New York Hospitality by Vijay Dandapani

The great summer travel bust?

Travelmole has a news-report on a survey conducted by " Travelocity to take a closer look at how much travelers paid for their summer vacations. Using hotel data of trips consumed by customers in July 2008 compared to those in July 2007, Travelocity was able to identify 14 major US cities where the price difference of a vacation that included a fight (sic) and five night stay in a hotel was actually less than a $50 increase compared to last year’s prices. Travelocity's editor at large noted that “the mistake many travelers make is that ending their vacation search based on that alone. Hotel pricing in many cities has stayed relatively flat compared to 2007. The hotel stay is typically the most expensive part of any vacation, so steady, an in some cases, decreasing prices means that skipping the vacation this year may not be necessary".

The article also states that "Fourteen popular cities with less than a $50 price difference include Atlanta, Austin, Boston, Chicago, Las Vegas, Los Angeles, Orlando, San Diego and San Francisco and others".

In essence, the report indicates that while airline prices may have gone up, hotels have obliged with price breaks to make the overall cost of summer travel about the same as it was last year. That may have been good news for the traveler but only goes to underscore pricing pressure on the hospitality industry. Unsurprisingly, New York City was not in the list of cities as hotel prices measured by Revpar has actually gone up although Hotwire ranked the Big Apple #3 as a hot labor day destination with a rate of $129 (no mention of the hotels' names).

Bienvenue aux Etats-Unis

A new survey of over 10,000 hotel reservations conducted by Booking.com, an Amsterdam-based international online hotel reservation service that is part of priceline.com shows that the number one source country for incoming tourists into the US is France. The Dutch company generated a top twenty list of countries as follows:

#1 France #11 Switzerland
#2 Italy #12 Belgium
#3 Spain #13 Sweden
#4 Netherlands #14 Ireland
#5 United Kingdom #15 Australia
#6 Germany #16 Denmark
#7 Brazil #17 Venezuela
#8 Canada #18 Israel
#9 Japan #19 China
#10 Mexico #20 Austria

While in the US, French tourists "favored New York, San Francisco, Miami Beach, Los Angeles and Boston for their summer trips".

While that is welcome news for the US tourism industry, the Euro is showing signs of receding from its commanding heights lately as the dollar has strengthened. What has kept US tourism robust, particularly in gateway cities has been the weak dollar. A strengthening dollar that is not indicative of US economic growth but European decline does not portend well for the hotel industry.

Miscellany - sand hotels and pocket passports

Sand castles have been around for eons both for fun (for kids) and as a metaphor for frailty. However, a team of four sculptors working 14 hours a day for seven days built the world's first ever sand hotel in Dorset in the UK which is accepting its first guests for £10 ($20) a night!

The Sydney Morning Herald carries the report with a somewhat unimaginative headline "Life's a beach - Briton builds sandcastle hotel". The Australian newspaper reports that Englishman "Mark Anderson took 1000 tonnes of sand and (along with) a team of four sculptors worked 14 hours a day for seven days to build the roofless structure on Weymouth beach. Guests prepared to get by without toilet facilities and happy to get the sand between their toes will be able to gaze at the open skies from sand beds for STG10 ($A20.50) a night.
According to Anderson, bookings are coming in. The best thing is in the morning the tide laps through the door, what a great way to wake up," said Anderson, who admits that his dream structure will only be there until it's washed away by the tide".

Perhaps prospective guests for the sand hotel could consider checking in with a pocket passport. The decidedly more durable item is expected to be easier to carry around particularly on beaches. USA Today reports that not only is it more convenient but also cheaper than the standard issue. The article says that it "cost(s) half the price of a new passport. About 350,000 Americans have applied for the new card, the latest step toward ratcheting up border security". The new passport "card" costs $45 compared with $100 for a first-time traditional passport and is particularly useful when traveling to neighboring countries whether or not on a beach vacation to a sand hotel.

Virtual hotels and staycations

The Wall Street Journal (subscription required) has a report on how the a flagging economy has caused some startling changes in consumer travel plans. Instead of actually going places, people have taken to simulating travel. The Journal reports on how a potential traveler, Karen Ash, "is about to take a week-long Japanese vacation. She'll buy postcards and souvenirs at a traditional Japanese market. She'll admire bonsai plants and view Japanese films. She'll eat ramen, ordering in Japanese. And she'll never leave the Bronx (NY).

The Journal article is along the lines of an entry posted on this site last month about staycations, a recently coined word that has ominous tones for the hospitality and ancillary industries. What drove Ms. Ash to the faux Japanese vacation was soaring airfares and a plunging dollar.

The phenomenon of simulating travel has, quite naturally spawned its own set of entrepreneurs. The WSJ article notes "Bob Porter, a literary editor from Pacific City, Ore., for one, has taken on the additional career of staycation planner. Last spring, a friend of Mr. Porter complained that he was too broke to travel, so Mr. Porter, as a joke, furnished his apartment like a hotel. He plugged in a TV, hung "Do Not Disturb" signs and even placed fresh soaps and towels in the bathroom. Since the joke, word-of-mouth has spread. Mr. Porter has repeated the hotel stunt 11 times since April, sparking a small business. For two nights of the faux-hotel experience, he charges $50 to $60. (He buys the items from real hotels.)". At least the line in parenthesis offers some hope for hoteliers.

While it is unclear at what point the whole exercise becomes farcical as in the case of Ms.Ash who while walking the streets of Manhattan saw Japanese postcards that she refused to buy as she was technically not yet on her staycation, what is certain is that American travelers are getting about as easy to spot as the LochNess monster in some traditional European travel spots such as Ireland.

Declining international arrivals

Travelmole has an oft repeated story in the travel press that seems to have done little to curb the unbridled growth of bureaucratic barriers to foreign visitation.

Travelmole's headline "Visitor numbers to US remain stagnant" says it all. The article notes how "post 9-11 security problems, lower airfares elsewhere and poor marketing by the US all add up to America’s losing out in the world travel market". And the ever-weakening US dollar has done little to offset that. Another quote from the United Nation's World Tourism Organization says "the United States had 51 million international visitors in 2000, more than 7% of the 682 million international arrivals worldwide. But as those travelers jumped to 846 million in 2006, the US saw roughly the same number of visitors as it used to -- dropping its share to 6 percent. Major destinations such as Los Angeles, Orlando, San Francisco, Miami, Honolulu, Las Vegas, Chicago, Washington, D.C., and Boston all saw 20% to 34% fewer travelers in 2006 compared with 2000". Only New York City bucked the trend with a 9%increase to 6.2 million arrivals in 2006 as compared to 2000.

Roger Dow, president of the Travel Industry Association, is unambiguous (and unsubtle) in his explanation for the US 's decline in share of world tourism saying "the perception of nasty US attitudes toward foreigners starting at customs" is at fault. Any American returning from a trip abroad who spares a moment to look at the process for foreigners entering the US can easily empathize - a combination of a fingerprint system (that frequently does not work with the "dry" fingers of older folks) to surly attitudes results in perennially long lines. In contrast, the European union does not even require an "arrival card" much less subjecting tourist to an arguably demeaning process of fingerprinting.

Travelmole's article notes that "Top destination cities are spending millions to promote themselves abroad and often compete with one another for foreign visitors, meaning less-obvious destinations with smaller marketing budgets have trouble being heard". The US instead is spending more money on more restrictive process such as ESTA (Electronic System for Travel Authorization), fingerprinting all ten fingers of arriving and departing international visitors.

Coolest hotel rooms

A recent Reuters report has a story on the world's coolest hotel rooms per "trend spotter and author Bill Tikos (who) has roamed the globe to find hotels that offer a unique, and luxurious, experience".

"From rooms decked out with a soundstage to concierges who can arrange impromptu tango lessons, Tikos' book, "The World's Coolest Hotel Rooms", features more than 50 rooms ranging from those that fulfill rock star fantasies to others that elevate the meaning of luxury with sumptuous day beds in lush, secluded gardens with private pools". The author writes a weekly syndicated column and also has a Thecoolhunter". Tikos believes the growing ranks of wealthy and well-heeled business travelers, as well as celebrities, have in the past five years helped drive demand for smaller, boutique establishments and all the luxury amenities that go with it.

Hotels that have made his list "include the Byblos Art Hotel Villa Amista in Verona, Italy, just miles from the centre of Verona, and which has hosted creative heavyweights such as author Takashi Murakami. In Frankfurt, Germany, Goldman 25hours Hotel catches the eye with its orange-and-blue facade". Somewhat surprisingly no US hotel makes the list yet.

Staycations

Hybrids are in vogue in more ways than one owing to soaring oil prices. A developing summer phenomenon stemming from gas sticker shock has spawned a new kind of hybrid - a word - staycation. Unable and unwilling to venture far, or even out of their homes this summer, a new poll says that some "forty percent of Americans taking "staycations" this summer say they will grill outdoors more as part of their staycation plans, according to the latest Weber GrillWatch Pulse(TM). As a result, 46 percent of them say they will spend more money on grilling this year.

A staycation is defined as "a vacation that people spend at or near home,instead of a traditional vacation away from home". While that may be great news for makers of grills it is surely not good news for the hospitality industry particularly in areas outside big destination cities such as San Francisco and New York. Adding to the potential woes of the hotel industry is a drumbeat of bad news for airlines including a steady shrinking of routes by major and even smaller carriers such as Air Canada which will cut up to 2,000 jobs, or 7 percent of its workforce and is slashing capacity like other major carriers beset by record fuel prices. Air Canada's CEO sums it up with a grim prediction of further route cuts if fuel prices remain high. Such a trend can only contribute to fewer check-ins at the front desk.

Multi-platform marketing

The phenomenal success story of Crocs, a billion dollar company that went from $1 million in revenue in 2003 to over $300 million last year needs no introduction and the company shows why its trajectory is likely to remain nearly vertical. The company has now unveiled a travel guide website called "citiesbyfoot.com" that serves as a "one-stop travel site that gives you the lowdown on some of the world’s best cities".

For now, the website, which epitomizes an exemplary multi-platform marketing strategy on the part of Crocs, includes three cities, Aspen, Vail and Denver in Colorado perhaps owing to its having started out in Boulder, CO and San Francisco and New Orleans. A press release from the company states that the guide offers "features fun walking guides to help leisure and business travelers easily find unique places to shop, eat, and play. An on-camera host steps out in style to discover each cities’ best kept secrets, interviewing local business owners and elaborating on the experience and ambience that each location offers, all while enjoying the comfort of their favorite Crocs™ shoes".

Hopefully the company will not be long in coming out with one for New York, the ultimate walking city in the world and even international destinations such as London that are conducive to walking.

MICE in Europe - Going East ?

Go West Young Man!, the exhortation penned by an Indiana newspaperman, John Soule in the middle of 19th century to look for a new life of promise may have to be turned 180 degrees for the MICE (meetings, incentives, conferences and events) market. The Financial Times reports in its May 12th edition that "Meetings industry looks to the east". Some of the principal reasons have been the "US credit squeeze and travel limitations within the financial and pharmaceutical sectors". Mice has been moving towards "Central and Eastern Europe, because of improved infrastructure and transport links - and in particular to Poland, Hungary and Lithuania."

An interesting observation in the FT article is that "Airport destinations are becoming more popular because people are struggling with transport and, providing these hotels are of the right quality and venue, that will continue. Using airport venues often means that organisers can reduce the length of an event by a night - and that is cost-effective too." While the US still leads the world in the MICE market, airport hotels in the US are less equipped to step-in a softening economic environment and capture some of the business which may otherwise contract. The US should also take note of the success of Dubai as one of the fastest growing meeting destinations in the world as the recently concluded IMEX show in Frankfurt, Germany showed.

Climate change: winners and losers in tourism

The May issue of Yale Global online, a publication of the Yale Center for the Study of Globalization has an interesting article entitled "Climate Change and Tourism’s Winners and Losers". The report details how climate change will bring about "a series of long-term of adjustments (that) is bound to leave some winners and losers" around the world.

It has some startling conclusions beginning with "tourism industries will improve in the countries of the northern hemisphere that have contributed the most carbon emissions into the atmosphere leading to climate change. And the tourism industry of countries throughout the southern hemisphere, which have contributed relatively little by way of carbon emissions, will suffer".

The article states that the industry has been one of the most resilient in the globalization era and notes that besides external shocks such as 9/11 and SARS "the travel behavior of many consumers has changed considerably, and some key factors characterizing this change include late bookings, increased price-consciousness, shorter holiday trips, the desire for more flexibility and individuality, and the trend towards special and theme holidays. On the supply side, notable changes include the major success of the low-cost carriers and new distribution channels such as the internet". It goes on to note that the industry is in for more turbulent times.

But it is the forecast (with a time horizon of 2030) of winners and losers that is of particular interest. "Canada, New Zealand and the USA are the only three further countries outside Europe whose tourist industries will be on the winning side. The reverse conclusion is that the tourism sector in all countries surveyed in Africa, Latin America and Asia will more or less suffer from climate change in the next few decades". The Caribbean , among others, is slated for decline.

The analysis concludes by noting that in "plain language, if prices for air trips increase, for example, because of their inclusion in emissions trading and if – as a result of that – fewer people travel to faraway destinations, the negative economic impact would be perceptible, especially in the poor countries. This means that measures taken by industrialized countries to reduce their own greenhouse gas emissions and thus their contribution to climate change can cause negative economic effects in other countries".

The author of the report does provide some suggestions that could mitigate the economic consequences for those on the losing side. These include new technologies "to substantially increase the energy efficiency of the transportation sector so that its impact on the earth’s climate can be reduced and traveling will not become a luxury good" and "direct transfer payments to the countries most affected by climate change". In other words, high transportation costs together with climate change is shaping up to be a witches' brew for tourism in areas that are less able to withstand those negatives.

In the end human ingenuity may well effect change that forestalls some of the gloom in the forecast, a fact the author barely manages to acknowledge.