CWT’s flawed report on 2014 travel prices.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

November 28 2013

CWT’s flawed report on 2014 travel prices.

An excerpt from our monthly Travel Business Analyst newsletter.

 

Annually, CWT* publishes a comprehensive report on expected travel prices for the next year, including coverage of the two main sectors of the travel business (air, accommodation). And it includes coverage of the three main geographic regions I track – Asia Pacific, Europe, North America.

 

The one obvious ‘fault’ with the report – title of the current one is 2014 Travel Price Forecast – is there is no reference to past forecasts, or to actuals. For instance, is the 1% price increase forecast for 2013, for air travel from Germany, say, close to what is happening YTD? And how do actuals in 2012 compare with CWT’s forecast in its report two years earlier?

 

Of course, CWT may not know. Its own sales to clients of hotel rooms represent only, by definition, its own sales. And even the source of the widest coverage of hotel price movements – Smith Travel Research – shows achieved rates, not always the same as price movements. Tracking air fares is even harder.

 

To provide more information on this I have selected just one indicator – on US hotel prices. This may be the single best-tracked travel pricing item – by STR – in 2012. My findings, see Table 1, are based on data from the earlier CWT report for 2012, and STR’s contemporary report.

 

On this basis, CWT’s forecasts were close – a forecast 4.0% increase compared with STR’s 4.2% actual.

 

The report lists some basic economic data, with commentary. This includes GDP growth, and inflation – an important element in prices.

 

CWT has expanded the report’s coverage. Meetings and Events, the ‘ME’ in MICE, and train (albeit limited to high-speed trains, and (light) editorial comment). Negatives on these positive moves are:

 

— HS trains are not very prominent/important in the world outside France, Germany, and now China.

 

 

 

For ‘ME’:

— Why is CWT bothering with a group-size measure?

 

— Has CWT mis-measured daily-costs-per-attendee? Attendee costs are a consumption measure; CWT’s study normally concentrates on industry rates.

 

— CWT attendee measures outlook is for the Eurozone (17 countries within the 28-country European Union). Its other measures are for Europe (presumably the EU plus the other about-6 countries in Europe); CWT makes no indication on why this attendee measure is for the Eurozone only. This may be a different measure to ‘group size’ measured for Asia Pacific and North America.

 

— CWT says an increase in group size in North America will lead to daily attendee costs even higher. Again, this is misleading. An increase in group size would normally be assumed to prompt a fall in costs. However, CWT may be measuring ‘spend’ not ‘cost’.

 

 

 

 

For a widely-experienced company, the authors of the CWT report seem out of touch with some industry developments. Those, along with some other comments on the report, follow:

 

— A measure for Europe-wide airfares includes Middle East and Africa, making findings of little practical value.

 

— More NFAs* “are entering the global market”. Does CWT mean “more NFAs are being started” or “more NFAs are adding medium- and long-haul routes”? CWT might also note that more NFAs, despite that description, are adding frills.

 

— In Europe the two examples CWT gives of NFAs “putting pricing pressure” on FSAs*, are bad choices. Of the two CWT chose, Easyjet has a pricing pattern closer to FSAs than NFAs – indeed, it is specifically targetting business travellers. And Lufthansa’s GermanWings failed as an NFA. Lufthansa now hopes to rework GW as a hybrid – part-NFA -FSA –LCA* – but I believe it is more likely to fail than succeed. Better sample choices for the report would be Norwegian and Ryanair.

 

— For hotels, CWT notes too much planned supply in China and India, but adds that demand in China is enough for the planned supply (in other words, then, there is not ‘too much’ supply). My research indicates biggest percentage growth of planned hotels (in comparison with existing supply) is in Manila, with Mumbai and Jakarta next but a long way behind – and no China cities in the top-10.

 

— Rates in Europe hotels are expected to fall because of the weak economic environment. I would agree with that.

 

— Rates in North America hotels are expected to grow “modestly” – although its table shows almost 5% at the highest, for the US, which I would put above ‘modest’. CWT believes prices in New York “may soften”. With the city’s high occupancies (STR shows 83% YTD-2013, bettered only by Honolulu), I think not.

 

— I have not shown CWT’s car rental prices – believing these to be a less important factor for the travel business. But I would like to see CWT incorporate train travel into this sector (which it calls ‘Ground Transportation’ although it covers car rental only). This is becoming a single-sector in travel terms and which needs CWT’s market knowledge to incorporate into a single-pricing sector.

 

— CWT mentions Ouigo (Yes Go) in France as an example of rail facing up to competition from NFA pricing. I believe this SNCF subsidiary is a badly-planned response and although likely to attract good sales will cause financial losses for SNCF.

 

 

Specific measures, see Table 2:

 

— Europe airfares an average +1.6%, including +4.3% for airlines based in Germany, +2.5% in UK. North America +2.0%, Asia Pacific +2.6%.

 

— Europe hotel rates a wide range for an average -1.2%, including -1.6% Germany, -0.3% in UK. North America +3.1%, Asia Pacific +2.7%.

 

 

— Some unclear forecasts (see above for my comments) for the ME segments of MICE, viz: in Europe (in some communications, described as the Eurozone) an average group size -1.5%, daily-costs-per-attendee 0.5%; North America group +0.8%, costs +4.8%; Asia Pacific group +4.0%, costs +4.5%.

 

— Europe car rental – Russia +4%, Germany +4%, UK +4%, Italy -1.2%, Spain -4%. North America +2%, Asia Pacific +5.5%.

Notes:

 

 

 

-*CWT = Carlson Wagonlit Travel, the travel agency group specialising in business travel and the ME sectors of MICE.

 

 

Definitions from Travel Business Analyst:

-*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 instance), fewer fare types, which may have first and business cabins, and which allows bookings through travel agencies etc. Usually similar to the parent airline, but a different name, and competition against parent airline allowed.)

 

-*NFA = no-frills-airline. Among the many essential elements that make a successful NFA are: market freedom in terms of routes and aircraft choice; single aircraft type; where relevant, competition against parent airline allowed; fares that are extremely low when booked at least three months in advance, say US$25; one fare at one time (no wholesale rates, travel agency commissions, etc); no refunds; no service frills; single economy-class cabin; no 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.

 

 

Table 1

2012 US hotel prices, % growth

Period CWT STR
Forecast Actual
H1 3.5-4.4 4.4
H2 3.5-4.6 4.3*
Total 4.0* 4.2

Notes: STR data is average room rate; CWT’s not specified. *TBA estimates from CWT and STR data. Source: Carlson Wagonlit Travel, Smith Travel Research, Travel Business Analyst.

 

Table 2

CWT 2014 travel prices forecast, % growth

Market Inflation Air Hotel
Denmark 1.7 0.9 -2.3
France 1.5 1.6 -1.5
Germany 1.6 4.3 -1.6
Russia 6.1 5.9 0.1
Spain 1.9 1.6 -4.0
UK 2.5 2.5 -0.3
Canada 0.8 0.1 1.9
US 2.0 0.8 2.8

Notes: Estimates by TBA from CWT data; average of high-and-low forecast shown. Source: Carlson Wagonlit Travel, Travel Business Analyst.

 

Table 3

CWT 2014 travel prices regional forecast, % growth

Market Air Hotel
Europe 1.6 -1.2
North America 2.0 3.1
Asia Pacific 2.6 2.7

Notes/Source: see Table 2.

 

 

The Fox

 

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On ITB Berlin, Singapore, Tune Hotels, WTO.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

November 27 2013

On ITB Berlin, Singapore, Tune Hotels, WTO.

ITB Berlin:

ITBB has produced some data on moslem travel, not all coherent. Some details, with my comments:

-In 2020 moslem travel will grow 4.8%, above 3.8% for total travel. (I understand ITBB means average annual growth, not single–year growth as stated.)

-The moslem share of travel will be 14% in 2020. (ITBB does not say what it is now; I estimate just over 10%.)

-67% of moslem travellers say halal food and cooking is most important for them in a holiday destination, then 53% price, 50% moslem-friendly atmosphere.

-53% went on holiday with their family, 23% with friends, 19% with spouses. (ITBB does not say if the ‘spouses’ share is also included in families’ percentage.)

 

 

Singapore:

(From Hotel & Investment Conference)

-A lot of Chinese are buying hotels in Singapore. Many just want a trophy property in Orchard Road.

-Singapore is an owners’ market. You can negotiate what you want. There is talk of key money, incentives. Key money is probably over US$1mn. Sometimes it is cash, sometimes it is terms of, say marketing.

-You will see China-based hotel management operators expanding into Asia, but not necessarily in Singapore.

 

 

Tune Hotels:

-Tune thinks it could have 15 hotels in Tokyo.

-It says it did not want to call its company ‘Tune Inn’ because it does not regard its motel-type hotels as inns.

 

 

WTO:

I questioned a senior WTO staffer (name on request) on the agreement signed by WTO’s secretary-general, Taleb Rifai, and JATA for the Tabihaku travel show in Tokyo. He knew nothing of it.

Methinks the agreement is a public relations scam, just to gain some worthless lines on publicity. Worthless, because what is the point of publicity on something which is nothing?

 

 

The Fox

 

WTM scam. Foolish figures.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

WTM scam. Foolish figures.

An excerpt from our monthly Travel Business Analyst newsletter.

The World Travel Market has shouted that its Global Trends Report* has “accurately [predicted] trends” in travel. Good; well done. Read on.

I was a little perturbed by the claim that the GTR “has a long standing history”, when it also said GTR was “launched” only in 2012. That’s not much of a history to me. But as I have copies in my possession going back to 2007, that seems to be a mix-up in wording.

If WTM would like, I will report progress of that ‘long-standing’ history of accuracy. (I suggest not.)

Then more concerns slipped in.

–GTR predicted, WTM tells me, that visitor arrivals in Europe from BRIC markets would “experience incredible growth”. In a data report, “incredible” is unprofessional, and has no real meaning. But colloquially, it has come to mean a little more than “surprising”.

–GTR was suspiciously selective in the support for its claim, starting with the definition “newly released data”. Me and you are left to guess what period that covers.

It selected just three destinations, only one of which is in the top-10 in Europe. And from these it showed only some BRIC data, viz:

Croatia. B +40%, C +93%.

Cyprus. R +42%.

Netherlands. I +18%.

I have:

Croatia. For 2012 B +40.9%, R +7.7%, I +50.0%, C +95.5%. Russia might not have been noted in GTR because it was below faster growth from bigger markets in Europe – +12% from Germany, +10% from Poland, +17% from Netherlands. None of those was foreseen by GTR.

But note – which GTR did not – those big percentages are on small or tiny figures, such as India growing from 4000 visitors to 6000. Germany sent 200k more visitors; additional from the BRICs totalled 36k; GTR did not foresee that.

Cyprus. R +42.0%, C +6.6%. No figures for B&I – which means they were small. Japan (already bigger than I&C) managed 80% growth – a trend that GTR did not spot. I also note that some of the Russia traffic may now fall following Cyprus’s financial crisis, of which Russia was an important element, this past summer.

Netherlands. I have only Jan-Mar 12 data (which may or may not tally with GTR’s ‘newly-released’. B +18%, R +6%, I +16%, C (includes Hong Kong) +27%. But, note, Japan (bigger than I&C) +21%, and much more important, Germany +15%. Again, that Germany growth represents 5-times as many additional visitors than the BRIC growth. Unfortunately, GTR did not foresee that trend.

 

 

–Another theme was GTR’s trend forecast of “Digital Detox at Hotels”.

(‘Detox’ appears to mean ‘relax’ the way GTR uses it. ‘Digital’ is almost meaningless in this title, but I presume it means getting away from technology.)

 

Obviously, this ‘trend’ is not a statistical measure, and can mean much or little. But nothing GTR shows indicates its forecast ‘key trend’ is indeed that. It gives a dribble of examples – the type of which happens every year – such as internet-free holidays.

I could easily find the same number of examples of more ‘connected’ offers from hotels, so would that prove the opposite of ‘detox’– that there is a ‘key trend’ to more ‘tech-friendly’ holidays?

 

 

–Nollywood.

GTR “correctly predicted” that Nollywood “would help boost tourism in Nigeria”. I think I would probably agree with that, although I might also add that the oil business also helped boost visitor arrivals (GTR means ‘arrivals’ when it uses the word “tourism”).

But WTM goes on, to ‘prove’ that Nollywood support, by noting that visitor arrivals in Nigeria increased 2% in 2012 and are expected to “grow by 3% by 2017”.

I am not sure I can interpret this last phrase, but it seems to be saying that growth over 2013-17 will be 3%. That’s 0.6% annually! Or is this a Nollywood comedy?

 

 

WTM’s head, Simon Press was quoted praising GTR’s “…high success rate at predicting trends for the sector”. I suggest WTM thinks more carefully before sending out indefensible statements under his name.

 

*GTR is produced for WTM by Euromonitor. That makes my comments about GTR a direct reference to Euromonitor also.

 

The Fox

Remember, I’ll be famous after I’m dead.

Getting cross at roads. (Amadeus report.)

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

November 18 2013

Getting cross at roads.

An excerpt from our monthly Travel Business Analyst newsletter.

We’ve done road-maps. We’ve done junctions. We’ve done crossroads, and many more traffic interventions. Now Amadeus tells us that the industry is standing at a ‘Big Data Crossroads’ (BDC).

The core of this 32-page report is ‘Big Data’ (hereinafter, BD). Despite that, we could find only one one-sentence giving its definition of ‘BD’ – “…large volume, unstructured data known as big data…” That’s it! Anything, everything, nothing. Something that might otherwise be casually described as “a lot of information to think about”.

Separately, not in the report, sponsor Amadeus appears to define BD in a way that is not as dramatic as billed in the report – “…to embrace the changing structure of data in order to maximize it”.

But Amadeus also adds a new element that we could not find in any form in the report – “…BD also offers us the chance to ‘put the fun back into travel’, which at its very heart is about improving the passenger experience”. Where? How? What?

We found, deep in the report, what to us better describes BD – although it is not billed as this, and refers just to airlines:

“…key data is often fragmented across multiple functions and units. For example, airline data on the passenger experience is spread across flight operations, baggage, loyalty programs, complaint databases, and external sources like social media. In order to make effective decisions about how to promote offers to customers and recover from service failures, airlines need to combine all of this information into one data warehouse and one set of algorithms.”

There is good information in the BDC but it is almost overwhelmed by vague, irrelevant, self-evident, old-knowledge commentary usually wrapped in the special redundancy-replete language often found in consultant-written reports (what we name ‘consultese’).

BDC findings/statements include the following. Some apparent quotations may have been paraphrased to ease comprehension. (Any comments from us in brackets.)

 

The Good.

–The report gives examples of how leading companies use BD. Such as Kayak’s fare forecasting (giving customers the likely changes in fares over a 7-day window). Or AirFrance-KLM’s Hadoop (open-source software for group-wide revenue management system) – although AFK is just implementing this.

Other case studies include Amadeus itself, British Airways, Marriott.

But there is no indication of the ‘huge impact’ that BD has on business – as noted below.

There seems nothing special about these. To us they are little more than examples of companies coming up with good ideas to run their businesses better. Indeed, could not the creation of Kayak as a company (giving people a range of air fares at a specific time on a specific route) be considered an example of BD? Or going back further, the Thomas Cook idea of collecting rates from different sources to create a single-price tour package to the French Riviera?

–The BDC includes some recommendations, although not all are remarkable when stripped of their consultese:

-Research BD. (Means do more research.)

-“Strategize about BD”. (Means decide what to do.)

-Start assembling BD skills. (Presumably this must be done at step-one.)

-Work with partners. (This cannot be general advice because it depends on the case details.)

 

The Bad.

–We do not like the accreditation for the BDC study, which Amadeus tells us is “authored by Harvard Business School professor” Thomas Davenport. Unconsciously, we would categorise this as a Harvard University report; it is not. Worse, the report describes Davenport as actually a ‘visiting professor’ (at HBS, not HU), not quite so important.

–“Harnessing high volumes of new, unstructured data offers the promise of better decision-making, greater product innovation and stronger customer relationships.” (Yes, but equally it might not.)

–Travel companies must “benchmark their maturity while assembling data science skills to devise a BD strategy.” (Baffling, but appears meaningless or self-evident at best – ie, does it mean ‘study information, learn from it, and act on it’?)

–“Benefits of BD include better decision-making, greater product- and service-innovation, stronger customer-relationships through new approaches to customer- revenue-management, internal operations.” (Ditto.)

–“New open-source software to separate data-processing across servers, with databases including ‘columnar’ or [Amadeus says “and”] ‘vertical’ approaches, new program-languages – such as Python, Pig, Hive – combine to deliver the potential to harness BD”. (Baffling again, or meaningless, not least because you cannot ‘deliver a potential’ – as a professor should know.)

–“There are significant challenges to access BD, including: data in different places; new and old data-management systems; finding people who can access and interpret BD; managing data.” (Nothing new in this – apart from the ‘consultese’.)

–The author says: “Some leading companies are pioneering the use of BD and already seeing a huge impact.” (No examples, although use of the ‘huge’ adjective requires examples for minimum credibility.)

 

Neither here nor there.

–There is a lot more industry information available and it is not easy to interpret all into actionable information. But in no sense is this a ‘crossroads’. Since forever, businesses have faced similar decisions. There is more information now than 10 years ago, when there was more than the 10 years earlier, and then will be even more in 10 years from now.

–Many of the ideas expressed are in effect reports on ongoing development in the online space. In that respect these ideas are how companies should develop their online sales activity. But we fail to see any crossroads.

–Is this report nothing more than a subliminal sales pitch from Amadeus? “We are committed to facilitating discussion on key trends in order to participate in the debate around how the future of our industry will be shaped, and the key talking point right now is undoubtedly BD. It is impossible to overstate the transformative potential of BD, both in terms of improving the travel experience and how the wider industry itself operates.” Although some of this does not quite follow the theme of the BDC. 

–“BD is perhaps the single biggest opportunity in a generation for the travel businesses.” (That is wild overstatement for an organisation that is generally associated with good business management.)

 

Off-track.

The BDC goes wayward sometimes:

–Saying British Airways must compete with airlines “backed by sovereign wealth”. We presume this is reference to Emirates, Etihad, Qatar, but the other (200?) airlines BA must compete with are not backed by sovereign wealth.

–Saying BA’s customers are “busy people”, so the company has designed programs for tailored offers to them. Really? What about BA’s customers who are not ‘busy’; retired people, for instance?

–Saying BA results from BD are “very positive”. Unsatisfactory reporting for such a report.

–If a hotel can predict “the optimal price at which to fill all its rooms, it will make more money”. Unfortunately, not true; it is the balance that needs to be right. To fill all rooms, a hotel needs simply to sell them all at $1 – but it will not make much money from that.

–GE “aggressively places” sensors in jet engines, “hoping that the data from them will allow both more efficient operations and more timely maintenance”. We do not see the difference between this and other technical improvements, even if BDC adds the moniker ‘BD’.

 

The Fox

 

Hurun. Lost in China.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

November 15 2013

Hurun. Lost in China.

An excerpt from our monthly Travel Business Analyst newsletter.

The Hurun Research Institute (via its Hurun Report) has published an impressively-comprehensive report, The Chinese Luxury Traveller.

(HRI did not respond to our request for additional information. Our analysis is thus based on the full report and our own market information. We have also noted apparent discrepancies in the report.)

 

Unfortunately, HRI does not clarify two crucial measures:

–The period covered. The survey was taken this year, but some commentary indicates the period covered only two months (March and April), some that this covers travel intentions not actual travel, and some others that the period varies. Likewise, there is no indication if the comparable earlier period is indeed comparable.

-What defines an HNWI*, sometimes called that, sometimes ‘luxury’, ‘super-rich’, ‘wealthy’. We have assumed all HRI’s 2.8mn US$ millionaires, up 4%, in China are HNWIs. (Beijing has 475,000, Shanghai 390k, Guangzhou 108k, Shenzhen 113k, Hangzhou 90k. Note Hong Kong and Macau HNWIs not included – although these two destinations are shown as domestic destinations in some other measures.)

HRI includes a person’s first property in its millionaire count; other similar lists start from a person’s second property. Another source, Capgemini, tells us there were (only) 700,000 in China “with at least US$1mn in investible assets” in 2012. Growth was fast, 14%, but the US, leader with 3.4mn, grew almost as fast in percentage terms, 12%, and much faster in actual numbers. Also well ahead of China are Japan 1.9mn and Germany 1mn.

The report also gives no travel numbers for HNWIs – only China’s total outbound count, which may or may not be relevant – and no indication of growth.

Our rough estimate from HRI’s data (which has a different purpose) indicates 8.7mn (which would be just over 10% of the total market in 2012). Growth is not possible for us to attempt a calculation; in fact there are indications that there is a fall, not growth.

Some measures are badly or wrongly explained, and some simply incorrect. In the absence of support commentary from HRI, we can sometimes do little more than flag these.

The following are some findings in the report. See end for Notes.

 

 

Traveller characteristics

-International* trips down from 3.2 annually (2.8 in 2012) with 19.8 days (20.2) annual vacation. The report notes this incorrectly as 3.2 ‘days’ not ‘trips’. HRI research finds that business travellers spend 7.5 days per month on the road – extraordinarily high, even if a fall on the 8.1 in 2012.

-Domestic package tours are for an average 9.8 days, and 53% consist of 3-10 travellers. International trips are an average 7.4 days (no other data).

-On each international trip, HNWIs visit one or two destinations. Mis-stated in that some obviously visit more than two destinations.

-Group sizes are smaller for those HNWIs spending over US$10,000. An average 7.1 people per group and only 16% of groups are larger than 10. For big-spending travellers, trips are an average 9.6 days. Most fly business class, preferring Air China domestically, Singapore Airlines internationally.

-HNWIs are going internationally in smaller groups, most in a group of 3-10 people, staying 5-nights. However, HRI partly contradicts this by saying most, 71%, are FITs. And, being new to the travel business, HRI has interpreted FIT as ‘foreign independent tourist’, which may have lead it to some other misinterpretations. See end for our definition of FIT.

-47% of HNWIs travel internationally during the Lunar New Year holiday. Another awkward statement. As HRI gives no traveller numbers of HNWIs, this finding is difficult to analyse. Based on our estimate of 8.7mn, see above, a 47% share of that over a 10-day (?) period looks implausible.

-63% of HNWIs say travel is their preferred form of leisure activity; it was 61% in 2012.

-Travel companions: family 40%; friends 20%. Another set of measures in the report gives these as 38% and 22%.

-Travel purpose: ‘sightseeing’ (=leisure?) 45%; business 43%.

-Flight class: 28% F, 49% B, 23% E. With few airlines having a FC cabin for intraAsia flights, and even on many longhaul flights, this is another measure than does not tally with casual observation.

-Hotel selection: location 61%; brand 58%; service 45%.

-Shangri-La is the preferred hotel group, scoring 100 in the percentage of preference from those interviewed. Next were Hilton 76, Peninsula 73, Sheraton 64, Grand Hyatt 61, Ritz-Carlton 58, Park Hyatt 57, Mandarin Oriental 56, Four Seasons 50, Marriott 47.

Findings are questionable in that Hilton, Marriott, Sheraton are not top-market brands. Yet all three have well-known top-market brands – Waldorf-Astoria, Ritz-Carlton, St Regis (brand of the Starwood group, of which Sheraton is another).

 

Another segment of the report also includes InterContinental after Four Seasons.

-France, US, Singapore are the most favoured destinations. Shanghai’s HNWIs prefer Asian destinations such as Japan and Korea. Beijing HNWIs, Europe.

 

-HRI also shows destination preferences according to China’s geography – north, south, etc. We find this of little marketing value, which is one reason for not showing the findings. Another is that HRI shows different figures for apparently the same definition.

Spend

-43% of HNWIs spend over US$5000* ($) excluding flights per trip, and 11% over US$10,000 ($).

-Shoppers from China spend most on tax-free shopping at Global Blue, a tax-refund company, taking a 24% share, followed by Russia 16%, Japan 4%. Given actual traveller numbers, this may indicate that yield from Russia is higher. In addition, this appears to be total spend, not HNWIs, and so disingenuous in such a report.

-HNWIs spent an average US$1153* (€), up 8%, on shopping per trip – which HRI says is more than any other nationality. This data is Global Blue’s own-customers data, and so may not be indicative of the whole market. HRI’s report confusingly notes this as a figure for both categories – all-Chinese travellers and just HNWIs. We cannot guess whether all-Chinese or HNWI, but the figure is high for all-Chinese but not-high-enough for HNWIs.

-China’s growth was 58% in 2012 to US$3.9bn (Y24bn), although total growth was 30%. Note, however, that Global Blue reports by passport. On this basis, a Chinese national living in London and buying in Paris would go into the ‘Chinese’ category.

-HNWIs plan to buy property in Hong Kong, London, Singapore, US west coast in the next 24 months.

Decision-Making

-Key considerations when choosing a travel destination are shopping 58%, culture 42%, local cuisine 37%. We can accept shopping as the leading activity, but culture is in the eye of the beholder – after all, we think Crazy Horse in Paris is local culture.

-In 2012, swimming passed golf as the preferred sport, 47%, among Chinese wealthy individuals and remains top this year. We find this hard to believe, even if it is what the respondents said. Yoga is the first choice for women, 48%.

-Internet 65%, word-of-mouth 51%, and magazines, 41%, are the most important media channels for seeking travel information.

-HNWIs usually travel with family or friends for the purpose of sightseeing, but increasingly for business. Most important factors for a hotel are location and brand.

-Bookings are made by HNWIs or by a family member with logistics handled by an assistant through websites. Business travel is mainly scheduled through ‘local’ business partners. HRI does not say if ‘local’ is ‘local here’ or ‘local there’. We presume ‘there’, but this should not need a presumption.

-Destination decision: traveller 60%. Given elsewhere in the report as 58%.

-Hotel decision: traveller 43%, secretary 27%.

Booking

-Hotel: traveller 38%; secretary/assistant 30%. Via ‘local’ business partners 26%, online 23%, domestic travel agency 16%.

HRI does not clarify if this is for domestic- or all-travel, and we also doubt that the customer can always correctly qualify a travel agency. Are China Travel Service and China International Travel Service domestic or international? (Both are both.)

Unfortunately, the report also shows wildly different findings – domestic travel agency 77%, local business partners 65%, direct 32%.

For personal travel: websites 22%. (We understand that ‘personal’ is not necessarily the same as ‘leisure’.) For business travel: local business partners 24%.

 

 

*All international – which we believe includes Hong Kong, Macau, Taiwan – although HRI says ‘overseas’. When US$s quoted in US$ ‘($)’ is added in brackets, when converted from Euros ‘(€)’ is added in brackets – conversion rate is US$1 to €0.76. HNWI = high net worth individual from China; not clearly defined for this report but appears to mean the 2.8mn US$ millionaires.

 

*According to our Travel Business Definitions, FIT is “now used as a word more than an acronym, to indicate an individual traveller, with the implication that he is paying full rates. Acronym has the following meanings: Fully Independent Traveller, Free (meaning uncommitted, not non-paying) and Independent Traveller/Tourist, Foreign Independent Travel/Tour, Fully Inclusive Tour (but rarely used in this sense), and variations thereof.”

The Fox

 

New heads. Air Asia India, PhoCusWright.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

November 9 2013

New heads. Air Asia India, PhoCusWright.

Reading between the lines of – or trying to read sense into – two recent appointments. Both are excerpts from our monthly PinT (People-in-Travel) report.

 

 

Air Asia

Air Asia India’s first CEO is Mittu Chandilya. Launch date for the airline has still not been announced.

 

Previously, Chandilya was working in Singapore with Egon Zehnder, the personnel search company. One of his responsibilities was the aviation business. We presume he too would have selected himself for AAI’s CEO job.

 

AAI and EZ provide no information on any of Chandilya’s earlier choices for other aviation jobs. Either they were insignificant or bad – as we cannot believe that all would be confidential.

 

Ratan Tata, still a chairman at Tata Sons (one of the AAI partners), is quoted saying that Chandilya will “bring to bear his entrepreneurial skills” in growing AAI. As Chandilya would not have needed entrepreneurial skills in his previous jobs (which includes being a part-time model), we presume this announcement was written for Tata, and not read by him.

 

Overall CEO of AA, Tony Fernandes, upgrades the unsubstantiated praise, noting Chandilya’s “great entrepreneurial skills”.

 

Chandilya seems to have zero experience for the job. That said, no-frills-airlines have managerial requirements different from full-service-airlines. These are mainly tight adherence to keeping operating costs low, and personality skills for personnel relations and publicity/promotional activity.

 

For AAI, the operational disciplines will presumably come from AA’s corporate offices in Malaysia. That leaves the personality skills, where Chandilya scores. Forget the entrepreneurial spirit, real or imagined; it is not needed for this job.

 

Chandilya, an ethnic Indian Malaysian (but born in Chennai, where AAI is to be based), has lived on three continents (Africa, Asia, North America), and has educational qualifications from places of learning in China, Singapore, US. Aged 32, he is married, and has two children.

 

 

PhoCusWright

Tony D’Astolfo has taken over from founder Philip Wolf as MD of PhoCusWright. The travel research company was bought by Northstar Travel Media 18 months ago, and Wolf stayed a little longer than the 12 months planned.

 

D’Astolfo seems a surprising choice based on his background. That said, PCW is special and so there is probably no standard bio for its leader. D’Astolfo was head of sales at Ground Link, a car leasing company. Before that, he was SVP travel at Rearden, an ecommerce company, SVP at Sabre Holdings, and 19 years at United Airlines.

 

Probably his most important task will be to hold onto current staff, many of which we guess are more knowledgeable about the business than D’Astolfo.

 

Northstar praises D’Astolfo, adding he has a “passion for moving the industry forward” – whatever that means. It also talks of PCW’s “next chapter”, but this too appears to have no real meaning.

 

Northstar also plans to “extend [PCW’s] global reach” – although we presume it means ‘expand’; because if PCW is already global, there is nowhere further to go.

 

 

The Fox