China tops in the US, Travel Stocks

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

Foxtrots – leading the industry in a dance.


Double WYSKs. WYSK = What You Should Know.

China tops in the US, Travel Stocks

Excerpts from our monthly Travel Business Analyst newsletter.


China tops in the US

Woah! China became the biggest overseas visitor source for the US (third after the two contiguous states, Canada and Mexico) at the start of this year. It soared past Japan and the UK. Nearly 40% of the numerical growth came from China.


Political points: If a President Trump,

-messed with China, the authorities there would cut that flow to a trickle. Trump may not know what China can do; I do.


-messed with Mexico, which represents 37% of the big visitor total, fewer might be ready to climb the wall (figuratively-speaking) to visit a Mexican-unfriendly destination.



Travel Stocks

Travel stocks (US, AsPac, Eur) in July. Airlines: biggest growth, American +25%; biggest fall, Turkish -10%. Hotels: Sands +17%, Dusit -14%. Others: Lastminute +28%, Genting -3%.


Previous month: Airlines: biggest growth, Thai AW +34%; biggest fall, IAG -31%. Hotels: Dusit +41%, NH Hoteles -17%. Others: Hertz +14%, TUI -26%.


TBA Travel Stocks Index: World 166, AsPac 92, Eur 112, US 293. Index previous month: World 155, AsPac 86, Eur 107, US 274.


NVTT (Net Value Travel Tech) Stocks Index: 115; previous month 104.


Stockmarkets. Biggest growth, Frankfurt +7%; biggest fall Istanbul -2%. Previous month: London +4%; biggest fall, Dublin -13%.


Details in next month’s newsletters.



The Fox

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


Visitor Trends following…Euro-2016…Terrorist attacks in France

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

Foxtrots – leading the industry in a dance.


Visitor Trends following…Euro-2016…Terrorist attacks in France

An excerpt from our monthly Travel Business Analyst newsletter.

Our Big Event Blues* proven again in Euro event

Hotel results during Euro-2016, a Europe-wide soccer tournament, proved again our BEB* – occupancy fell in the three main cities: Marseille -3%; Nice -7%; Paris -12%.


Also, achieved rates were higher in the three, resulting in overall revenue growth for Marseille of +42%, Nice +9%, although not for Paris -8%.


However, because of recent events*, direct comparison with the same period in 2015 may not be valid.


In addition, there is no calculation of difference in spend between sports-visitors for the Euro tournament and regular visitors. We would think close to equal for destination spend (higher spend for Euro visitors but shorter stay), but probably higher for Euro visitors for industry spend (on flights, hotels, etc).



-Big Event Blues is our semi-serious theory suggesting that momentous international events actually reduce visitor arrival totals. Although these events attract international visitors, many traditional travellers (such as business travellers and even holidaymakers) will stay away from that destination just before, during, and just after the event. They assume that there will be too much disruption to normal movement in the destination. In general, they are right – not only is movement curtailed, but many prices are higher.)

-Terrorist attacks in Paris last November and in Brussels this March may have affected the results. Whereas the Paris attack reduced visitation, Brussels may have improved it (diversion travel). And other bad news on France for visitors – strikes, street riots – probably also reduced business.

-The terrorist attack in Nice last week occurred after Euro-2016 had finished.

-Data from MKG.


Hotel results in main cities in France during Euro*, % growth

Item Marseille Nice Paris
Occupancy -3.4 -6.8 -12.2
Average room rate 47.3 17.0 5.2
Revenue┼ 42.3 9.0 -7.6

Notes: *Europe-wide soccer tournament, over Jun 10-Jul 10. ┼Definition unclear. Source: MKG, Travel Business Analyst.



Terrorist attacks in France

Figures appear to indicate that the terrorist attacks in France (Nov 15, Jul 16) caused a hotel occupancy fall of 18-22%, see table. But we estimate this fall went closer to 25% in the week post-attacks.


We also believe these results are representative of the overall fall in visitation to the two destinations – with related falls in other locations.


From a business viewpoint, Nice was worse in that the attack came during the city’s peak period – July, August. The Paris attack came in one of the three slowest months for the city – November, January, February.


Damage does not seem to be longterm. Paris airport passengers fell 2% in November, -3% December, but was back to growth in January. Brussels – which suffered attacks in March, one of which was at the airport, which was then closed a few days – airport passengers were -29% March, -46% April, but only -8% in May, -6% June.


Notes: Source shows Paris results in day of attack, Nov 13, but we believe results would be unaffected by the attacks that evening. Source does not show results for third day after attacks, as it does for Nice; thus our ‘NA’.


Hotel results following terrorist attacks in France

Friday Saturday Sunday
Nice,2016┼ Jul 15 Growth╪,% Jul 16 Growth╪,% Jul 17 Growth╪,%
Occ,% 86 -5.4pts 84 -7.7pts 67 -18.4pts
ARR,US$* 310 5.0 307 -2.2 312 -2.5
Paris,2015┼ Nov 14 Growth╪,% Nov 15 Growth╪,% Nov 16
Occ,% 86 -20.7pts 46 -22.1pts NA NA
ARR,US$* 186 6.7 187 5.5 NA NA

Notes: See text. Rates are before tax. ARR = average room rate, Occ = occupancy. *Converted at US$1 to €0.90. ┼Nice (Promenade des Anglais; Thu Jul 14) 68 hotels/8400 rooms; Paris (Bataclan and others; Fri Nov 13) 250/32,000. ╪Over same weekday, year earlier. Source: MKG, Hospitality On.


The Fox

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


First-half at Europe’s top-3 Airline Groups, and some challengers.

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

Foxtrots – leading the industry in a dance.


First-half at Europe’s top-3 Airline Groups, and some challengers.

An excerpt from our monthly Travel Business Analyst newsletter.


A first-half progress report. On Europe’s big-3 Airline Groups – AKAG (Air France, KLM, plus), IAG (British, Iberia, plus), LAG (Eurowings, Lufthansa, Swiss, plus). And some of the region’s ‘challengers’ (Aer Lingus, Air Berlin, Easyjet, Eurowings, Norwegian, Ryanair, Transavia, Vueling, Wizz).



-KL is doing well – first-half seat sales +7%.


-AF -1%. As this includes its regional airline Hop, that -1% is worse than it might look. That said, analysis is twisted by terrorist attacks in Paris last November and in Brussels this March. Whereas Paris damaged results, Brussels may have improved them (diversion from Brussels airport).


-But events at AF and in France makes AF business prospects harder – with an AF strike and two air traffic control strikes this year.


-Asia Pacific is bad for AF-KL, pulling the total down.


-Paris is a big leisure attraction for many AsPac travellers, particularly the two biggest markets – China and Korea – as well as Japan. And the continual bad news from France – terrorism, strikes, street riots – will damage potential.


-AKAG’s no-frills-airline Transavia is doing well. See report yesterday.



IAG (International Consolidated Airlines Group, sic).

-Looking good. Now not much smaller than LAG, see next – 10%. And a better mix. LAG has three full-service-airlines and one unworkable mixup (Eurowings). IAG has two FSAs, one no-frills-airline (Vueling). Plus a hybrid (Aer Lingus), not quite unworkable as Eurowings, but not yet clear what IAG will do with it. Something must be done with AL although it is currently doing well.


-IAG is around +10% intraEurope (when many others find the region slow), and perhaps +12% on Asia Pacific.


-Iberia is performing better than British, as Spain pulls out of its economic slowdown.


-Danger ahead, of course, following UK voters’ bad EU-exit decision. At best, we believe IAG’s growth will vanish with all-2016 counts. If there is growth, it will be thanks to Iberia and Vueling.




-Does LAG (the Lufthansa airline group) recognise its problems? In the first half, growth was weak for each of its full-service-airlines – Austrian +2% in seat sales, Lufthansa -1%, Swiss flat.


-Worse is that for each airline the latest month was even worse.


-And Eurowings, another LAG subsidiary, is not yet clearly pulling LAG out of slow growth. True, seat sales were +7% YTD, but also slower in the latest month.


-If EW’s 7% looks good, it is mainly just when compared with LAG’s FSAs. Yet as a hybrid – part FSA, low-cost-airline, no-frills-airline – and recently-strengthened with new routes, missions, EW should be growing faster. We think at least +10% YTD.




-Be impressed.

-Those seat factors of the two leading NFAs (no-frills-airlines) – 93% first-half at Ryanair, 92% at Easyjet.

-Growth at Ryanair – +17% at Ryan H1, albeit slowing (ok, but still +12% in June).

-Norwegian good +14% growth, seat factor at a sustainable 88%. But its future growth threatened by Brexit; complicated, but see earlier posts.

-Wizz. Close to entering the big league – which we put at 25mn seats sold annually. But perhaps not this year; 23-24mn all-2016?


-Be worried.

-Air Berlin still down, at -6% H1. May be easing but seat factor, at 82%, is bleedingly low for the hybrid operation. Owner Etihad has shown no capability of turning this around (apart from saying it is); not a good sign for its other big charge, the lossmaking Alitalia.


-Happy children.

-IAG does not publish all the measures we track. But we believe its Aer Lingus is growing at around twice the pace it was pre-IAG. About +10% H1.

-But AL is still small; less than half the size of IAG’s Vueling. And V is still growing fast – probably +18% H1.

-But seat factors of both need to be improved – 79% and 81% H1.

-Sshh! Are AF-KLM doing with Transavia which AF unions said they could not – grow T into a Vueling-type airline? And pulling AF out of trouble (KL is ok)? T is still small – under half the size of V – but its +19% H1 is unheard of at AF, whose calculators we thought did not go above +5%. T already represents 13% of the AF-KL group total.

-We find it hard to categorise LAG’s Eurowings – hybrid, ie part-NFA, low-cost-airline, full-service-airline. For that reason, we think its businessplan will need to be rewritten (although this hybrid-EW is already a rewrite!). In the meantime, EW traffic looks good! +7% H1, but some traffic measures up 25% (because it is expanding on some longer-haul routes). Careful though, its seat factor is an unsustainable 77%. We are not sure what it should be, given EW’s hybridity (don’t look it up; it doesn’t exist); 85%?



The Fox

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

Fox On Friday: Thoughtless statements from new Malaysia Airlines CEO.

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Fox On Friday: Thoughtless statements from new Malaysia Airlines CEO.

An excerpt from our monthly People-in-Travel report.


We expect company leaders to say anodyne things when they are appointed. But we look for indicators nevertheless – somewhat like reading-between-the-lines/China-watching.


But we are disappointed with statements from Peter Bellew*, new CEO of Malaysia Airlines (MA). We found few indicators, and not anodyne comments but almost puerile.


Here are some (may be paraphrased):


PB soundbite: “I am sure it will be a road to recovery with many interesting turns.”

Comment: Means he does not know what will happen. Although that might be true, that is not what he should be saying.


PB soundbite: “…great progress in the last 10 months with many turnaround initiatives working.”

Comment: Means some turnaround initiatives are not working.


PB soundbite: “We will stop doing things that lose money.”

Comment: Ah, if only life were that simple. So no more new routes (which, generally, lose money initially)? No more free food on board, say, because free food loses money?


PB soundbite: “We will start new routes to new unserved Asean destinations.”

Comment: First, verbosity: ‘start’ or ‘new’ is superfluous; so is 2nd ‘new’; so is ‘unserved’ (the airline cannot operate a new route to a destination already served).


But wait a minute. Doesn’t PB say (above) that nothing would be done that loses money? Are we to believe then, that all these destinations (no number, so this could just be two destinations) will make profits from Day 1?


PB soundbite: “We will operate some leisure flights from KLIA2 [KL’s budget-airlines terminal] in 2017.”

Comment: Same as above about doing nothing that loses money. The other comment is that leisure routes (if that’s what PB means) are more risky financially than multi-traffic ones, and usually seasonal. That said, PB gave no numbers, and as he said ‘flights’, this could mean just one leisure route from KLIA2, and more than once-weekly frequency. All cost savings will be passed on to passengers in lower fares; good news for passengers, but also means that it will not help MA’s profitability.


PB soundbite: “Profit seen in the last quarter shows that the financial gap between revenue and cost has significantly closed.”

Comment: PB may have ‘seen’ the profit, but we haven’t; MA keeps this information confidential. A ‘gap’ between revenue and cost, depending on what the figures are, is what we would call a ‘profit’ or ‘loss’. In addition, the gap cannot be ‘significantly closed’; it is either closed (ie breakeven or profit) or not (loss).


Earlier, MA said it was ‘marginally profitable’ in Q1 but added some unclear caveats, and so that profitability could be no more than creative book-keeping. See also WYSKs below.




*What You Should Know:

-MA’s Q1 revenue fell a jaw-dropping 22% (to what we don’t know), but the fact that capacity (ASKs) fell further, -30%, is relatively good news. But reflect; the airline is almost one-third smaller than it was in 2015, when it also downsized.


-MA’s previous CEO Christoph Mueller, who resigned after less than a year in the job, is now leaving this month, rather than in September as he said when announcing his resignation. Important only in that it shows MA company statements have reduced credibility.


-We understand Mueller is moving to the Gulf to either Emirates or Etihad (or one of its seven associate airlines). He is known at Etihad, which at one time owned part of Aer Lingus (then CEO, Mueller) before being bought by IAG (mainly British and Iberia). This would threaten credibility on the official ‘personal-reasons’ for leaving MA. In fact, we understood he left for professional reasons – not being able to do at MA what he wanted to do.


-Much is made of PB’s time at Ryanair (nine years; 4 jobs), the world’s 2nd-largest no-frills-airline. But:

-Most of his time there was in flight operations, as was his first job (from end-2015) at MA.

-He had an unexplained one year as head of S&M (albeit under the current head of marketing, Kenny Jacobs, for most of that time) – which seemed well outside his professional competence.

-Two months after he left S&M, Ryanair’s extraordinary traffic pickup started – two years of monthly 20-30% growths. The airline is now 25% bigger than it was when PB moved out of S&M. He might want to claim credit for starting that (this is a CV after all), but there are no indications that he was responsible in any way. We would credit Jacobs more than anyone else, and Michael O’Leary, head of the airline. Jacobs joined from a supermarket retailer strong in marketing, Tesco.



The Fox

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

Travel stocks. Europe special review, all-world standard review.

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Travel stocks. Europe special review, all-world standard review.

This report is divided into two – Europe special review, and our standard monthly review.


  1. Europe special review

An immediate reaction to the UK’s vote to leave the EU – so-called Brexit – has been stock prices, and the value of the UK currency. We are not qualified to comment, or track, currency movements.


And our special review of stock prices here is entirely within the travel business. And not our usual full coverage of Asia Pacific, Europe, US.





  1. End-June prices over end-May.

-Airlines were hit much harder – -23%, compared with -9% for hotels and -10% for Others.


-Although we think the no-frills-airlines Easyjet, Norwegian, Ryanair are most under threat, the market thinks otherwise – or thinks differently. IAG (Aer Lingus, British, Iberia, Vueling) was -31% in London and -37% in Madrid!



A separate report in the Travel Business Analyst newsletter shows 36% of Ryanair’s capacity is UK-EU (and which could be lost), and 10% of Norwegian’s capacity (excludes its UK to non-EU points, also at risk). Plus Easyjet’s intra-EU capacity (also at risk) is 24% (excludes Switzerland – where EJ has a base – which is outside the EU but which pays to access the EU market).


-Least hit airline was Turkish, -8%, although that is a sad irony given the terrorist attack on Istanbul’s main airport two days ago.


-Among hotels, biggest fall was at NH -17%, although most of this is probably a result of that company’s disarray – following the move of some shareholders last month to fire its chairman and CEO.


-Among others, Eurotunnel – whose routes London-Brussels/Paris look vulnerable – was -18%. That looks slight when compared with the hit for airlines.


-But the biggest ‘Others’ fall was -24% for Frankfurt-quoted TUI – because one of the company’s subsidiaries is a big UK tour operator, Thomson. Perhaps TUI now regrets its move in 2014 to absorb its UK-quoted TUI Travel into the parent TUI AG.



  1. End-June over end-2015.

Much worse:

-Airlines -27% against hotels -14%, Others -13%.


-Biggest falls -39% at IAG, -38% at Easyjet. (IAG Madrid was -47%!)


-InterContinental is the only one of the hotel groups we track that was ahead, +4%.


-Among Others, Thomas Cook was down 48%. Perhaps investors do not know TC is German-owned, and has most (65%?) of its business outside the UK.


-But also hit was TUI, -39%, for the reasons given above.


-A winner was Kuoni, +31%. It must be extra pleased it sold off its UK (and other) tour operations in 2015.


-Tech companies (see our Net Value Travel Tech index, below) also were relatively untouched (-4%, and -6% end-Jun over end-May).





  1. World standard review

The following is our standard monthly report.


Note that changes in this section are, as usual, based on a comparison with previous-month prices, not end-2015. And that this is a worldwide report, not just Europe.


Travel stocks (US, AsPac, Eur) in June. Airlines: biggest growth, Thai AW +34%; biggest fall, IAG -31%. Hotels: Dusit +41%, NH Hoteles -17%. Others: Hertz +14%, TUI -26%.


Previous month: Airlines: biggest growth, Thai AW +24%; biggest fall, Air China -13%. Hotels: NH Hoteles +9%, Wynn R -24%. Others: Avis +15%, T Cook -13%.


TBA Travel Stocks Index: World 155, AsPac 86, Eur 107, US 274. Index previous month: WW 165, AsPac 87, Eur 126, US 281.


NVTT (Net Value Travel Tech) Stocks Index: 104; previous month 109.


Stockmarkets. Biggest growth, London +4%; biggest fall, Dublin -13%. Previous month: India +4%; Istanbul -9%.


Info via Travel Business Analyst. Details in next month’s newsletters.




End-June closing prices of travel company stocks, Europe

Company* Growth┼,% Growth╪,%
Air France-KLM -21.0 -18.5
Easyjet -29.2 -37.6
IAG London -30.9 -39.4
IAG Madrid -37.0 -46.5
Lufthansa -16.4 -27.5
Norwegian -15.9 -11.1
Ryanair -19.7 -24.6
SAS -29.8 -34.4
Turkish -8.0 -22.6
Wizz -17.3 -12.1
Accor -11.3 -13.3
InterContinental 3.5 3.6
Melia -11.9 -20.6
Mill & Cop -7.7 -12.9
NH -17.3 -25.0
Airbus -7.7 -16.6
Amadeus -5.7 -3.5
eDreams -10.2 6.3
Eurotunnel -17.5 -16.1
Fraport -6.7 -19.3
Kuoni -0.3 31.4
Lastminute -1.8 -14.5
Thomas Cook -18.1 -48.2
TUI -25.5 -39.4

Notes: *May not be full formal name. ┼Over end-May. ╪Over end-2015. Source: stockmarkets, Net Value, Travel Business Analyst.



The Fox

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

Trottings: Exit – England out of UK.

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TROTTINGS = Trip Jottings

The Fox Trots: Travel Stories from The Fox.


Trottings: Exit – England out of UK.

I propose the England hold a referendum to leave the UK.


-No more social support payments to Scots, Welsh, and, worse, Irish from the North (NIWS). We’ll give that money saved to our English social service. (I think we should paint that on the campaign bus.)


-No more foreign immigrants taking our English jobs. (That’s Irish and Welsh and the Scots who can bear England’s mild climate.)


-No longer a parliament with foreign members (NIWS) that makes decisions on England-only affairs. Don’t be fooled by the fact that it is based in Westminster. Many of its members are foreigners from NIWS; why should they rule our lives?


-We will establish our own parliament – and finally be equal. Northern Ireland has its Assembly, Scotland its Parliament, Wales its Assembly. Why not England?


-Hitler would never have allowed that.


-Devon and Cornwall can fund their own poverty. Oh, sorry, ignore that; they’re in England. We will take the money that we give to NIWS and give to those two counties. Oh, sorry, we’ve promised that money somewhere else.


-NIWS will no longer be allowed to use our own language, English, unless they make an annual ‘free-access’ payment.



The Fox

Trottings = Trip Jottings