Euromonitor and World Travel Market; eh?

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Euromonitor and World Travel Market; eh?

Some generous claims are made by Euromonitor (EM; a research company) and World Travel Market (WTM; the travel trade exhibition in London) concerning its Global Trends Report (GTR).

 

I am particularly severe on this topic because both EM and WTM have a good reputation, which will lead many users of the GTR to assume that EM/WTM know what they are talking about. Unfortunately, the indications are that EM knows little about the travel business, and WTM does not know that EM does not know (!).

 

The GTR 2014 report is due to be published early November. EM/WTM have published a teaser (literally, in this case; see below), which is so full of rubbish that I thought I should react before the main report is published.

 

EM/WTM make the claim the GTR “has accurately predicted global travel trends…for nine years”. In 2013, I demolished some of its specific claims for their GTR 2012, some of which were laughable. If EM/WTM still have the chutzpah to continue with their claim – and deceive their professional audience – they deserve little sympathy.

 

Read EM/WTM’s latest observations:

 

 

 

PANKs.

 

EM/WTM claims their GTR 2013 “identified a new travel industry segment: the PANKs or the ‘Professional Aunt, No Kids’”. I think EM/WTM are serious, so I request anyone to identify – or even harder, enumerate – this ‘demographic’ development. In passing, I also wonder if GTR 2014 will identify the male version – uncles, or PUNKs?

 

I have no record of GTR 2013 (my critique in late-2013 was for GTR 2012) but I suspect that the PANK reference is actually related to GTR 2014 not 2013.

 

To prove their PANK statement, EM/WTM reported that a New York hotel has created a package for childless women! Do I really need to note that one of one hotel’s accommodation packages does not automatically mean another ‘demographic’?

 

 

 

Cruise.

 

EM/WTM also report of a “Fight for cruise control in China”. However, there is nothing about a fight, or about control – just about cruises. Perhaps the authors wanted a snappy heading but forgot that it should also make sense?

 

EM/WTM say GTR 2013 predicted China will become a key market for cruise companies. I agree with that, and I guess 99% of those in the travel industry would also. And so hardly piercing new market insight.

 

The report says China’s cruise business grew 10% in 2013 to US$6.8mn – presented as a positive and to back its prediction. But the report does not say – and I now wonder if the authors know – that this is an underperformance. China’s total outbound business grew 19% in 2013, which indicates the cruise segment is not doing so well.

 

EM/WTM also do not note that that US$7mn is tiny. The cruise-industry trade body (CLIA) does not list revenue, but berths-filled – which it names as ‘passengers’. (And CLIA has an eccentric way of counting occupancy – but that is another story.)

 

I calculate that GTR’s dollar figure for the China market indicates at least 7000 berths sold. That would be 0.04% of the world market, and so hardly something to shout about.

 

That said, in 2013 the Travel Business Analyst newsletter forecast that China would be the top market within five years. And it also noted that China was already 40% of the still-small Asia market.

 

But note that many cruises for the China market are not quite the same as for other markets – as much likely to be a short 1/2-night cruise with gambling as a 10-day traditional cruise trip.

 

 

 

No-frills-airlines (NFAs).

 

EM/WTM reports that NFAs are going “…upmarket in the Middle East”. I am not sure if EM/WTM understand the irony in this. If an NFA ‘goes upmarket’ it is no longer an NFA. Do EM/WTM know why many NFAs are successful? It is because they offer low fares to attract the public, yet still make a profit for themselves because they keep their costs low.

 

Start to change that, and something has to go – either profits fall or disappear, or if fares are increased to cover the additional costs, then part of the ex-NFA’s passenger-appeal weakens.

 

This is basic business stuff. EM/WTM do not seem to have grasped it.

 

To support its commentary, EM notes that its own data shows “business arrivals in the Middle East grew 7% globally from 2011-2013”. I am stuck on this. ‘In the MidEast’ and ‘globally’ seem contradictory – or is this just a sub-editing error? Also, 7% over two years (or three?) is just 3.4% each year – which I would interpret as weak growth.

 

The GTR 2013 report notes in this MidEast section that Ryanair started business class this past August – although I question how that development can be in GTR 2013. EM/WTM also link this Ryanair event to the Middle East. I cannot see the link, but perhaps I’ve got it wrong, and EM/WTM are linking Ryanair to business travel, and not to the MidEast?

 

I should also add that Ryanair has not started business class. It has introduced a fare package targetted at the business traveller. The package includes certain service elements (seat selection, priority boarding, 20kg baggage, etc) that would normally be charged separately. So the customer is still paying for these – through a higher fare.

 

I accept that those outside the travel business might not understand this elementary difference. But if EM/WTM do not understand, I wonder about their other observations.

 

 

The Fox

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

 

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Going Wrong? Nok, Scoot, Tiger.

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Going Wrong? Nok, Scoot, Tiger.

I detect a wavering in strategy at the Singapore Airlines group’s no-frills airlines. Commentary on recent developments at NokScoot (sic), Scoot, Tiger, and a question about Nok:

 

NokScoot (NS) is the JV between Thai Airways’ no-frills-airline subsidiary Nok and Singapore’s Scoot. (Or is it ScootNok?)

 

Firstly NS has announced that it plans to operate charter flights as well as scheduled no-frills flights. Might sound a good commercial opportunity but lots of questions.

 

Is it thinking of getting contracts for some of those charter flights from Russia into Thailand, or from China? And if someone does charter its big B777s, even if medium- not long-haul to, say, Abu Dhabi, what happens to the schedule at that time? NS should not have enough spare time on the aircraft – unless it has realised that it cannot keep such big aircraft busy and full enough.

 

Also, NS flights were due to launch in the second-half of this year. NS now says launch was planned for this December, but adds that it has now been delayed to Q1 2015.

 

The reason? It is still recruiting staff. I find that hard to believe; that in the 12 months from the time of the announcement of NS’s creation, it has not been able to find enough staff.

 

 

 

Scoot’s first of 14 too-big B787s, which are due to replace its much-too-big B777s, is due next month. First B787 flights seem to be planned to start next March.

 

There is usually a start-up gap between the arrival of a new-aircraft-type and its launch into operations. But this five months’ wait looks long. Are there other reasons?

 

 

 

Tiger, the dysfunctional associate airline of Singapore Airlines, is stopping its Singapore-Perth from next February.

 

Reason? The route is “unsustainable” (which should mean “unprofitable” but is sometimes used to mean something else). Probable real reason? Scoot, a subsidiary of SA, starts SIN-PER early-2015, possibly March.

 

Scoot will need all the help if can get to fill its big aircraft. Tiger’s withdrawal should give it a 125-seat start. Now how to fill those other 200?

 

 

 

Nok is launching free inflight connectivity. Good for passengers, but it shows the airline’s management still does not understand what a no-frills-airline is.

 

The NFA concept; Lesson One. Offer basics (not much more than the seat) at a low fare, and charge for the rest – meals, baggage, seat selection, even (eventually) toilet access, certainly wifi, and so on.

 

I am surprised this basic has been forgotten.

 

 

 

The Fox

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

Singapore AL troubles. Virgin surprise. Ebookers trickery.

 

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Singapore AL troubles. Virgin surprise. Ebookers trickery.

Singapore Airlines troubles.

Here I go again…The Singapore Airlines group (SAG) seems to be getting deeper in trouble. Seat sales at its most-costly operation, Singapore Airlines, are up 1% so far this year. Its should-be-fast-growing shorthaul claimed-clone, Silk Air, is up 2%.

 

Some time ago I proposed that SAG should converted Silk into a lower-cost version of SA (not, note, no-frills, just lower cost) and operate it on some SA routes that are too costly for SA to operate. So that might be Singapore-Manchester, not necessarily just Singapore-Bali.

 

SAG’s no-frills airlines – Scoot and Tiger (well, some of the Tiger airlines; don’t ask) – should be merged. We have only Tiger Singapore data, and that is growing reasonably well, +14% YTD, although its latest month was only a worrying +2%.

 

Scoot does not publish data. I have calculated approximate annual seat sales (2mn) but not growth. I guess around +20%.

 

There are indications that SAG is – by default and possibly sub-consciously – making Scoot its preferred no-frills-airline.

 

Tiger – which I regard as part of SAG, even if its shareholding is only one-third – is flailing, with no apparent strategy. Will SAG let go, or buy more and merge the two NFAs?

 

 

Virgin surprise.

After one year, Virgin Atlantic has agreed to refund me my full claim following a delayed flight Tokyo-London. I presume they realised that the amounts, US$10 offered versus US$100 claimed, was not worth the angst. But thanks anyway.

 

 

Ebookers trickery.

Reference my airline-cancelled refund-refused Air France flight, AF tells me it is Ebookers responsibility. Dumb stuff because AF keeps my money – fraudulently because they would not let me use the ticket – but Ebookers gets the blame.

 

In fact, EB was incompetent in this matter, but does not seem capable of realising that, and so will maintain its operating methods. One day EB will lose – but not with my case because I cannot afford to fight it.

 

 

The Fox

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

 

Disneyland Paris. Mickey’s Mistakes.

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Disneyland Paris. Mickey’s Mistakes.

A refinancing plan has been announced for Disneyland Paris (DP). The funding is about US$1.3bn, and it is not clear yet what amount will come from who, and how much will be invested in DP, doing what, and for what results.

 

But it does not really matter because DP is a loser; this would be throwing good money after bad. Some pointers:

 

-The apparent target (Walt Disney gives few figures, ever) when the resort opened in 1992 was about 20mn visitors annually. In fact, the figure is my extrapolation of a daily figure – although it was never clear if that was a peak-season daily figure, or overall annual average.

 

-That is part of the problem in another sense because the park was built in the wrong place – Paris. April in Paris might be nice but otherwise the weather in the French capital means it is usually pleasant-enough outdoors for only six-maybe-seven months of the year. If the Disney resort had been built in the south of France, another 2/3 months/year could have been added, and if in some other parts of Europe the resort might have been comfortable outside for 11 months each year. That bad location choice is Disney’s fault.

 

-Current visitor counts, as always, are vague. We have 2% growth in 2013 to 15.7mn. But current press reports indicate around 14.5mn, which would mean a fall of 5%. Forget that these are still below those 25-year-old targets. And forget that Disney’s obfuscatory policies are now causing it problems.

 

-The point is that investment in new attractions (one of the reasons for raising that US$1.3bn) will increase DP’s costs substantially (say half of that US$1.3bn, plus ongoing maintenance and staffing – an expensive matter in France). And, given construction time, getting back those 1mn lost visitors will take at least four years.

 

-I think with general market growth, without big additional investment, DP can hope for 3-4% growth in visitors each year.

 

-So the best business solutions are:

 

-Leave DP as it is, and accept a gradual relative decline, and work on profitability;

 

-Try various known marketing methods to increase visitor spend to get a higher percentage growth than that 3-4%;

 

-Walt Disney should invest in another park in Europe – whether the simple Disneyland type, or future park or animal park. And hopefully avoid the huge blunder it made with its DP location;

 

-Adjust DP to its new realities and steadily add indoor attractions to overcome that winter down-time.

 

-Wait for global-warming to improve the weather in Paris.

 

DP is owned 40% by Walt Disney, the US company, and 10% by Saudi Arabia’s Prince AlWaleed bin Talal, who despite having a good investment name, has made giant investment mistakes, including paying high to increase his share of Four Seasons Hotels at the peak of the market.

 

The Fox

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