gain an aircraft offering in the 100-seat category to counter a new threat from Airbus SE, which agreed in October to take control of Bombardier Inc.’s C Series program — the target of a trade complaint brought by Boeing.

“Boeing has a very solid commercial airline business that covers a lot of the key markets, but they were missing this piece in their portfolio,” said Jeff Windau, an analyst at Edward Jones.

Embraer’s American depositary receipts jumped 27 percent to $25.34 at 2:36 p.m. after advancing as much as 31 percent for a record intraday gain. Boeing fell less than 1 percent to $295.85.

Manufacturing Footprint

Boeing and Airbus have focused on larger, higher-margin aircraft, avoiding planes with 100 seats or less that have similar development costs while selling for commodity-like prices. Boeing’s potential Embraer deal raises the prospect of a duopoly with Airbus that would extend into the market for smaller planes, where manufacturers in Canada, China, Russia and Japan are emerging as competitive threats.

A tie-up with Embraer would expand Boeing’s manufacturing base outside the U.S. for the first time, while also marking a shift away from the Chicago-based company’s emphasis on handing cash back to investors through dividends and stock buybacks.

“To go and buy Embraer here would be a major change from what investors have been lead to expect, and also seemingly endorse the Airbus/C-Series strategy that Boeing was so recently unenthused about,” Robert Stallard, an analyst at Vertical Research Partners, said in a note to clients.

Government Hurdle

The Brazilian government is already signaling opposition to a takeover, according to the newspaper Folha de Sao Paulo.

President Michel Temer won’t allow control of Embraer to change hands, he told Defense Minister Raul Jungmann and Air Force Commander Nivaldo Rossato on Thursday in a meeting, according to the Brazilian newspaper. The government was taken by surprise by the Journal’s report on the talks, the newspaper said.

Brazil’s ministries of defense and foreign affairs directed requests for comment to the finance ministry and the presidency. Neither immediately responded to inquiries from Bloomberg. Brazil retains a “golden share” in Embraer that guarantees government control in the event of threats to national sovereignty or security.

“With the Brazilian government having a say, it is worth asking what their upside would be from an American company buying the Brazilian A&D champion,” Stallard said, referring to aerospace and defense.

National Pride

Created in 1969 by the Brazilian government and privatized in 1994, Embraer has been held up as a source of national pride and an example of efficiency and innovation in a commodities-driven country, though corruption scandals in the past few years have tainted that image.

The Sao Jose dos Campos-based company has enjoyed a collegial relationship with Boeing over the years. The news of Airbus’s C Series venture fanned speculation that the two might draw closer to ward off the competitive threat. Boeing is also Embraer’s commercial and maintenance partner for the KC-390, a military cargo plane still being developed.

Boeing has focused on smaller acquisitions for the past two decades to expand its portfolio of commercial, military and space products. But Dennis Muilenburg, Boeing’s chief executive officer, and chief strategist Greg Smith, signaled a willingness to consider bolder moves this year when they promoted Kent Fisher, a rising star, to head the team that handles large mergers and strategic partnerships.

–With assistance from Samy Adghirni

©2017 Bloomberg L.P.

This article was written by Julie Johnsson, Fabiola Moura and Thomas Black from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

Trump Refugee Ban Gets a Hearing Before a Judge the President Disparaged


Who gets into the U.S. and who doesn’t? A case about refugees is being litigated in Washington State, and that will provide a temporary answer to the question. Bloomberg

Skift Take: Behind the scenes, ban or no ban, the Trump administration is slowing the flow of refugees into the United States to remake the country into his administration’s own image.

— Dennis Schaal

Donald Trump’s immigration agenda is back in court with a challenge to his October ban on refugees from 11 countries — before a judge who didn’t rule to the president’s liking in the past.

Nine of the countries on the list account for 80 percent of the Muslim refugees entering the U.S., leading resettlement agencies and civil rights groups to claim the policy is driven by an “irrational prejudice against refugees in general” and religious animus against Muslims.

Earlier versions of the president’s travel ban that included a worldwide suspension of refugee admissions were blocked by judges until the Supreme Court ruled in June that the restrictions could be enforced for immigrants who didn’t have ties to family members or institutions in the U.S. The high court this month removed that condition when it said Trump’s latest bar on entry for travelers from half a dozen Mideast and North African nations, as well as North Korea and Venezuela, can take full effect while the litigation plays out.

The refugee ban — which covers Egypt, Iran, Iraq, Libya, Mali, Somalia, Sudan, Syria, Yemen, South Sudan and North Korea — is now a separate directive from the restrictions on travelers.

Somali Refugee

Among those asking a Seattle federal judge Thursday to temporarily block the refugee ban is a Somali national forced into a Kenyan refugee camp for 20 years by civil war. He married, had three children, then won admission to the U.S. as a refugee in 2014. Two years later, his children and wife were also granted refugee status, but they weren’t able to travel to the U.S. before Trump issued his initial executive order.

“The harms to plaintiffs and others like them have been swift, irreparable and will only intensify,” lawyers for the family said in a court filing. “The message to Muslims in this country and around the world is clear: You are not welcome here.”

The Justice Department says the suspension of refugee entries isn’t indefinite and only applies to nations that don’t adequately screen travelers to ensure they don’t pose a security risk to the U.S.

The policy “merely provides for a pause in admissions while the agencies align their screening and vetting procedures,” according to a government filing. The policy will “result in some delay in the processing of refugees, but no refugee applicant is entitled to have his or her application processed at any particular pace.”

The dispute will be heard by U.S. District Judge James Robart, who issued one of the earliest orders halting Trump’s January travel ban, which caused chaos at U.S. points of entry after being introduced without notice. Afterward, Trump took to Twitter to slam Robart, a 2004 appointee of Republican President George W. Bush. “The opinion of this so-called judge, which essentially takes law-enforcement away from our country, is ridiculous and will be overturned!” the president tweeted.

The case is Doe v. Trump, 17-cv-00178, U.S. District Court, Western District of Washington (Seattle).

(Updates with countries covered by ban in fourth paragraph.)

–With assistance from Alexandria Arnold


©2017 Bloomberg L.P.

This article was written by Kartikay Mehrotra from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

Download (PDF, 1001KB)

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

China Pays Airlines Millions of Dollars to Fly Tourists Around the World

Hainan Airlines

A Hainan Airlines aircraft. The carrier is offering cheap flights from China. Hainan Airlines

Skift Take: Chinese carriers aren’t the first to receive government subsidies and they certainly won’t be the last, but that doesn’t mean the tactic represents a credible long-term plan.

— Patrick Whyte

China is set to become the world’s biggest aviation market in five years thanks in part to hefty subsidies from local governments beseeching airlines to fly mainland tourists overseas.

Local governments, especially those outside mega cities like Beijing, Shanghai and Guangzhou, spent at least 8.6 billion yuan ($1.3 billion) subsidizing airlines in 2016, mostly for them to start direct services to far-flung places such as New York and Paris, according to data compiled by Civil Aviation Data Analysis. These payments, to both Chinese and foreign carriers, equate to close to half the 19.49 billion yuan in profits earned by the top four mainland-based airlines last year, according to the consultancy known as Cadas.

“In addition to a growing need for international exchange resulting from China’s economic development, local governments’ increased subsidies are driving Chinese carriers’ global route expansion,” Shanghai-based Cadas said in a report released Thursday.

As economic growth and rising incomes led China to become the largest source of outbound travelers, major airports in Beijing and Shanghai have been stretched beyond their capacity. The top three state airlines — Air China Ltd., China Eastern Airlines Corp. and China Southern Airlines Co. — have depleted their quota for direct services to foreign destinations from major Chinese cities, and countries including Australia and the U.K. have allowed more flights to and from China.

The battleground for long-haul flights has shifted to lower-tier cities, where state and private carriers like Hainan Airlines Holding Co. are offering international flights at low fares. Such flights would hardly make any money without government subsidies, according to Cadas.

‘Unsustainable’ Handouts

Several carriers have expressed concern over the handouts. Air China’s finance chief Xiao Feng has said heavily-subsidized direct flights from lower-tier Chinese cities are “unsustainable.”

Foreign airlines have also started to pull out of smaller cities, citing unsatisfactory performance. British Airways Plc canceled direct flights to London from the Chengdu in western China after three years of service. United Continental Holdings Inc. ditched Hangzhou and scrapped its seasonal flights between San Francisco and the western Chinese city of Xi’an.

“Airlines still face significant operational risks even if their long-haul international flights from second-tier Chinese cities are subsidized,” Cadas said. “Rather than bringing in more foreigners to China, local governments are subsidizing Chinese outbound travel, with little positive economic impact on local economies.”

©2017 Bloomberg L.P.

This article was written by Bloomberg News from Bloomberg and was legally licensed through the NewsCred publisher network. Please direct all licensing questions to

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

Tybee Island amends ordinance for short-term vacation rentals and increases fees

After working closely with representatives of the short-term vacation rental industry, Tybee City Council approved amendments to the City’s short-term vacation rental ordinance just in time to implement it for the coming year. Amy Gaster, owner of Tybee Vacation Rentals and member of Tybee Island Association of Rental Agents (TIARA) said “Now that the City […]

The post Tybee Island amends ordinance for short-term vacation rentals and increases fees appeared first on VRM Intel.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

Mexico’s Meetings Sector Benefits Businesses and Locals Alike

Skift Take: Mexico’s increased strategic focus on the meetings and events sector makes it a strong candidate for hosting international business events.

— Dawn Rzeznikiewicz

The Mexico Tourism Board (MTB) reported that its 2017 Meetings and Events program has led to significant growth in the industry sector, showing a 6.7% increase from January to October, when compared to the same period in 2016.

Mexico has taken a leadership position as a destination for meetings and events with the relaunch of its strategic partnership program with meetings industry organizations and initiatives that aim to elevate its ICCA ranking, and increase the economic impact of the meetings and conventions industry in the Mexican economy, which currently accounts for $25 billion USD. The International Congress and Convention Association (ICCA) ranks Mexico as 3rd in Latin America, 5th in the Americas, and 21st globally for meeting and incentive travel.

“The meetings and convention industry is a crucial part of our growth plan focused on elevating the average expenditure of travelers,” said Hector Flores, CEO of the Mexico Tourism Board. “We are continuing to invest in building Mexico’s profile for business events and are working closely with industry leaders around the world to bring more corporate and association events to Mexico while introducing them to destinations beyond our traditional sun and beach offerings.”

Mexico offers businesses strong competitive advantages, including an ideal location, connectivity, infrastructure, affordability and a mature supply chain. Additionally, the country is home to convention and exhibition centers with spaces ranging from 13,000 to 960,000 square feet in more than 56 destinations, providing a wide variety of options for event planners based on the size and scope of any event.

The Mexico Tourism Board is also looking beyond capacity offerings and focusing on changing the narrative Mexican destinations use to approach the international meetings market. By connecting associations and corporate clients with their counterparts in the local communities and by closely partnering with the different public and private sectors, Mexico’s meetings industry is helping corporations to identify academic and business reasons to host meetings, and make the most of the different Mexican destinations.

To continue strengthening its position in as a top destination for hosting international business events, the Mexico Tourism Board launched a dedicated Meetings and Events plan this year. The implementation of these programs has had a significant positive impact in the industry and in Mexico’s strategic approach to growing this important sector.

The National Ambassador Program, consisting of 90 scientific, professional, and trade leaders from Mexico with global influence, resulted in securing important events such as the 14th International Colloquium on Paratuberculosis (Riviera Maya, 2018), 24th Meeting of the International Society of Electrochemistry (Merida 2019), 5th Latin American Congress on Controversies in Diabetes, Obesity and Hypertension (Mexico City, 2019), and the 11th Congress of the World Society of Reconstructive Microsurgery in Cancun 2021, to name a few examples. As part of this initiative, the Mexico Tourism Board developed a toolkit to provide each ambassador with pertinent information and contacts to support in bringing visitors from the select ambassadors’ respective industries.

The Economic Cluster Perspective program serves to diversify the demand across different destinations around the country, not only based on their attractions or capacities, but also on their industry development across diverse sectors such as Aerospace, Automotive, Renewable Energy or IT. As a result of this initiative, the Mexico Tourism Board is launching a pilot regional program in Queretaro, Aguascalientes, and Leon.

The Client Advisory Board consists of a group of leaders from different sectors in the global meetings industry. The Mexico Tourism Board, along with its partner Professional Convention Management Association, created the board to obtain expert feedback on strategic advancements in the industry, including the identification of leading destinations’ best practices and global industry trends.

The Industry Bidding Committee (IBC) is in charge of developing guidelines for the collective efforts when competing to attract World Congresses and International Events to Mexico. The IBC defines specific support criteria and is already coordinating private, public, federal and local resources for international bidding. The committee is also implementing a code of ethics to ensure fair competition among host cities and tracking of successful bids. As a result, there is now a clear process in place to bid for international events.

The Professional Certification Programs ensure local companies are adequately prepared to meet the needs of international events and travel groups. Certifications offered by the new organization include Certified Meeting Professional (CMP), Certified Exhibition Manager (CEM) for tradeshow professionals, Certified Incentive Specialist (CIS) for travel suppliers and Certified Association Sales Executive (CASE) or Convention Service Manager (CSM) for corporate market professionals. As the on-the-ground experience is crucial for repeat visitors, the MTB is aggressively investing in skills training for locals throughout the country. This year alone, there are more than 90 additional certified professionals from different destinations and companies in the meetings industry.

Accounting for 29 million participants, 30 million room nights and 266 events in a year, the meetings sector in Mexico is an increasingly important part of the tourism industry and the country’s economy. The meetings and incentive industry generates 1.5% of the GDP, creating nearly a million jobs in Mexico.

Download the Infographic

This content was created collaboratively by Visit Mexico and Skift’s branded content studio, SkiftX.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

Travel Companies Enthusiastically Back Tax Bill That Majority of Americans Oppose

Andrew Harrer  / Bloomberg

President Donald Trump speaks during an event to mark the passage of the tax bill on December 20, 2017. Andrew Harrer / Bloomberg

Skift Take: Is the revamped tax code a “gift for hard-working Americans” as President Trump declared, or just a gift for corporations already reaping record profits? For now, travel executives seem way more excited than the general public.

— Hannah Sampson

The tax bill that Congress passed Wednesday might not be a hit with the general public — statistical analysis site FiveThirtyEight calls it historically unpopular — but corporate America sounds pleased as punch.

Travel industry executives, some of whom have been vocal advocates for years for changes to the U.S. tax code, belong in that satisfied group.

In recent days, Skift reached out to multiple companies to ask for a reaction to the tax legislation. We also searched earnings call transcripts, regulatory filings, television interviews, and other sources to get a sense of the impact industry players expect — and how they might use the extra cash in hand as a result of the changes to the tax code.

It’s not clear when President Donald Trump will sign the bill, which lowers the corporate tax rate from 35 percent to 21 percent, but the White House held an event Wednesday afternoon to celebrate its passage by the House and Senate.

The Immediate Reaction

The bill’s passage was touted as a victory for Republicans, and those in the travel industry who offered comments on Wednesday seemed to count it as a win for their companies as well.

“We applaud the passage of the tax reform legislation which is aimed at reenergizing the economy through tax cuts for businesses and individuals,” David Kong, President and CEO of Best Western Hotels & Resorts, said in a statement. “As taxes decrease, small business owners will have more resources to reinvest in their businesses, resulting in a stronger economy overall. With key indicators such as the stock market on the rise, the travel and tourism industry will be one of many sectors to see a direct benefit.”

In a statement, Hilton Hotels and Resorts said the tax changes were positive for hotel owners and builders.

“As each new property brings with it potential economic activity and local employment, we choose to be optimistic about what this can mean for our industry,” the statement said.

Several other hotel companies pointed to an enthusiastic statement from the American Hotel & Lodging Association.

“Our industry is proud to support legislation that will reform U.S. tax policies and create a pro-growth tax environment,” said the association’s president and CEO, Katherine Lugar. “Tax reform will enable hoteliers to expand their businesses, create more jobs, and help keep our economy strong. Tax cuts will contribute to the overall economic growth of our nation and strengthen our economy.”

A handful of companies — some with direct links to travel — made quick moves Wednesday to demonstrate that their tax savings would benefit American workers. Bloomberg reported that Comcast, which owns Universal Parks & Resorts, would give $1,000 bonuses to 100,000 workers and invest more than $50 billion in infrastructure. Likewise, aerospace company Boeing said it would devote $300 million to employee training, workplace improvements, and corporate giving.

Don’t Spend It All in One Place

Critics say the bill is a gift to the super rich and already-profitable corporations that comes at the expense of the working class. And they question who the corporate tax breaks will actually help.

“There is a reason so few executives have said the tax bill will lead to more jobs, investments, and higher wages — because it will actually lead to share buybacks, corporate bonuses, and dividends,” Democratic Senator Chuck Schumer said in a statement, according to CNBC.

Before the bill passed, Barclays analyst Felicia Hendrix wrote in a note to investors that she believed that merely the expectation of tax changes had already helped stock prices and company valuations, “but could have a further positive impact once investors can home in on the specific upside that can come from generally higher corporate profits, capital spending and economic growth.”

In recent months, the leaders of several publicly traded companies have sketched out some of their ideas for how to spend a tax cut windfall.

“It’s not really going to change the way we allocate capital,” Hilton president and CEO Chris Nassetta told CNBC earlier this month. “Tax reform, in reducing our tax rates, is going to drive more free cash flow, and the largest part of that free cash flow increase is going to go back to our shareholders.”

In a CNBC interview in August, Walt Disney Co. chairman and CEO Bob Iger named a couple of things the company would do if it did not have to pay “an unusually high corporate tax rate.” Disney’s effective income tax rate in 2016 was 34.2 percent.

“It would give us the ability…to return more capital to investors and invest more in our businesses,” he said. “And even create more jobs, which we’ve been doing in the United States. More capital would give us the ability to expand even more.”

During a third-quarter earnings call in November, Marriott CEO Arne Sorenson said the company has plenty of money to make investments even without any tax changes.

“Obviously, we have not been capital constrained in current times before tax reform,” he said.

Marriott CFO Leeny Oberg said the typical practice is to figure out investments that make sense and then return anything that’s left over to shareholders. Marriott would do the same after tax reform.

“The answer will continue to be that we want to invest in our business to grow and strengthen our platform, strengthen our brands, and add a lot more distribution, and do everything we can to make our equation for the customer the most powerful one in the industry,” Oberg said. “And from that standpoint, we would look at it exactly the same way, and then continue to return capital to shareholders.”

Sorenson said there “clearly” have not been enough of the kinds of investments Oberg referred to, because the company expects to return $3.5 billion to shareholders this year.

“That tells you that there is that much extra capacity which is being produced by our company that we don’t need to invest in our system,” he said.

Sorenson said he does ultimately expect any additional cash to help the economy once it goes back to shareholders.

“That’s likely to go principally to American shareholders, which gets the dollars back into the American economy, and the American economy should benefit from that,” he told analysts. “And that growth, in turn, should create jobs and should create more capital investment in the U.S. economy.”

“And more demand for our hotels,” Oberg added.

“Hopefully,” Sorenson said.

Travel Bump Coming?

There is some hope that companies working with more cash will send more employees out on the road.

On the other hand, it’s not clear that families will feel enough of a benefit to devote extra money to leisure travel. The biggest individual tax cuts will go to higher earners — who can afford to travel without a tax break. The Tax Policy Center estimates that the average household will get a tax cut of $1,610 in 2018, according to NPR. That number is far lower for those making less than $75,000; is a household likely to spend its extra $870 on a family trip?

Still, some in the travel industry have said they would expect to see a tax-related lift.

“Domestic business travel has already been showing some bounce because of an optimistic business environment, and the president’s stated goal with his tax package is to jolt the private sector even more,” David Huether, senior vice president for research at the U.S. Travel Association. “If he’s right, then it’s reasonable to expect some of that benefit to show up in our measurements for the domestic travel economy both on the business and leisure side.”

Before the bill passed, Association of Corporate Travel Executives executive director Greeley Koch offered a cautiously worded statement.

“U.S. tax reform may have the potential to encourage businesses to invest more money in their operations, resulting in more jobs,” he said. “Depending on the make-up of these new positions, there is further potential to see an attendant increase in business travel, including travel by those tasked with launching a new facility.”

Beyond the Corporate Tax Rate

The corporate tax rate gets the headlines, but another provision affects companies with operations overseas — a common situation with travel businesses. The U.S. slaps a 35 percent charge on repatriating cash generated from overseas.

Much of that cash parked overseas has been spent on international deals in the interim. So a tax law change may tempt these companies to bring their cash back to invest in the U.S., changing the nation’s market dynamics.

Among online travel companies, Priceline Group might benefit the most, given the vastness of its size and that about 80 percent of its business occurs outside of the U.S. In 2016, the company generated approximately $13 billion in international earnings.

Earlier this year, CEO Glenn Fogel said in a statement: “We would welcome potential tax reforms that would allow us to repatriate cash earned by our non-U.S. companies into the U.S. without penalty.”

Congress is not currently planning on dropping the “penalty” — only lowering it.

The final version of the tax bill had a tax rate on the deemed repatriation of currently deferred foreign profits of 15.5 percent for cash and cash-equivalent earnings and 8 percent for other profits. Those are significant drops from today’s 35 percent repatriation tax rate. But the drops may not be enough for Priceline.

Working backwards from its other regulatory filings, one can estimate the company’s average tax rate overseas has averaged about 17 percent, according Matthew Gardner, a senior fellow at the think tank The Institute on Taxation and Economic Policy in Washington, D.C.

That’s only an estimate, given that we don’t know how much tax its home state of Connecticut would have levied — an amount that the company could have deducted from its federal liability.

The Fine Print

Many news stories have focused on the tax bill lowering the corporate tax rate from 35 percent to 20 percent. But in practice, corporate taxes are often effectively lower than the headline rate.

Companies often don’t have to pay a 35 percent federal income tax rate because credits, deductions, and loopholes can trim their bills.

The U.S. Treasury examined the 2007-2011 tax bills of profitable companies (of all types, not just in travel) with more than $10 million in assets and found that they paid an average of 22 percent of their profit in taxes.

Priceline, Expedia, TripAdvisor, Fareportal, and Airbnb appear to fit this description, though spokespeople from the companies declined to speak about the tax bill or their taxes.

While tax liability statements are public record in regulatory financial filings, determining the actual amount paid to Treasury can be tricky.

A case in point: In 2016, Priceline had a loss on its U.S. operations and paid no U.S. corporate tax.

In 2015, the company paid $88.2 million in U.S. federal income tax on a U.S.-based profit of $35.4 million. But a wrinkle in how companies could account for federal and state taxes on stock-based compensation in years prior to 2017 meant that the Priceline Group probably only paid about $4 million in federal corporation tax, according an estimate by the think tank The Institute on Taxation and Economic Policy.

In short, Priceline Group’s effective federal income tax rate in 2015 was 14.8 percent — significantly below the 35 percent headline rate.

The estimated low payment was not a one-off and is representative of its average payment since 2008, the think tank said.

Expedia Inc.’s effective federal corporate tax rate in recent years has been less than the 35 percent on average, too, because it also took advantage of the same accounting method Priceline Group did.

The three largest legacy U.S. airlines – American Airlines, Delta Air Lines and United Airlines — haven’t paid significant taxes in years, because though the overall industry has been profitable since about 2010, the previous decade had been so rough that the major carriers still have “net operating loss carryforwards” they use to avoid tax bills. Guidelines permit corporations to deduct previous massive losses from future tax bills.

However, in recent years, major airlines have warned investors this benefit eventually will end. Delta said Dec. 14 it had long expected to pay cash taxes by 2019. But tax reform has a couple of benefits for Delta, CFO Paul Jacobson, told investors. First, the airline expects tax code changes could help Delta push its first cash tax payment into 2020, rather than 2019. And second, it’ll pay significantly less in taxes than expected.

If tax reform passes, he said, “our book tax rate would go from 35 percent to approximately 22-24 percent, including state taxes.” In addition, he noted, “we would see [earnings per share] go up by $1 to $1.25 per share, and while that is non-cash in the short term, it certainly translates to cash over the longer term.”

Like most corporations, Delta does not expect to pay book taxes. If the book rate goes to 22 percent, he said, Delta will pay roughly 12 percent in cash taxes.

“Anything that can be done on tax reform is beneficial to Delta in terms of cash generation, which goes back into that model of reinvesting in the business, redeploying in the balance sheet and allocating capital in a balanced way,” Jacobson said.

Other airlines are similarly bullish. At Allegiant Travel Co.’s investor day on Nov. 30, CEO Maury Gallagher declined to talk specifics — “I can’t read the newspaper anymore, so I’m not keeping up with a lot of stuff” — but said tax reform is a “win” for the company. Allegiant, which has been profitable and does not have carry-forwards, has been paying cash taxes “in the mid-20s,” he said.

Southwest is another consistently profitable U.S. airline, and like Allegiant it has much to gain, even short-term. Its CEO, Gary Kelly, has been among the more outspoken proponents of tax reform, writing every member of Congress to express his support.

“We’re pleased,” he said in a video interview for The Street. “It would certainly be a benefit for the transportation industry, and certainly for Southwest Airlines. The airline industry in particular is in need of that kind of tax burden relief.”

Cruise Lines Dodge a Tax Hike

Major cruise companies, which are based in the United States but incorporated in other countries, pay almost nothing in U.S. income tax thanks to exemptions for shipping companies.

A proposal to remove that exemption and tax cruise lines for the time they spent in U.S. waters was included in the Senate version of the bill, but removed after Alaska lawmakers complained it would disproportionately affect their state.

Neither cruise operators nor their industry group, Cruise Lines International Association, had much to say about the proposal.

“We’re pleased with how things worked out on the tax bill,” said Rob Zeiger, chief communications officer for Royal Caribbean Cruises, in an email.

He added that the company could see a bigger-picture benefit from the legislation.

“A strong economy is a strong driver for our business,” Zeiger said. “When the economy is strong, more people have more money to spend on a vacation experience. So if the tax bill contributes to an expanding economy, that’s a good thing.”

Carnival Corp. chief communications officer Roger Frizzell also struck an upbeat, if measured, tone: “We are hopeful that the proposed tax reductions will help stimulate consumer spending on vacations and travel.”

Skift editors Deanna Ting, Dan Peltier, Andrew Sheivachman, and senior research analyst Rebecca Stone contributed to this report.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico Group Speeds Pivot With Purchase of Germany’s

An advert for Group has bought the booking site’s parent company.

Skift Take: Group’s attempt to ween itself off low margin flight-ticket sales gets accelerated with this deal. The relatively low purchase price makes it a relatively risk-free acquisition.

— Patrick Whyte Group has acquired German travel booking site from ProSiebenSat.1 for $14.2 million (€12 million).

The deal for Comvel GmBH, which operates, and a number of other travel portals, will see the Swiss Group expand its operations in central Europe with its German revenue expected to increase from $20.2 million (€17 million) to $43.9 million (€37 million) next year.

It also continues’s move away from a reliance on low-margin flight bookings.’s main focus (80 percent) is selling package holidays, which is a much more lucrative line of business.

Fabio Cannavale, CEO of Group, said: “Comvel GmbH with its brand is a perfect complement to our business model and represents a further step ahead in the accomplishment of our strategy of becoming the reference player in the European packaged holidays arena.”

The sale is another travel-related disposal for media company ProSiebenSat.1. Earlier this year, it sold Etraveli, the Nordic online travel site, to private equity firm CVC Capital Partners for $565 million.

ProSiebenSat.1 bought Comvel GmbH, via its subsidiary Seven Ventures, in late 2013 with the aim of integrating travel retail with its existing TV ventures.

The sales of Etraveli and now Comvel indicate this wasn’t a success.

“Changing market conditions, for example, can mean that ProSiebenSat.1 is no longer the best owner for an investment,” ProSiebenSat.1 said.

“In these singular cases, ProSiebenSat.1 endeavors to sell its shareholding to a new owner that can better manage and develop the business.

“The group commenced such a strategic review process for its travel portfolio in spring 2017. As a result, ProSiebenSat.1 Group already sold all of its shares in the global online travel agency Etraveli to the strategic financial investor CVC in June of this year. By selling ProSiebenSat.1 is continuing this strategy.”

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico

Leisure travelers shun flying leading to opportunity for drive-to vacation rental destinations

Americans believe flying is more frustrating than five years ago, according to a new Morning Consult survey released today by the U.S. Travel Association. Travelers especially dread flying around the Christmas holiday, the time of year overwhelmingly cited as the worst for air travel. Because of such headaches, Americans avoided 32 million air trips last year, costing […]

The post Leisure travelers shun flying leading to opportunity for drive-to vacation rental destinations appeared first on VRM Intel.

Ryan Wolkov

PRC Time Shares

Author: Ryan Wolkov

Powered by WPeMatico