Interview: Maldives president.

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FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning. 

Foxtrots – leading the industry in a dance.

September 18 2010

 

Interview: Maldives president.

 

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ARAPHRASED comments on the travel business from the president of the Maldives’, Mohamed Nasheed, to me:

[] We will do away with the tourism board. It will be public/private operation; the government will pay around 50% of budget. [This is the promotional body, the Maldives Tourism Promotion Board; the ministry of tourism remains untouched.]

[] The government will do anything to bring the Maldives to the attention of the market – that is why we conducted one cabinet meeting underwater. The advertising spend value of that must have been over US$100mn.

[] We don’t feel we should go over 1mn tourists. We will reach that in next 3/4 years.

[] We (the world) must regain the eco-mantle. There has been some negative press, but it is downright silly to say that the Himalayan glaciers are not melting. We have only one planet [so we should look after it].

[] I am optimistic about climate change. I think there will be solutions. There will be a point when humanity decides they need to do something about it. The most climate-change-aware country is Germany.

[] I believe others will see in the next 4/5 years. I see it the same as the 1960s mass demonstrations. Politicians will act only when the people want them to act. It is not an election issue. In China, nothing is an election issue. In the US it is the opposite – ‘no climate change’ is the issue.

[] Others. We do not see neighbours as competitors. We have 97 resorts in operation; 64 are planned.

The Fox

 

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Air Asia. No-frills facts.

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FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning. 

Foxtrots – leading the industry in a dance.

September 16 2010

 

Air Asia. No-frills facts.

 

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IR Asia continues with some odd-if-not-misleading reporting practices:

[] For the past year, each of its quarterly reports has given revenue figures in millions of ringgit, although they are in 1000s. Neither its own accountants nor the Kuala Lumpur stock exchange – to which it reports – have yet spotted this.

[] The airline’s 2009 revenues by quarter did not add up to the total it gave for all-2009. Again, no one in authority seems to have spotted this, or deemed that it is worthy of comment.

[] Sometimes the AA group reports data for Air Asia X, sometimes not. Yet if AAX data is not in the AA figures for the Malaysia division, then they are mis-represented, because AAX is an associate of AA.

[] Likewise its joint-venture in Vietnam. In theory this is an operating airline, but when AA last formally commented on it (April, in its report on Q1) it said only that talks were continuing and there is no specific launch date for the airline. Some observers give it a market share of 7%; not bad for a non-operating airline. But you do not have to be cynical to note that this has gone wrong. Will AA admit this in the Asian manner it – just stop talking about it?

If these shortcomings could be forgiven, I would have thought AA’s management is knowledgeable about Asean – particularly as it pushes the Asean link (despite it being worthless in travel-marketing terms) constantly.

Well, apparently not. AA CEO Tony Fernandes recently announced with pride that AA was starting flights into Myanmar and thus would be covering all 10 Asean capitals. But – you guessed it – AA is actually going to fly into Yangon, not into Naypyidaw, or, rather, Kyatpyae.

The Fox

 

Asean. Tourism rethink.

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FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning. 

Foxtrots – leading the industry in a dance.

September 11 2010

 

Asean. Tourism rethink.

 

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SEAN (Association of Southeast Asian nations; 10 countries) often draws parallels between itself and the European Union – in the political sense. The travel business part of Asean – Aseanta, the Asean Tourism Association, similar to a grand governmental tourism marketing body – also does.

But although Asean has been pushing ‘Visit Asean’ for some time, in some ways since it was formed in 1971, the EU has never tried to get travellers to ‘Visit EU’. The reason, presumably, is that few people – if any – want to visit the EU. Some might want to visit Europe, or France and Germany and Turkey, but not the ‘EU’.

Asean may now understand this, and that few if any travellers want to ‘visit Asean’. Many , however, may want to visit some of the destinations in Asean, and some Asian destinations not in Asean.

But perhaps the most important realisation has not yet happened – the fact that to get travellers to visit Asean is almost a hopeless case is not a negative reflection on the destinations themselves. Or, indeed, on Asean as a political body.

[] Website. The change at Asean has come about with a new travel portal for the 10 Asean destinations. This website is no longer ‘Visit Asean’ or similar, but ‘SoutheastAsia.org’ (SEA), with a tagline , following a visitor-impact study – ‘Feel the Warmth’.

The obvious and major shortcoming with the new SEA set-up is that the site should be ‘.com’ and not ‘.org’. The owners of ‘.com’ did not want to sell, and will now presumably profit greatly if Asean’s SEA venture works.

The second shortcoming, also a major one, is that ‘Visit’ or ‘Travel’ are not in the website name, but probably will be in the search request by would-be travellers. Management says it is currently about 10th on search engine – not bad for a start, but expected to get better.

However, given these circumstances/shortcomings, it would have been better to have chosen ‘.travel’ as the domain, rather than ‘.org’, which is usually used by political, governmental, or educational sites.

[] Organisation. Perhaps surprisingly, the creation of SoutheastAsia.org is funded by the US government. The structure is complex.

Asean and the US signed an agreement in 2006, with US agency AID working through a body named ACE (Asean Competitiveness Enhancement). There are additional links – ACE was designed and funded by US AID’s Regional Development Mission in Asia. ACE’s work is in travel and textiles/apparel. The ACE project is part of a broader Asean-US program launched in 2006, where the US agreed to support Asean in its aim to become a community similar to the European Union, by 2015. The ACE project itself is managed by another company, Nathan Associates.

The SEA promotional activity will be online only, as this is cheaper. Funding is believed to be US$7.8mn (fixed in US$) but that covers both the travel and textiles programs and for five years – even though the SEA program is said to be for just three years.

After three years, SEA will be handed over to Asean. That might not be a good idea. Asean may be a good political organisation, but its travel-related activity has been weak and ineffective. Aseanta says it was not able to develop a travel website itself because it did not have the money to fund it.

There may be other reasons. As just one example, the executive in charge reportedly did not know how much his marketing budget was, although he could name what support was offered! As another example, some senior Aseanta executives say Visit Asean was launched in 2001, others in 2005.

But the start for SEA has not been easy either. Launched at Asean Tourism Forum last January, the SEA site programmed a second launch – which it said was the major one – at ITB Berlin in March.

That Berlin launch was a failure in that fewer than 10 media attended. (ATF was better attended, for obvious reasons) ITB had 7000 registered in the ‘media’ category (although the qualifications are not monitored closely), but it is difficult to attract more than 20 writers to secondary events.

Perhaps Aseanta and ACE were not aware of the size of ITB Berlin and the difficulty of creating any sizeable impact. Unfortunately, part of the reason for the small turnout was the small pulling power in Europe of ‘Asean’ or even ‘Southeast Asia’.

The Fox

Carlson Hotels. Expanding dilemmas.

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FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning. 

Foxtrots – leading the industry in a dance.

September 9 2010

 

Carlson Hotels. Expanding dilemmas.

 

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HE Carlson hotel group plans rapid expansion. It wants to expand its portfolio almost 50% to 1500 hotels by 2015 – which would mean an annual average growth of 8.4%, equalling 85 hotels per year. It currently has 1060 hotels with 250 planned.

Some specific portfolio growth noted by Carlson:

[] Country Inn. Currently 485 hotels and 80 planned; the target is 815 by 2015, primarily in North America (Canada, Mexico, US) and India.

[] Park Inn. Now 100 hotels and 54 planned; no target detailed.

[] Radisson. Now 422 hotels and 90 planned; the target is 600 by 2015.

This ambitious program may require some changes in the corporate culture, as well as resolving some other potential problems. These include:

[] Brand muddles. There are no signs that Carlson is ready to reform its brand strategy – primarily the similar market levels between Country Inns and Park Inns, and between Park Plaza and Radisson. Carlson maintains there are clear differences between CI and PI – remaining silent on PP/R – but I would challenge that, whatever the awareness-rating-agencies say.

As for Park Plaza and Radisson, the 35-hotel PP division does not figure in Carlson’s announced development plans for the future. In fact, the brand was not even discussed. Neither was the deluxe category – which was serviced with its Regent brand, now sold, see below.

Partly related to this muddle is the nominal link between Park Inn and Park Plaza. If there is no link between the brands – and there does not seem to be any – why risk confusion in the market by using the same name?

Questions: Does all this mean Park Plaza will be sold? But how could Carlson sell a brand to a competitor or would-be competitor when PP is so close in standards to Radisson? Or will PPs be merged into Radisson (thus also resolving the PI/PP non-link)? And could the same happen with Country and Park – one merge into the other?

[] Regent. Carlson’s 5-star division was sold earlier this year. This was a shocking failure for Carlson. The portfolio, after nearly 15-years of ownership, was just seven Regent hotels – fewer than the brand had when the original founders sold in 1987! If this is an indication of Carlson’s capability, then its 50% expansion target looks hard, and so does its capability of resolving those brand dilemmas noted above.

Carlson and its Europe-based master-franchise owner, Rezidor, would seem to have had the necessary managerial talent to expand Regent – but perhaps not. They are good at the 4-star level (their Radisson brand), but perhaps not at Regent’s 5-star level. Carlson seems now to be out of 5-star (Rezidor is dabbling, separate from Carlson) but talks of “upgrading” Radisson – whatever that may come to mean. If there becomes something like a ‘Radisson Grand’ brand, then Regent might be a competitor.

 

Fortunately and possibly deliberately, Regent has been sold to an inexperienced international hotel operator, Formosa International, which so far shows few signs of capability. But ironically, measured against Carlson’s own poor stewardship of Regent, the task to better Carlson’s results may not be that hard.

The Fox

 

Club Med. Long-term fall.

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FOXTROTS

Fox – sly.  Trots – left-leaning (Trotsky) plus its more insalubrious meaning. 

Foxtrots – leading the industry in a dance.

September 6 2010

 

Club Med. Long-term fall.

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HE Economist ran a report on Club Med last month, related to its first-half profit but some falls in other operating statistics. It quoted its CEO blaming 9/11 for the downturn.

I believe the reason the decline started – in the 1980s – was something rather more sordid. Co-founder Gilbert Trigano preferred to give the top job to his son Serge rather than the then equal number-two, Jean-Robert Reznik – who was generally considered to have a better grasp of marketing.

Going up-market usually seems a sound business tactic – getting more revenue per customer. But there are some important challenges: converting existing customers to accept, in affect, a new product costing more; or finding new customers; or making more profit from a product that costs more to produce.

I believe the post-Trigano- and subsequent-teams underestimated these challenges, and indeed were not able to overcome them.

And the report did not note that Henri Giscard d’Estaing has been in his CEO post more than 10 years and has also failed to make the upmarket push (which he has tried twice) to work. The blame is put on 9/11; the decline started well before that.

Do current results mean that the original product line should have been left unaltered, or that Club Med was doomed to fail because the market for its business-model vanished – as it did for horse-carriage-makers, and psychedelic shirts?

The Fox