Questions on Euromonitor’s forecasts

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FOXTROTS*

 

Questions on Euromonitor’s forecasts

An excerpt from our monthly Travel Business Analyst newsletter and/or our WYSKs (What-You-Should-Know). As these are subscription publications, the following item is not from the current edition.

 

Euromonitor* (EM), a UK-based market research company, forecasts that international visitor arrivals will total 2.4bn in 2030, with visitor spend at US$2.6tn – which we calculate to US$1083-per-arrival.

 

EM does not give its current data, but see below. WTO (World Tourism Organization) has reported 1.33bn +6.9% for 2017 with visitor spend at US$1.34tn +4.9% – which we calculate to US$1012-per-arrival.

 

Our forecasts show bigger numbers, possibly mainly because of our interpretations on the China outbound market.

 

Based on China’s current economic growth, and without any sizeable political negatives (such as wars) not just in China but other key parts of the world, China will reach a 1:1 ratio in terms of outbound travel – which includes arrivals in technically-domestic destinations such as Hong Kong and Macau – in 10 years’ time. That means 1.4bn visitor arrivals, which alone would take WTO’s current total to 2.7bn.

 

Other EM findings, along with our comments:

 

-China, France, US will be the ‘main beneficiaries’ of the growth EM forecasts. Reason for that order of destinations is not clarified, or if this means these three will be the biggest recipients of spending, or count the biggest growth over the next 13 years.

 

-Arrivals will grow 5% this year to reach 1.4bn ‘trips’ (which we calculate back to 1.33mn for 2017, indicating EM is basing its forecasts on WTO data). EM credits this growth to an ‘upgraded economic outlook for major economies such as the US, Japan and the Eurozone’.

 

We presume EM means ‘faster economic growth’ (if only because an ‘outlook’ would have only marginal impact on current activity).

 

Also, many would question EM’s selection of economies to report a positive outlook. Indeed, many economists and official bodies such as the IMF, are lowering their economic-growth expectations.

 

EM terms that 1.4bn as ‘trips’, which appears to be a surprising misinterpretation of the WTO’s 2017 data – if that indeed is EM’s source. WTO’s data shows visitor-arrivals; if a traveller from the US, for example, visits France and the UK on the same trip, that would be two arrivals, but one trip.

 

These are basics, although misinterpreted by many in the travel business. David Scowsill, ex-head of WTTC (World Travel & Tourism Council), a lobby group for the travel business, made the same error in his valedictory speech in mid-2017.

 

WTO forecast +4-5% growth this year, which would mean about 1.39bn visitor-arrivals – the same (rounded) as EM.

 

-‘Low-cost carriers’ (probably what we define as NFAs*) are expected to grow 6% over 2018-23, thus outperforming what it defines as ‘scheduled operators’.

 

This is sloppy editing (we hope it is not sloppy research). 6% over five years is tiny, so we presume EM means annually, although that would also be below recent growth. Our tracking shows +27% in seat sales for NFAs in Europe in 2017, and +9% in the first-half of this year.

 

In addition, Air Asia, Ryanair, Southwest, and others, are ‘scheduled operators’. We presume that by ‘scheduled operators’ EM means what we call FSAs*. But surely EM can do better than this?

 

-‘By 2023, travel intermediaries are forecast to exceed US$2tn stimulated by digital advances and the shift to mobile sales representing 70% of travel agents’ sales in 2017.’ We are unable to interpret this statement.

 

*Notes:

 

1. We have run a few critical reports on EM findings – most apparently due to imprecision in its editorial commentary. At press time, EM had not answered our request for clarifications.

 

2. Following are our airline-type definitions:

 

FSA = full-service-airline. Offering first/business/economy, travel agency bookings, meals/bookings/baggage/cancellations included, etc. As its name indicates – full service.

 

LCA = low-cost-airline. (Not a no-frills-airline; see next.) An FSA but with lower operating costs – cheaper longer-hours flight-deck crew, younger/new longer-hours cabin crew, tighter cost control (twinned 3-star hotel rooms, for example), fewer fare types, may have first and business cabins as well as economy, and which allows bookings through travel agencies etc. If relevant, usually similar to the parent airline, but a different name, and competition against parent airline allowed.

 

NFA = no-frills-airline. We believe that among the many essential elements that make a successful NFA are: shorthaul point-to-point routes; market freedom in terms of fares, routes; single aircraft type; where relevant, competition against parent airline allowed; extremely-low fares when bought at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no (free) service frills; single economy-class cabin; no (free) seat selection; two toilets for 150-seat aircraft; 25-minute turnaround time; cabin crew do daytime cabin cleaning; name and flight change charged at least US$25 each; no trade shows; plenty of consumer advertising and promotion; and much more.

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

*Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance.

 

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What’s working; what’s not. Airlines in Asia Pacific

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FOXTROTS*

 

What’s working; what’s not. Airlines in Asia Pacific

Our summary of traffic results for the leading airlines in Asia Pacific, excerpts from the current editions of the Travel Business Analyst newsletter, over January-August.

 

Seat sales at biggest FSAs (full-service-airlines) in Asia Pacific (whole-group results for all), in alphabetical order: Air China +9%; Cathay +2%; China Eastern +8%; China Southern +12%; Japan +4%; Singapore +11%.

 

We would include Air Asia, but it is less transparent than others, and publishes only quarterly data – although when it started it promised to be above industry norms. Over a year, the AA group sells about 70mn seats, compared with say 126mn at the region’s largest full-service-airline group, China Southern.

 

Notes (on notable details):

 

-Air China. International still stronger, at +15%.

 

-Cathay. Still too weak; given the pressure to keep air fares low, the group is still looking unprofitable.

 

-China Eastern. As is becoming common, some of the airline’s figures do not add up. Based on the figures the airline published in 2017 and this year, international grew +1%; the airline’s data shows +11%. We presume the airline is showing the correct data, but for the present, there is some doubt.

 

-China Southern. Still the fastest-growing of China’s Big-3, with international also still impressively-strong at +18%.

 

-Japan. International looking good, at +8%.

 

-Singapore. We have criticised elements of the group’s businessplan over many years – and still do. But now the results are starting to look good. We note that our criticisms were not misguided, but that the group is now doing much of what we proposed – essentially three years after we proposed it.

 

But we do admit to one surprise – that the core Singapore Airlines is doing so well – +9% for the month, and although YTD +4% is OK, it is not good. Silk Air (the subject of one of our proposals, which is now happening – to merge into the core SA) could be fading because of that planned merge – +5% for the month against +8% YTD.

 

Scoot (which we said should not have been created, but Tiger expanded instead; that has sort-of happened, although Tiger has been folded into Scoot) looks good with +13% for the month, although YTD is +17%. However, Scoot’s seat factor is only 81% for the month and 86% YTD, although for the low fares and high costs (certainly on those medium-haul routes) it needs to be closer to 90%.

 

-Others of note: Air Asia YTD is +14%.

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

*Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance.

 

November travel stocks’ ups and downs

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FOXTROTS*

 

November travel stocks’ ups and downs

Travel stock prices (US, Asia Pacific, Europe) in November:

Airlines: biggest growth, China Southern +26%; biggest fall, Easyjet -7%. Hotels: Wyndham +16%, NH Hoteles -16%. Tech: Travelport +2%, cTrip -13%. Others: HNA +37%, Thomas Cook -33%.

 

Previous month:

Airlines: biggest growth, United +0.0% (flat); biggest fall, Turkish -26%. Hotels: Peninsula -2% sic, Wynn -21%. Tech: LastMinute +17%, Travelport -11%. Others: EuroTunnel +1%, HNA -34% sic.

 

TBA Travel Stocks Index: World 222, Asia Pacific 98, Europe 184, US 384. Index previous month: World 218, Asia Pacific 88, Europe 191, US 375.

 

NVTT (Net Value Travel Tech) Stocks Index: 126; previous month 135.

 

Stockmarkets. Biggest growth, Hong Kong +6%; biggest fall Dublin -4%. Previous month: smallest fall Zurich -1%; biggest fall Korea -13%.

 

Comments:

-These good-growth figures must be read against the big fall the previous month. Only 5 (out of 23 stocks) are above their price before that fall (ie, end-September) in Europe, 10/27 Asia Pacific, 5/28 US, 3/8 tech.

 

-Top airline was actually India’s Jet with +38%, but this is boosted by an expected sale of the airline.

 

-China’s airlines are usually closely matched in stock movements. But this month, although just behind China Southern was Air China with +20%, China Eastern was only +12%.

 

-In Asia Pacific, three hotel groups were still falling. All airlines grew, except the Singapore Airlines group, flat. HNA had the fastest growth (but fell most in October), although it is still half its end-2017 price. Investors do not seem to have confidence in HNA’s supposed reorganisation.

 

-In Europe, we were impressed to see Lufthansa’s stock grow +22%. So often, traffic performance and stock prices seem out of sync. This time, the stock growth better matches traffic growth, around +11%.

 

-But for the rest in the region, some surprising results. Both no-frills-airlines, Easy and Ryan, fell – and all other airlines grew. (Norwegian, hard to categorise, was flat.) Four of our five hotels continued to fall. And 7 of the 8 ‘Others’ fell.

 

-In the US, only two stocks continued to fall – although these were big companies, Boeing (to be hit by US-led trade wars?) and Marriott.

 

-Travel-tech stocks were another surprise – six of the eight still falling. Only Booking/Priceline and Travelport grew.

 

Info from the Travel Business Analyst newsletters. Details in next month’s newsletters.

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

*Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance.

 

October travel stocks’ ups and downs – well, just downs

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FOXTROTS*

 

October travel stocks’ ups and downs

Better change that heading to ‘October travel stock downs’.

Only seven travel stocks out of the 78 we track did not fall. And three of those were flat; only four grew.

 

Worse for their stockmarkets; none grew. Best performer was Zurich, which fell only -1%.

 

First, though, the figures, for travel stock prices (US, Asia Pacific, Europe) in October:

 

Airlines: biggest growth, United +0.0% (flat); biggest fall, Turkish -26%.

Hotels: Peninsula -2% sic, Wynn -21%.

Tech: LastMinute +17%, Travelport -11%.

Others: EuroTunnel +1%, HNA -34% sic.

 

-Previous month: Airlines: biggest growth, Turkish +17%; biggest fall, Jet (India) -35% sic. Hotels: Dusit Thani +13%, Wynn -14%. Tech: Trivago +28% sic, Travelport -9%. Others: Boeing +8%, Thomas Cook -31% sic.

 

-TBA Travel Stocks Index: World 218, Asia Pacific 88, Europe 191, US 375. Index previous month: World 240, Asia Pacific 97, Europe 214, US 408.

 

-NVTT (Net Value Travel Tech) Stocks Index: 135; previous month 141.

 

-Stockmarkets. All fell – smallest fall, Zurich -1%; biggest fall -13%. Previous month: biggest growth Istanbul +8%; biggest fall India -6%.

 

 

Comments:

 

By segment, the worst performer last month was hotels – no hotel stock grew. Best were travel-tech stocks, although only two of our eight grew.

 

However, those single stocks that we have signalled as ‘worst’ hide more bad news (we cannot see any good news). By segment:

 

 

Airlines.

The only airline stock that grew is in Asia Pacific. But don’t relate India’s Jet Airways’ +21% to good performance, traffic or other. Growth for the stock of this Etihad subsidiary follows speculative buying after market rumours of a possible bid – by US-based Delta. Jet’s price, even after that boost, is still a -73% fall on its end-2017 price!

 

(Jet is not listed as ‘best’ because it is below our minimum-size level, in seats sold, to be included in that category.)

 

Clearly, China’s airlines fell further than others in the region – in double-digits, including for Hong Kong’s Cathay group – possibly because one of the group’s two airlines is Cathay Dragon, which has a big network into China.

 

This would seem to indicate that the China/US trade war is a factor in travel stock prices.

 

Of the two other airlines that fell in double-digits, one is a surprise – Air Asia’s -17%. But perhaps the other is a surprise as well – Thai’s -14%?

 

In Europe, the biggest fall after Turkish was Lufthansa, -17%. That is the airline group we think is easily the region’s best performing (see our October 22 post on our website, and our October 31 Foxtrots blog). All its main airlines – Austrian, Brussels, Eurowings, Lufthansa, Swiss – are reporting strong traffic growth.

 

But after that, no-frills-airlines seem to be hit harder than others. Both Norwegian and Wizz fell double-digits. And if you thought Ryanair would be slammed because of its bad-tempered summer strike season, maybe not. Its -9% was the same fall as at untroubled Easyjet.

 

Then there is Air France-KLM, which has also had a long strike period (on-and-off for more than six months), lost a CEO, appointed another, then one month later said he was ‘interim’ CEO at AF, and will not stay longer than end-2018 (he will stay CEO at AFKL)! Is this the way to run an airline? Yet AFKL’s -5% was almost the best performance in Europe.

 

In the US, all fell double-digit except Delta and United. All are well below their end-2017 price except United – the airline people love to hate. And does Delta’s less-than-most -5% indicate market support for a possible stake in India’s Jet Airways – see above?

 

 

Hotels.

In Asia Pacific, Thailand’s Dusit and China’s Jinjiang also fell double-digit. None grew. In Europe, big play InterContinental fell hardest, -14%. None grew. In the US, the heaviest US players fell furthest, and two big Las Vegas operators (Sands and Wynn) lost most, although for another LV operator, MGM, its -4% was the best among hotels.

 

 

Tech.

Hard to identify any special pattern. The three US owned (two others are US quoted) fell, but two by not much (4-6%) – which was similar to the performance of others. China’s US-quoted cTrip fell -11% but so did others.

 

 

Others.

In Asia Pacific, the big item is that big fall a China’s Hong Kong-quoted HNA. This is worse than some other stocks (and in its businesses, which include airlines and hotels), so is this a vote on its recent developments (see our PinT:People-in-Travel posts)? It is now 67% down on its end-2017 price.

 

In Europe, the biggest falls were for the travel agency groups, Thomas Cook and TUI. In the US, worst sectors appear to be leisure – the four biggest falls were, alphabetically, Avis, Carnival, Hertz, Royal Caribbean. That said, Avis and Hertz are also strong in the business-travel market.

 

 

Stockmarkets.

As noted, none grew. But also falling in double-digits were Hong Kong and Taiwan. Both, of course, are China related. (We track no stockmarket in China itself because we track no travel stock in China; our China-based companies are mostly Hong Kong-quoted.)

 

The fall for markets in Asia was slightly greater than in other regions – but only about two-points and so that may not be indicative. Even the three markets we track in the US fell a combined heavy -8%, meaning the bad news is everywhere.

 

 

 

Info from the Travel Business Analyst newsletters. Details in next month’s newsletters.

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

*Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance.

 

What’s working; what’s not. Airlines in Europe

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FOXTROTS*

 

What’s working; what’s not. Airlines in Europe

Our summary of traffic results for the leading airlines (not, where relevant, airline groups) in Europe, excerpts from the current editions of the Travel Business Analyst newsletter, over January-July.

 

Seat sales (RPKs for British; our estimates for Ryan), in alphabetical order: Air France (from February this year available only combined with KLM, but we have now obtained separated data) -0.2%; British +4%; Easyjet +4%; Lufthansa +7%; Ryanair +6%.

 

Notes (on notable details; on whole-group for Air France (=AFKL), British (=ICAG), Lufthansa (=LHG):

 

-AFKL +3%. AF’s fractional-fall compares with KLM’s +5%. Transavia’s +6% not good for an almost-NFA (no-frills-airline) but it was only +3% for the month. We presume AF’s strike-prone staff also affected this subsidiary, although its capacity grew +5%.

 

Joon? AFKL is still hiding data. We add the separate parts without Joon and they match (what AFKL reports as) the total with Joon – so something is clearly wrong.

 

 

-ICAG +8%. Going good is Iberia (our estimate) +12%, AerLingus (our estimate) +14%, Vueling (our estimate) +11%. If BA was not so sluggish, ICAG’s growth would be matching LHG’s.

 

-Easyjet. If we describe BA’s + 4% growth as ‘sluggish’, that is worse for an NFA. As both are UK airlines, is this partly related to the Brexit economic slowdown?

 

-LHG +11%. Good but monthly data slower than for the month for Austrian +9% YTD against +4% for the month; Eurowings (our calculation) +26% +17%; Lufthansa +7% +5%. But the other way round for Brussels (our calculation) +12% +16%; Swiss +9% +11%.

 

-Ryanair. The start of flight disruptions start to show? Just +4% for the month.

 

-Others of note:

-Turkish a fair +7% YTD but only +4% for the month.

-Is SAS slipping into trouble? Only +1%, although its Nordic neighbour Finnair reported +14%.

-Is Virgin going to grow again? Just +2% YTD but +6% for the month.

 

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

*Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance.

 

What’s working; what’s not. Airlines in Asia Pacific

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FOXTROTS*

 

What’s working; what’s not. Airlines in Asia Pacific

Our summary of traffic results for the leading airlines in Asia Pacific, excerpts from the current editions of the Travel Business Analyst newsletter, over the first-half.

 

Seat sales at biggest FSAs (full-service-airlines) in Asia Pacific (whole-group results for all), in alphabetical order: Air China +9%; Cathay +2%; China Eastern +9% (our estimate; CE has not published its data for two of the first six months); China Southern +11%; Japan +3%; Singapore +6%.

 

Notes (on notable details):

 

-Air China. International growth +15%.

 

-Cathay. Our perennial question: is it Cathay Dragon or Cathay Pacific that is doing badly?

 

We hope it is CP, because China – the main operating area for CD – is growing fast and so if CD is not also doing well in this market, that would be even worse news for the Group.

 

 

-China Eastern. International growth +9% (our estimate).

 

-China Southern. International growth +18%.

 

-Japan. That low systemwide growth looks unhappily standard for JA. But international is at +7%, shockingly fast for Japan.

 

That is the result of fast growth in four of the first six months, and +12% in June – prompting us to recheck the data to see what had gone wrong! However, we must note it fell -1% in the same 2017 month.

 

 

-Singapore. Significantly, the core SIA airline is now just 57% of the group. That compares with a 63% share for Air France in the AF-KLM group, 58% for British in ICAG, 50% for Lufthansa in its group, 55% for Qantas in its group.

 

That looks good. And now that SAG (our no-longer-true name for the group) plans to follow what we proposed eight years ago – merge Silk into SIA – prospects look better.

 

 

The Fox. Remember, I’m an industry expert in the parallel world.

*Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning.  Foxtrots – leading the industry in a dance.

 

Trottings: Direct Ferries – False Promises.

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TROTTINGS*

 

Trottings: Direct Ferries – False Promises.

Direct Ferries (DF) is a UK-based wholesaler of ferry trips. The other week it offered a 25% discount on Italy’s GNV ferry company for sailings to Sicily booked before September 30.

 

I did it; I booked Sicily on the 30th on GNV via DF.

 

Where was the discount? It did not seem to be there. Indeed, DF even added a booking fee to the price it quoted.

 

I contacted them.

 

First contact after getting my details was to inform me that a bus transfer was not available on the DF site, but it was available on the GNV site. As I had not enquired about a transfer, bus or other, this explanation was a puzzle.

 

I reverted, and another agent replied, apologising for the reference to the transfer. The agent added that he/she did not know why I had received that first message. I replied perhaps he/she should ask the other agent, and would then know the reason, and could then tell me.

 

The agent also told me that the fare I was quoted included the 25% discount – if I had clicked through the discount offer on the DF site.

 

In fact, that is what I did – clicked through on the DF site. But I had also checked on another system on another computer, and the fare was the same as the one available from a click-through. Also, the fare was the same as when I checked two weeks earlier.

 

In other words, the DF agent either did not know, or believed that was the system, or was lying. Given that they sent me no further message, I am tempted to believe that they were lying.

 

I never got my discount.

 

Obviously, the moral of this message is for travellers to beware statements by Direct Ferries, and to assume they may not provide what they seem to be offering.

 

 

*Trottings = Trip Jottings

*The Fox Trots: Travel Stories from The Fox.

 

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