Airlines/hotels. Forget flying.
FOXTROTSFox – sly. Trots – left-leaning (Trotsky) plus its more insalubrious meaning. Foxtrots – leading the industry in a dance.
2006 October 30
Airlines/hotels. Forget flying.
We occasionally hear pundits suggesting that a company should keep its secondary-but-profitable business, and sell its primary-but-lossmaking business.
This seems to be becoming a business fact when concerned with airlines and hotels, and not just a cute comment. Take the two hotel groups I mentioned in a recent column – Hilton and Inter-Continental. Now that the TWA airline has been bought and merged into American Airlines, both hotel companies have outlived their original parents. Both were started by airlines that no longer exist – Hilton by TWA, and Inter-Continental by Pan Am.
When airlines sell their hotel businesses, I usually remark that this seems like a dumb reversal of a smart move to create the hotel division in the first place. After all, around 75% of their passengers in at least one direction are heading for a hotel bed after the plane lands. Surely it is smart business synergy to have a hotel that could attract some of that 75%.
(Although the cynical side of my brain – which is the dominant side – notes that as near-100% of passengers are wearing shoes (lower percentage on Qantas), maybe the smart business synergy is to start a shoe shop instead…)
Seriously though, there is another coming example of a hotel group surviving its airline creator. If Swissair vanishes into Thinair this spring, as programmed, then its hotel arm, Swissotel (now in the loving arms of Raffles International) will also have outlived its creator.
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