Rising travel costs: not an impediment to more travel?

At the just concluded ITB world tourism fair in Berlin Germany, a constant refrain was rising costs associated with high petroleum prices and an incessant appetite for more taxes on travel providers from hotels and airlines to even car rental companies.  German hoteliers were vociferous in condemning the raft of new and higher taxes including the quaintly called "culture tax". It is a theme found around the world particularly in the cash-starved jurisdictions of the Western world including the US.

That higher taxes have, historically, never garnered more revenue in the longer term is not a persuasive argument for the "sock it to the foreigners" crown inhabiting legislatures. Adding to the woes of guests is the reflexive tendencies of many hotel companies, particularly the larger chains, to levy their own "tax" on guests as "incidentals" with extortionate WiFi charges leading the charge. Britain's Daily Telegraph has a top ten list of things to change in travel with extraneous (and outrageous) hotel charges coming in at #3.  These include £6 for a couple of bottles of water and more than £5 an hour for Wi-Fi with 24 hours coming in at more than £20 a day.

Germany is not far behind with, for example, the Hilton in Berlin charging €22 for the privilege of connecting. As the Telegraph notes "given that Wi-Fi access doesn’t cost the hotel anything" (other than capital costs) it is beyond unconscionable that hotels continue to extort presumably under the assumption that business travelers don't care as their employers pay for it. The Wall Street Journal, however, recently had a report on more hotels incuding incidentals in room charges. 

Nevertheless, despite rising costs both in airfares and, in some areas, hotel charges there is a highly encouraging prognostication on the growth of air travel by the Federal Aviation Administration that says "airline passenger travel will nearly double in the next 20 years"! The agency's report says that "the total number of people flying commercially on U.S. airlines will increase by 0.2 percent to 732 million in 2012, then to 746 million in 2013, and then increase more rapidly to 1.2 billion in 2032. The aviation system is expected to reach one billion passengers per year in 2024." If even fractionally true, it may well be a case of let the good times roll again for travel providers.

 

Published by

Vijay Dandapani

Co-founder and president of a New York based hotel company for 24 years. Grew the firm to five hotels in Manhattan and also developed a greenfield project at MacArthur airport, New York. Speaker at numerous prestigious forums including Economy Hotels World Asia, Lodging Conference, NYU, Columbia University Real Estate Roundtable, Baruch College's Zicklin School and ALIS. President and ceo of New York City Hotel Association since January 2017.

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