Getting it wrong – Japan’s DMO, Malaysia Airlines.

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FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

Getting it wrong – Japan’s DMO, Malaysia Airlines.

TinT (Truth in Travel) Rides Again! How things are not quite like they say in Japan and Malaysia:

 

Japan’s DMO

Japan Tourism Agency – Japan’s DMO – has awarded a contract to Accenture, accountants-cum-consultants. The contract runs for seven months and the idea is to help Japan reach its target of 20mn visitors in the run-up to the 2020 Olympics, due to be held in Tokyo.

 

I have an idea. Given the contract to me. I can do the work in 60 seconds, and charge only US$10,000 (10% of what Accenture will get?).

 

This is how it goes. I do nothing, and the total reaches 20mn in 2020. That is because there is enough time and the visitor arrivals are already growing very fast.

 

To reach 20mn requires an annual growth of just under 10%. In 2013, growth was 24%; so far this year it has been 26%. As a result annual growth needed to reach 20mn has dropped to just 7%.

 

Being accountants, I presume Accenture already knows these figures. Being consultants, they would not tell JTA.

 

 

 

Malaysia Airlines

(An excerpt from the People-in-Travel report.)

Christoph Mueller has been appointed the new CEO of MA. He is praised for turning around companies, for having international experience, etc. Realities are somewhat different.

 

His only international experience is the job he has now, Aer Lingus CEO. He started in October 2009. Before that he was aviation director at Germany’s travel group TUI, and he has also worked at Daimler Benz (its aerospace division), Lufthansa, Sabena, and DHL.

 

Aer Lingus was not in deep financial trouble, as MA would like us to believe, and is still not in financial trouble. Over his time there, the airline’s stock price has grown at the same pace as its local competitor, Ryanair – around 25%/year – although AL has added €1.18 to its price per share, whereas Ryan has added €5.52.

 

Financial results do not clearly show whether progress has been good or bad. In 2013, AL revenue was +2% to €1.43bn, operating profit -12% to €61.1bn. In 2010 (the first full year after Mueller took over) +1% to €1.22bn, and an operating loss switched to a €57.6bn profit. However, this is not much growth over that period – revenue +5%/year, profit +2%/year.

 

In fact, Mueller’s importance to MA is perhaps something different – how to face up to a powerful no-frills-airline, Ryanair. Although there are important differences, one of MA’s two big problems is how to meet competition from the Air Asia NFA. (The other is MA’s unfortunate loss of an aircraft this year, and then a second one shot down by military forces.)

 

Mueller handled the Ryan challenge by matching it. AL is effectively a NFA on its Europe routes (although it does add a few frills), and a full-service-airline only on its transAtlantic routes. And that policy was introduced not by Mueller but by an earlier CEO, Willie Walsh, now running British Airways.

 

Will he does the same for MA?

 

 

The Fox

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

 

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ILTM exhibition in Cannes.

Leave a comment

FOXTROTS

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

Foxtrots – leading the industry in a dance.

 

ILTM exhibition in Cannes.

Some business news from last week’s ILTM exhibition in Cannes.

 

[] Banyan Tree, Singapore.

-Plans to open 30 properties in next two years; currently it has 37.

-Launched Cassia this year as its third brand. BT launched 20 years ago; Angsana 12 years.

-First Cassia is due to be Phuket; five are confirmed. Will be a sort of time-share; BT does not use that term. The hotels’ units will be separately-owned and owners get 60 days accommodation.

-A fourth brand is due to be launched in 2015. It will be at a standard similar to Cassia.

 

[] Belmond, exOrient Express, UK.

-Due to add another train product, in Ireland, in 2015. This will be its 46th ‘product’ – primarily hotels but also cruises and trains.

-It has signed its first management contract – for the small Cadogan hotel in London. Currently closed for renovation, it is due to reopen in 2016.

 

[] Dorchester Collection, UK.

-Publicity/promotional activity have been reduced this year following boycotts after the group’s owner, the Sultan of Brunei, introduced the sharia-law system in his country. It is certain that DC’s revenue has fallen this year as a result.

-At its Plaza Athenee in Paris, added ballroom and 14 suites in adjacent buildings bought for this expansion.

 

[] Four Seasons, Canada.

-Moved its EAME regional office from Switzerland to Dubai.

-Launching private 52-seat B757 service in FS colours, with flat-bed seats, wifi etc. Jet not owned by FS; leased from Switzerland-based TAG Aviation through US-based tour operator TCS Expeditions (whose other B757s have 78 seats).

-First of five itineraries/year due February 2015. Because this will be well short of full utilisation, FS’s B757 is also available for charter.

-Openings in past few days/weeks – Orlando in Disneyland, Dubai, Johannesburg (reopening). Due soon – Bahrain Q1 2015, London (its third, in Trinity Square) 2016.

 

[] ILTM, France.

-Organisers hosted seven media for the exhibition when it started in 2002. They hosted 70 this year; Travel Business Analyst was not one.

 

[] Jumeirah, Dubai.

-Has doubled hotels since 2011; now 22, plus 17 in development.

 

[] Kyoto, Japan.

-Targets 3mn foreign visitors in 2020. It was 1.13mn in 2013; that would mean annual average growth of 15.0%, and thus the target is unlikely to be reached.

 

[] Leading Hotels, US.

-Due to launch an advertising campaign – a description it eschews, preferring ‘brand strategy’ – in 2015.

-Follows change of owners six years ago. It says it spent five years fixing the company, and this year “we started thinking about what we do from here”.

 

[] Mandarin Oriental, Hong Kong.

-Recent openings in China are Guangzhou, Shanghai; planned for Shenzhen.

-Projects include resorts – which MO previously avoided – in Bali, Maldives, Turkey. Work has stopped on Maldives while owner seeks refinancing.

 

[] Oetker Collection, Germany.

-Lanesborough, now closed for renovation, is due to reopen April 2015.

 

[] Peninsula, Hong Kong.

-Building a village for 100 people where a super typhoon hit in Mindanao, Philippines in November 2013.

 

[] Relais & Chateaux, France.

-New locations in Hong Kong and Maldives.

-Plans to launch new digital platform in 2015.

 

[] Six Senses, Thailand.

-Opened its first property in Europe, 90 minutes from Porto, Portugal. Was house, built around 1900; comprehensive renovation.

-Chose another corporate name for its properties in China – Liu Shan. Means roughly ‘six wellness’.

-Sees substantial opportunities for development in Central and South America, but also in Africa.

-Also looking for urban properties, even Manhattan.

 

[] Small Luxury Hotels, UK.

-Company, owned primarily by CEO Paul Kerr, sold to the owners of two of its resorts in Spain. Not yet officially announced, and new owners have not yet taken over operationally; they are currently looking for a CEO.

-Operations. Average room rate still not back to pre-crisis 2008 when it was US$400 (quoted in US$); this year about US$360. In 2005, business share from travel agencies was 75%; now 55%. YTD increase in mobile bookings 62%.

-It may add boats/yachts to its product offer.

 

[] Starwood, US.

-Its luxury division (brands Luxury Collection (sic), St Regis, W) due to open 18 hotels in 2015. Most in one year before this was 12.

 

[] Virtuoso, US.

-Turnover (gross booking value) expected to be US$14bn, +12.0%, this year.

-Has just added 16 travel agency members in Europe. (Members, of which it has 355, are only outbound travel agencies. Its partners of which there are 1700, are suppliers and include inbound travel agencies.)

 

Different reports on these topics are published in the Travel Business Analyst newsletter, the Net Value and People-in-Travel monthly-report, travelbusinessanalyst.com, Facebook-Travel-Business-Analyst. They highlight some important observations on the data as presented here.

 

 

The Fox

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