Casinos into travel.

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

Foxtrots – leading the industry in a dance.


February 24 2014

Casinos into travel

(An excerpt from our monthly Travel Business Analyst newsletter.)

The development of Macau into a giant gambling-leisure destination has brought gambling into the travel business in Asia.


Worldwide gambling revenue is put at US$160bn a year. In 2010 the US was about 50% and AsPac about 30%. PWC, a consultancy, reckons that AsPac will be the biggest by 2015; we estimate that this happened in 2013.


There are three surprises about the business:


1. Macau annual gambling revenues are much higher than its competitors – US$38bn (quoted in US$) compared with US$6bn in Las Vegas, the destination usually considered the biggest of them all, see table.


(Note, however, that although Macau and Las Vegas publish their gambling data, most of the rest do not, or mix it with other revenue. Morgan Stanley does not give its sources.)



2. That Macau is 6-times bigger than Vegas is not the only surprise. Perhaps a bigger surprise is that Singapore’s revenue is almost the same size as Vegas’s. Yet Singapore has only two casinos (Vegas has 74!), which have been open only three years (Vegas 80 years, Macau 50 years) and is not on the border with the biggest gambling market, China.


However there are twists to the story. Macau has become almost a gambling-only destination for visitors from China. The other attractions in Macau – from events, entertainment shows, even prostitution – are a side show to the principal attraction of gambling.


For Singapore, gambling has become another visitor attraction, albeit one with a strong pull. Although China is also a big source of gamblers, the casinos attract not only ethnic Chinese from markets other than China, but many others.



3. The third surprise is the low ranking of Malaysia, despite the fact that it has been running casinos for 40 years – longer than most all other AsPac centres except Macau.



Gambling revenue in Asia, 2012

Destination No,US$bn Per visitor, US$
Australia 4.2 736
Cambodia 0.2 73
Korea 2.0 189
Macau 38.0 1354
Malaysia 1.9 72
Philippines 1.8 404
Singapore 5.9 446
Atlantic City 3.1 112
Las Vegas 6.1 156

Notes: TBA estimates from MS data. Source: Morgan Stanley, The Economist, Travel Business Analyst.



The Fox

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


Soundbites from Philip Wolf.

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

Foxtrots – leading the industry in a dance.


February 22 2014

Soundbites from Philip Wolf.

Soundbites from Philip Wolf – who founded in 1995, sold and now left the well-respected PhoCusWright research company.


My comments follow at end.


-Lasting companies know how to reinvent themselves. You’ve got to reinvent the company to make new consumer products other than consumers.


-The travel business, at 9.3% of global GDP, is pretty darn big. It has been jolted by dizzying changes in technology, voracious appetite for mobile and social, fundraising for start-ups, mergers and acquisitions, and lots of new competitive threats.


-There is an urgent call for strategic realignment. Tweaking your strategy is just insufficient. It won’t work any more. Many are at what we call pivot points.


-You’ve got to be like a butterfly and have a metamorphism. Need to pivot, not tweak. A pivot is a change in strategy without a change in vision.


-Trip Advisor rules the day, not Frommers and Zagat. Expedia and Priceline rule travel, not American Express and Thomas Cook.


-There is some debate over whether companies in an industry are, say, a travel company or a tech company. I think they are tech companies.


-Priceline changed itself from an opaque US air business into an international travel business.


-American Express is pivoting, spinning off its card business.


-OTAs are pivoting because OTAs are expensive to run compared with metasearch companies. The start was Priceline paddling off with Kayak for US$1.8bn. Then Expedia bought Travago for US$632mn. China’s Qunar just filed for an IPO. The most head-turning event was Sequoia Capital buying Skyscanner (whose turnover is only US$50mn) for US$800mn.


-We mustn’t forget Google’s acquisition of ITA software last year. Google’s airline and hotel finders affect everyone in travel. And don’t think this is the end of their move into travel. This is just the tip of the iceberg regarding Google’s travel strategy.


-Mobile activity is so significant that I am amazed that so many travel companies do little about it. Hotel Tonight is the poster child; it is not what they do, but how they do it; it is mobile only.


-70% of Twitter’s revenue comes via the mobile app program. Ctrip and Expedia say 50% of their bookings are on smartphones.


-Then there is the sharing economy – cars, hotels. Even Facebook is sharing information, You Tube is sharing videos.


-The internet business is getting big. Expedia does more travel gross bookings, at US$34bn. But its lead is narrowing.


-Priceline has an insurmountable lead in market capitalisation, at US$55bn, the highest in the travel business. Ctrip, with US$44bn, overtook Expedia into second place. And with Ctrip’s plan to raise US$500mn capital, maybe it will buy Qunar after Qunar goes public. Next are Wotif, Elong, and Make My Trip.


-Priceline is ahead of Carnival Cruises, the biggest non-internet company in terms of capitalisation. Biggest airline is Delta. Priceline is 2.5-times more valuable, as well as 4-times more than the most valuable hotel company, Starwood.


-Priceline is about the same value as Amadeus, Ctrip, Hertz, Singapore Airlines, Trip Advisor – combined!


-The past is becoming a poor predictor of the future.


-As Yogi Berra said: If you don’t know where you’re going, you might end up someplace else.





-PCW reads too much into change. Why should the extraordinary success of one, Apple, mean we must all apply the same businessplan? Apple’s success was primarily the brilliance of one man, Steve Jobs. And two other successes – Facebook, Google – did not change their strategy. They were single-minded in following through on their original inspiration.


And in the travel business, Priceline, tweaked its model, to become the success it is today. It did not metamorphose. But You Tube was a video-dating site, and Twitter was a podcasting business. And they did ‘pivot’ – although overall I am not clear when a ‘tweak’ becomes big enough to be a ‘pivot’.





The Fox

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

Soundbites from WTO’s Rifai.

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

Foxtrots – leading the industry in a dance.


February 20 2014

Soundbites from WTO’s Rifai.

Soundbites (may be paraphrased) from Taleb Rifai, head of the World Tourism Organization.


Figures generally indicate that the Olympic Games do not produce additional visitors. What is your opinion?

You have to look at the big picture. It is not about the month or even the year. You will probably not see good data. You may even see some reduction for understandable reasons. The importance of the Olympics is how to use them for the good of the country. The days after the Olympics are much more important.


What have you done with the infrastructure that was prepared? How have you used the services, facilitation etc?


An example is that for our annual meeting in Zambia and Zimbabwe they cleaned the streets, they upgraded the hospitals and schools, and people were grateful. They also opened the border between the two for the event, and when they found that created no problem, they decided to leave it open.


This is the importance of big events – what you leave as a legacy. To focus on the numbers before, during, and immediately after, is very short-sighted.



Why cannot Taiwan become an associate member of WTO?

As a UN body, the matter of membership is not in our hands. But even associate members become members with the agreement of our main members. I cannot talk much about Taiwan because I have never visited it. I know it is an advanced destination in terms of services and quality.


I would like to integrate the tourism community in the entire region into an international community. (Sic; political talk, where the meaning is absent or open to any interpretation.)

(Rifai appears to have made a political mistake. By saying he cannot comment on a destination he has not visited, he is admitting that Taiwan is separate. Yet in the UN’s un-real political world, Taiwan is part of China, and he has visited China, so he can comment on Taiwan. In addition, despite what he said and although he is widely travelled, he does comment on places he has not visited.)



What will your agreement with JATA produce?

This is the first agreement we have signed in Asia, but we have signed many with many other organisations. We will be leading the conference at JATA’s Tabihaku starting every year from 2014 – just as we do at ITB, WTM, and others. For instance at WTM we have had a ministerial roundtable for the past six years. At ITB [Berlin] we have the Silk Road forum.


(This is not how we would interpret ‘leading’. This indicates that WTO will simply hold its own conference as part of the Tabihaku conference.)


Also, we will set a research agenda, and direct our research resources to things that are relevant to Japan and Asia. There also might be someone from JATA to stay and work with us in Madrid.


No other agreements are planned – although we may become more involved in the Macau Forum, and we probably will sign an agreement with ITB Asia at the right time.





The Fox

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


Trottings: Air France; Paris CDG airport; Sama Sama

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TROTTINGS = Trip Jottings

The Fox Trots: Travel Stories from The Fox.


February 15 2014

Trottings: Air France; Paris CDG airport; Sama Sama

Commentaries on some recent trips

Air France

-Announcement said languages spoken by crew were German and Spanish. Actually they also spoke English and French.


-On screen arrival information, they spelled ‘transfert’ instead of ‘transfer’. This is an airline that is proud of having been 80 years in business.


-IFE turned on 15” after t/o, and off 20” before landing. Why?


-Safety checks – some window blinds left down, some armrests up (all three in row in front of me). In other words, the checks were not thorough.


-In Paris, there were two flights boarding at my gate within five minutes of one another (yes), and no indication which check desk to go to. Of course, the staff checked, but why not help themselves and passengers by using a sign? Or, more sensibly, when such double-gating is necessary, split the gates to give them a bit more time between flights. That’s sloppy planning.


-Delay once on board. 55 minutes after I made a query, there was an announcement (blamed on traffic; I suspect it was mechanical), and no apology. On arrival they announced the flight was late because it left late!




Paris CDG airport

-Passport check as passengers exited from the jetway. No desks, but just three agents checking passports.


-Walk, through security, and then through another, formal, passport check. The line for that had dividers so you had to slalom; there were no passengers in the line – but no employee bothered to adjust the system.


-When I arrived at my concourse, there were gates both sides, but nothing to indicate which gates were which side. I had to look at the individual gate numbers to see on which side was mine. Not really hard, but should not be necessary.


-My gate was at end, and that was not so easy to see.




Sama Sama

I was impressed with the Sama Sama* hotel at Kuala Lumpur airport (ex Pan Pacific). Some salient points:


-Has nine room types. Business floor on top floor, 9th, with 60 rooms and lounge (providing breakfast and cocktail hour). Green view or runway view. US$185 (MR570) is lowest rate.


-Has three F&B outlets. All-day dining in lobby area, with 220 covers. Four meeting rooms plus ballroom, with separate entrance and big foyer.


-Others. Free in-room wifi. 3-hour turnaround for laundry. Coffee machine in suites. Outdoor swimming pool, with lush greenery. It has received good feedback on soundproofing.


-In addition to this, there is an airside hotel which has just been renamed Sama Sama Express. And adjacent to that SSE is a paying lounge for stopover passengers, with facilities including food, shower, wifi. When the new terminal opens – named KLIA 2, and due this April or May – it will also have an SSE plus lounge.

*A different report on this hotel is running in the Travel Business Analyst newsletter.




The Fox

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


TinT – Truth-in-Travel: Air Asia; Skymark.

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

Foxtrots – leading the industry in a dance.


February 14 2014

TinT – Truth-in-Travel: Air Asia; Skymark.

Air Asia

You won’t see all these numbers from official data from the Air Asia Group (AAG) – because they don’t always report formally – and some totals do not add up. My report on 2013:


-Group seat sales 42.2mn, up 24%.


-On published data, Philippines AA seat factor was 68%. PAA reports lower, but both are bad; AAG needs to get that up, quickly.


-Indonesia AA’s loads are also too low, at 77%. Malaysia AA and Thailand AA at acceptable levels, 81% 83%, but AAG at just under 80% needs improvement.


-Seat sales for Malaysia AA, the first AA, growing at 11%, which indicates it is close to a ceiling, although this is better than the +9% in 2012.


-AAX (not included in AAG totals) sold 23% more seats to reach 3.2mn, much better than its +2% in 2012 – when it stopped more routes than usual. Its 82% seat factor is too low for a longhaul operation, but it is moving to medium-haul and even some longish short-haul routes.




Skymark; Pagpft

Pagpft (pronounced pag-puffed); People Are Getting Paid For This.

You thought Skymark was dead? Japan’s no-frills-airline Skymark has been going nowhere for a long time. It was formed in 1996, when Tony Fernandes was still selling CDs.


An original shareholder was HIS owner Hideo Sawada, who still retains a 5% shareholding.


Skymark has 31 B737s and sold around 7mn seats in 2013. It also has some reasonable strategies – such as operating from Tokyo’s Ibaraki airport, although it also operates from the much-more-costly Haneda and Narita airports.


It no longer seems to know whether it is a no-frills-airline or not. It was frightened by the entry of Air Asia and Jetstar in Japan, and cut back frequencies and destinations. Worse, it ordered six A380s, of which the first is due later this year, as well as 10 A330-300s.


Eh? Yes, Skymark is thinking of flying Tokyo Narita to the US (some reports also indicate Frankfurt, London, Paris). If that wasn’t bad enough, Skymark is going premium – with 114BC and 280EC-premium in its A380s – only 394 seats.


So, new business model, new markets, new routes. Pagpft.






The Fox

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


Trottings: Smart singer; Airports (Amsterdam, Paris, Singapore).

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TROTTINGS = Trip Jottings

The Fox Trots: Travel Stories from The Fox.

February 12 2014

Trottings: Smart singer; Airports (Amsterdam, Paris, Singapore).

Smart singer

A singer at a travel event I witnessed recently was reading her song’s words from her smartphone. Being impressed, I pointed this out to a colleague, who was not impressed.

He ventured “She’s checking her emails!”



Amsterdam airport

I was intrigued to read that the airport housed a museum air-side. It was not easy to find, partly because the entrance is inside the shop selling souvenirs related to the museum.

Some museum paintings are displayed in just a single room above the shop, not small, not large. I was disappointed that the ambiance was dull (paintings on three sides), but on reflection obviously one cannot expect much; it is an airport, after all.

The shop sold what seemed to be good quality knicknacks of many types – bags, elephants, key rings, drinking glasses, etc. To me they seemed a little costly; the smallest elephant, for instance, was about US$30.



Paris CDG airport

I am surprised that I spotted an inefficient work pattern – without really looking.

At the security check for transit passengers, the security agent stands at the end of the conveyor belt telling travellers what to do (remove telephone, computer, etc). Because of where she was standing and what she was doing, only one person at a time could prepare; the rest of us just stood waiting.

If the agent moved to the end, next to the security machine, then three or four people would be ready for her to help/check, and thus save about one minute per passenger. She also had to tell each passenger to push their bag and tray along the belt. And some did not, so she had to do it for them.

All that would be solved if she did it my way.



Singapore airport

I remarked earlier that I seem to see some new passenger-service element at Singapore’s Changi airport every time I visit it (2/3-times/year). This time it was child-height computers for access to the internet.



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

The Fox