It must happen to a greater or lesser extent if American Airlines create a model that succeeds and then gets rolled out across the industry. The only way that TMCs will be able to give their customers what they want will be to direct connect with every key supplier and, as such, become mini specialist GDS in their own right. It will cost them a lot in time, resource and money despite what some AA loyalists say and you can bet your bottom dollar they will want it back with interest.
So how will such an event impact the balance of power in the travel supply chain? I think it will affect it significantly. Obviously the GDS will not simply sit back and let it happen and I am sure there is intense discussion and negotiation going on as I write.
However let us just pause for a minute and reflect on the following statements:
1) Despite airlines best efforts the TMC world still has considerable value to their corporate clients and will be hard to dislodge unless they do all the things TMCs do.
2) TMCs have been preparing their own strategies by building their own booking platforms that can be directed to be very specific on what choices they offer.
3) If airlines direct connect to these platforms they may be stepping out of the frying pan and into the fire as far as power balance is concerned.
The GDS are too darn expensive and working with a defunct, unjustifiable pricing model. I think many of us believe that and I can see why airlines are getting sick of paying sector fees even for cancellations and suchlike. The only thing is that GDS have a value to them and this value may be provided by TMCs in future. If you receive a value you can expect it to cost you as the TMCs will not give such distribution capability away for nothing. On top of that they will have their own platforms overlaying it which will allow dynamic pricing and availability control.
My message to airlines is to look at the broader implications of their actions. Remember how some thought GDS were great to own once. And how ownership, encouragement and support of OTAs were expected to reduce not increase cost. Not a great track record so far so look at your next step very carefully!
Saturday, 29 January 2011
Friday, 28 January 2011
My Life in Bars – Part 2
Picture this. You are a young single guy and you have been sent abroad. Your job is to spend anywhere between 2 and 4 weeks in somebody else’s house and look after their office whilst they are back in the UK on annual leave. Money is not too much of a problem because you inherit their food and entertainment budget for the month in question as well as temporary membership to various sporting and social clubs.
Your usual lifestyle is built around the local pub, your shared flat or bed-sit and any party you can con your way into. You are not the tidiest person in the world and your culinary skills extend to spaghetti on toast. All in all not much use to man nor beast except you get transported to far off places where you have cooks, cleaners and lots of spending money. It was rather like sending a voracious fox into a large hen house full of chickens and saying ‘Behave yourself’. A warning that all too often fell on deaf ears.
I went on quite a few of these assignments and they took a bit of getting used to. Instead of wondering where your next takeaway was coming from you would be sitting in some comparably palatial lounge with a large drink and the smell of cooking food wafting from the kitchen every time the servant came through with a refill. Everything you dropped got picked up and your ashtray was emptied about every 20 minutes. I used to feel quite disorientated. And ultimately bored to tears.
There was only so much splendid isolation one could stand. At least if you were staying in a hotel there were other like minded people about and you might even get lucky and pick up an air hostess. If that failed you could maybe take in a club or hit the residents bar. In your house somewhere in the outskirts all you had was your own company and the nagging thought you could be ruining someone else’s house.
I was in this kind of dilemma on my first relief posting to Nairobi. Fortunately this place came with a car and chauffeur so I decided to spend most of my evenings out.
Nairobi in the early 70s was a pretty wild and potentially dangerous place to be and for all I know it maybe still is. I decided to make a tour of the hotels and see what was going on.
Most airline crews stayed at the Panafric Hotel and that was my first port of call. Sure enough a group of cabin staff were propping up the bar and I attached myself to them.
Terry was their chief and, clearly smelling an expense account, he became my new best pal. I am not sure how it happened but the bar eventually closed and I found me, Terry and another guy called Ken being ushered out the door. Strangely all the hostesses had disappeared and my thoughts of skinny-dipping back at the house pool went with them.
Terry said he knew of a ‘night spot’ across the road which would be lively and we decided to go there. It was called the Starlight Club and I quiver as I remind myself of it even now. The place was frankly sordid and little more than a bordello with a large patio and a frantic band playing insanely in the background. It was a place full of furtive foreigners and friendly girls. A place you would definitely not take your granny to.
Like most Nairobi bars of that kind you had to run the gauntlet to get in. This comprised of a group of ‘dusky maidens’ who would stand either side of the entrance corridor and grab at you vital areas as you walked past. This could be some kind of local ethnic greeting but, as once they grabbed you they wouldn’t let go, I doubted it. Terry, Kevin and I were forewarned so we had already pushed some ’borrowed’ hotel menus down the front of our trousers. By the time we got inside they were like origami.
Once inside it went further downhill. It was a wall of sweat, smell and sound. Full of svelte gyrating women and balding clumsy men in loud shirts and louder voices. Maybe a quiet night in was not such a bad thing I thought as I paid a small fortune for three Tusker beers while fending off two of the door-keepers who had followed us to our table. One of them disappeared under it and Ken started shifting guiltily and uncomfortably in his seat. “What is going on under there” I demanded? Can’t say” said Ken “But I’m frightened to move”.
That was it for me and I got up to leave. Another girl threw herself at me but got intercepted by door keeper number two who said she was my girl. An enormous fight started between the two of them with wigs and bits of clothing flying everywhere. I fled while everyone watched them, except for Ken who was still sitting bolt upright with a bemused look on his face. I need to find new friends and a new bar I thought.
I eventually found a new bar to spend my evenings in. It was called The Sombrero club and the only difference to The Starlight was once they knew you and you got chummy with the owner/barman they would leave you alone. Many the evening I sat talking to Moses (the barman) and watching these incredible events going on around me.
I came unstuck at the end of my stay. Our regional director came to Nairobi to do a spot check on our operation. He was staying at the Norfolk Hotel just a short distance from The Sombrero. When evening came he said he wanted to go out for a drink and suggested trying “that bar down the road”. I said that although I had never ever been there I had heard it was a really dangerous and rude place. He could not be dissuaded so off we went.
Needless to say he got the ethnic Nairobi handshake at the door…at least four times. “Ah Mikey” one of the girls said but I ignored her. By the time we got to the bar I had two more “Hi Mikeys”, two hugs and a kiss. I shielded my boss as best I could so he could get a bar stool and before I could order Moses leaned over and said “Hi Mikey. You are late tonight. You want your usual”?
“Never been here before Michael” my new boss probed? Maybe once or twice I admitted. “We expect our relief staff to be perfect ambassadors for the company so we will need to talk more of this tomorrow” he said. He kept me waiting all the next day.
“We will go back there tonight” he said as we closed the office. “OK “I replied “but may I suggest you pick up a hotel menu before you come?”
Your usual lifestyle is built around the local pub, your shared flat or bed-sit and any party you can con your way into. You are not the tidiest person in the world and your culinary skills extend to spaghetti on toast. All in all not much use to man nor beast except you get transported to far off places where you have cooks, cleaners and lots of spending money. It was rather like sending a voracious fox into a large hen house full of chickens and saying ‘Behave yourself’. A warning that all too often fell on deaf ears.
I went on quite a few of these assignments and they took a bit of getting used to. Instead of wondering where your next takeaway was coming from you would be sitting in some comparably palatial lounge with a large drink and the smell of cooking food wafting from the kitchen every time the servant came through with a refill. Everything you dropped got picked up and your ashtray was emptied about every 20 minutes. I used to feel quite disorientated. And ultimately bored to tears.
There was only so much splendid isolation one could stand. At least if you were staying in a hotel there were other like minded people about and you might even get lucky and pick up an air hostess. If that failed you could maybe take in a club or hit the residents bar. In your house somewhere in the outskirts all you had was your own company and the nagging thought you could be ruining someone else’s house.
I was in this kind of dilemma on my first relief posting to Nairobi. Fortunately this place came with a car and chauffeur so I decided to spend most of my evenings out.
Nairobi in the early 70s was a pretty wild and potentially dangerous place to be and for all I know it maybe still is. I decided to make a tour of the hotels and see what was going on.
Most airline crews stayed at the Panafric Hotel and that was my first port of call. Sure enough a group of cabin staff were propping up the bar and I attached myself to them.
Terry was their chief and, clearly smelling an expense account, he became my new best pal. I am not sure how it happened but the bar eventually closed and I found me, Terry and another guy called Ken being ushered out the door. Strangely all the hostesses had disappeared and my thoughts of skinny-dipping back at the house pool went with them.
Terry said he knew of a ‘night spot’ across the road which would be lively and we decided to go there. It was called the Starlight Club and I quiver as I remind myself of it even now. The place was frankly sordid and little more than a bordello with a large patio and a frantic band playing insanely in the background. It was a place full of furtive foreigners and friendly girls. A place you would definitely not take your granny to.
Like most Nairobi bars of that kind you had to run the gauntlet to get in. This comprised of a group of ‘dusky maidens’ who would stand either side of the entrance corridor and grab at you vital areas as you walked past. This could be some kind of local ethnic greeting but, as once they grabbed you they wouldn’t let go, I doubted it. Terry, Kevin and I were forewarned so we had already pushed some ’borrowed’ hotel menus down the front of our trousers. By the time we got inside they were like origami.
Once inside it went further downhill. It was a wall of sweat, smell and sound. Full of svelte gyrating women and balding clumsy men in loud shirts and louder voices. Maybe a quiet night in was not such a bad thing I thought as I paid a small fortune for three Tusker beers while fending off two of the door-keepers who had followed us to our table. One of them disappeared under it and Ken started shifting guiltily and uncomfortably in his seat. “What is going on under there” I demanded? Can’t say” said Ken “But I’m frightened to move”.
That was it for me and I got up to leave. Another girl threw herself at me but got intercepted by door keeper number two who said she was my girl. An enormous fight started between the two of them with wigs and bits of clothing flying everywhere. I fled while everyone watched them, except for Ken who was still sitting bolt upright with a bemused look on his face. I need to find new friends and a new bar I thought.
I eventually found a new bar to spend my evenings in. It was called The Sombrero club and the only difference to The Starlight was once they knew you and you got chummy with the owner/barman they would leave you alone. Many the evening I sat talking to Moses (the barman) and watching these incredible events going on around me.
I came unstuck at the end of my stay. Our regional director came to Nairobi to do a spot check on our operation. He was staying at the Norfolk Hotel just a short distance from The Sombrero. When evening came he said he wanted to go out for a drink and suggested trying “that bar down the road”. I said that although I had never ever been there I had heard it was a really dangerous and rude place. He could not be dissuaded so off we went.
Needless to say he got the ethnic Nairobi handshake at the door…at least four times. “Ah Mikey” one of the girls said but I ignored her. By the time we got to the bar I had two more “Hi Mikeys”, two hugs and a kiss. I shielded my boss as best I could so he could get a bar stool and before I could order Moses leaned over and said “Hi Mikey. You are late tonight. You want your usual”?
“Never been here before Michael” my new boss probed? Maybe once or twice I admitted. “We expect our relief staff to be perfect ambassadors for the company so we will need to talk more of this tomorrow” he said. He kept me waiting all the next day.
“We will go back there tonight” he said as we closed the office. “OK “I replied “but may I suggest you pick up a hotel menu before you come?”
Thursday, 27 January 2011
Better to never have something than see it taken away?
I wrote a few comments in my blog not that long ago about corporate entertaining. I tried to both entertain and inform but there was one particular argument I tried to put across. It was ‘never give someone something and then take it away’ i.e. once you invite someone somewhere regularly and then stop the reaction is worse than the initial benefit. This is exactly what is going on in travel at the moment but in a much broader sense.
Have you wondered why ‘low cost’ airlines like Ryanair manage to sell tickets much cheaper than say British Airways? Simple you might say, Ryanair is much more restrictive in timetable, booking conditions, departure airports etc. Plus they do not have the enormous cost infrastructure the big global giants have. Of course you would be right but it is far more than that, which brings me back to my entertaining analogy.
Nobody gets anything from a low cost carrier unless they pay for it. They never have and never will. What you get is a low cost and a menu of add on prices for everything from bags to card payment to seat reservations. That is the key reason for the low lead price and they absolutely depend on income from ancillary costs.
The big airlines are the complete opposite to this. Their prices are historically all inclusive but now they have to change rapidly to stem the flow of lost revenue to their new ‘low cost’ competition. So what do they do? They start looking at every distribution cost they incur and try to eradicate them. Things like free card usage, credit periods, use of agents and access to special fares. They will in fact ultimately end up pretty close to becoming low cost carriers themselves which is, to me, as worrying as it is welcome, in fact more so.
So the national airlines are starting to take away things they used to give away. Well actually they never gave them away. Instead they built the costs into those high prices they cannot compete with these days. As I implied in my heading, taking away something people are used to breeds discontent and intransigents. Pity the poor big airline, they are getting attacked for taking things away that their low cost competition never gave in the first place and get kudos for not doing so!
The travel world can be a cruel place sometimes!
Have you wondered why ‘low cost’ airlines like Ryanair manage to sell tickets much cheaper than say British Airways? Simple you might say, Ryanair is much more restrictive in timetable, booking conditions, departure airports etc. Plus they do not have the enormous cost infrastructure the big global giants have. Of course you would be right but it is far more than that, which brings me back to my entertaining analogy.
Nobody gets anything from a low cost carrier unless they pay for it. They never have and never will. What you get is a low cost and a menu of add on prices for everything from bags to card payment to seat reservations. That is the key reason for the low lead price and they absolutely depend on income from ancillary costs.
The big airlines are the complete opposite to this. Their prices are historically all inclusive but now they have to change rapidly to stem the flow of lost revenue to their new ‘low cost’ competition. So what do they do? They start looking at every distribution cost they incur and try to eradicate them. Things like free card usage, credit periods, use of agents and access to special fares. They will in fact ultimately end up pretty close to becoming low cost carriers themselves which is, to me, as worrying as it is welcome, in fact more so.
So the national airlines are starting to take away things they used to give away. Well actually they never gave them away. Instead they built the costs into those high prices they cannot compete with these days. As I implied in my heading, taking away something people are used to breeds discontent and intransigents. Pity the poor big airline, they are getting attacked for taking things away that their low cost competition never gave in the first place and get kudos for not doing so!
The travel world can be a cruel place sometimes!
Sunday, 23 January 2011
The Evolution of Air Distribution – The Story so Far
Now you are going to need to bear with me on this. Blogs are supposed to be brief and incisive but this one won’t. I just think that perhaps too many people assume that everyone knows about air distribution history and, by extension, fully understands the dynamics in play. I am not sure this is the case (why should they) so here is my understanding of how we got to where we are now.
It would take a book not a blog to go into the full detail and rationale so I will content myself and your patience by picking out the key players and change milestones in what will be a summary of what has happened and who are the movers and shakers. I think the customer needs to know the basics especially as they are ultimately paying unless they can do without at least one of the current cogs in the distribution mechanism.
Initially there was not much of an issue. The airlines worked in concert with each other and their supply chain and basically paid for everything required to distribute their product. They paid merchant fees to card companies, commission to agents (no such things as TMCs then) and fees to the GDS. Having picked up all these tabs they then sold their tickets with these costs built in to their fares. All of them did it so there was no problem Simple and reasonably effective in a well regulated, stable and growing travel market where little true competition existed.
As an example (and it varies hugely by area) airlines paid agents 10% commision and between 3 to 30% override, 1.5-3% card fees and 4% to 6% GDS charges.All of that bundled into the end ticket price.
Then things changed. Airlines expanded their route structures and became far more competitive with each other. The first sign of change was when ticket prices started to diversifyfrom airline to airline. In order to attract increasingly fickle travellers a fare differentiation was required. Carriers moved away from simply discounting their standardised global gross fare pricing and introduced corporate nets, yield managed specials and additional one-off deals.In one class alone you could end up with over a dozen fares each with their own restrictions and availability allocations.
The result was twofold. Firstly the ability to interchange tickets between airlines disappeared and secondly the need to mitigate pricing concessions made them look harder at their costs. Their distribution costs to be precise.
They found themselves in a real dilemma. The need to compete and discount was obviously threatening their profits (what there were) and simultaneously two other things happened. Low cost carriers with a totally different price model arrived who had to worry far less about convenience, timetables, airport locations and service which in turn encouraged corporations to view travel in a far more commoditised way. So, on one side they had to compete with carriers with a considerably lower cost base/tariff and on the other, a customer with a much harder stance towards price.
What became clear was that they could not continue paying the full cost of distributing their products whilst competing with new entrant pricing combined with more savvy buyers.Something had to give and what ‘gave’ was the air distribution model. After all, if you cannot beat the no frills airlines and professional buyers then the only option was to join them and challenge elsewhere in the travel merry-go- round.
I think their objectives were a mixture between the sound and the inevitable. The markets had clearly changed and if the end customer really wanted transparency and a lower cost model then give it to them. Whether they really wanted or needed it in the first place is a discussion for another day. Many of the arguments today are revolving around the desire for commoditisation coming head to head with the necessity for flexibility and uniformity of information and access.
There is another key influencing factor which is technology. Part of the reason why the main airlines feel both desirous and capable of change is that, for the first time there are other potential technology solutions out there. That is to say they are there if, and only if, the end users really do expect them to act individually rather than collectively with other provider’s inventory. Hence the current pressures on the GDS who provide all encompassing booking services and charge a high price for doing so. There is no way any individual airline can provide the diversity and product span that a GDS does.
The airlines (individually and at varying speeds) have called time on paying full distribution costs for all services to all customers. Unfortunately I do not see their goal as eradicating such costs. Their objective is to find what they see is the right home for these costs and then try to ensure the savings are not taken away by having to reduce prices to compensate the travellers, who will undoubtedly have to pay. Unless as I mentioned earlier a cog taken out of the distribution wheel. but which one?
So are there any expendable cogs? In some sectors of the market then probably yes. However, only if people recognise what they want and are prepared to accept the consequences and constraints of such. I think the line will be drawn between those corporations that want a controlled, managed and reported programme and others that choose a more deregulated approach where cheapest flights and few management ‘frills’ are acceptable.
If you want travel management you need knowledge and control. In order to do this you need someone to consolidate travel in all forms and package it into controllable chunks from as few sources as possible. At present this is best done through a GDS booking system, a travel management company and a mandated card programme. You take overall control of your travel, accept the price of doing so and form the right balance between value and all the other broader elements that complement your company ethos. Does anybody with a travel programme really want to run around numerous individual online airline sites and compare them when a GDS already does that in a one-stop environment?
On the other side if you want to maximise trip by trip savings there is no reason why approaching the cheapest distribution source and exploiting it until another one comes along is not the right way. To be frank the cheapest booking cost would be by going to an airline direct either independantly or through a TMC which is why carriers like American Airlines, Lufthansa etc are differentiating pricing and availability dependant on where the booking comes from. It does not by any means guarantee that overall trip price will be lower but the reservations element may be.
What I am begining to see happening is that airlines are finally differentiating between varying corporate needs and handling them individually. This part I applaud even though it has taken a long time and has a way to go. They are beginning to see the contrast between travel management and the very different service provided through Online Booking Agencies (OTAs) which, despite all the hype, focus on a different and smaller market that has a different list of demmands. It is this SME market and the OTAs that service them that are taking the brunt of current airline initiatives. The rest will follow.
Before I conclude let me set out the distribution milestones again as I see them:
1) Airlines have mainly eradicated standard agency commission payments but have failed to stop override and incentive payments. Whilst not totally successful it has enabled them to target better those they want to reward to a greater and more productive effect.
2) Agents responded by passing their new costs to the corporations by changing their contracts to management/transaction fees. End result? Most agencies protected their income and some grew it by ensuring remaining income from the airlines stayed with them and not passed on within their client deals. Airlines were forced to reduce prices to compensate customers.
3) GDS/Airline negotiations became far more aggressive. When you look at what airlines have to pay them, even for passenger cancellations and suchlike it is hardly surprising. Some airlines started charging TMCs for certain bookings to gain compensation. TMCs passed these costs on to the corporations but are still incentivised by GDSs which make airlines pretty mad as it is their fees that are funding them.
4) Various airlines changed some of the remaining IATA regulations regarding payment to shorten credit terms with TMCs and escalate penalties for perceived non compliance. A very much hidden cost that again the customer ended up collecting.I find it quite alarming how much cost comes into the chain via IATA and its interpretation of their own rules.
5) Credit/charge card usage has increased because of 4) as individual countries cut agency credit by 50% or more meaning TMC passed on the casflow deterioration to customers resulting in this migration to plastic . Ironic really as this area is very much a top target for airline cost reduction. Cards, like GDS charge wide and varying merchant fees to suppliers and these will be attacked robustly and very soon.
Where will this evolution take us? Airlines will continue fighting distribution costs. Instead of taking them all and then charging travellers through price they will try to dump them and leave the customer to pay separately. Meanwhile they will compensate by offering lower cost alternatives to those prepared to book direct. The battlefronts will be GDS fees, credit card merchant fees, cost of credit, TMC incentives and service deliverables. The customer will get what they say they want which is transparency and a unit price for everything. Currently I do not believe actual cost will go down. It will simply be realigned and will probably go up. If prices go down any further then there will be less suppliers, less choice and devolution not evolution.
It does not make sense that suppliers should pay for everything and then charge a correspondingly high price. Equally it does not make sense that the traveller gets all the bills and tries to negotiate their way out of them. I expect it is the way of the world and will provide yet newer business opportunities but regrettably the same old regurgitating costs.
It would take a book not a blog to go into the full detail and rationale so I will content myself and your patience by picking out the key players and change milestones in what will be a summary of what has happened and who are the movers and shakers. I think the customer needs to know the basics especially as they are ultimately paying unless they can do without at least one of the current cogs in the distribution mechanism.
Initially there was not much of an issue. The airlines worked in concert with each other and their supply chain and basically paid for everything required to distribute their product. They paid merchant fees to card companies, commission to agents (no such things as TMCs then) and fees to the GDS. Having picked up all these tabs they then sold their tickets with these costs built in to their fares. All of them did it so there was no problem Simple and reasonably effective in a well regulated, stable and growing travel market where little true competition existed.
As an example (and it varies hugely by area) airlines paid agents 10% commision and between 3 to 30% override, 1.5-3% card fees and 4% to 6% GDS charges.All of that bundled into the end ticket price.
Then things changed. Airlines expanded their route structures and became far more competitive with each other. The first sign of change was when ticket prices started to diversifyfrom airline to airline. In order to attract increasingly fickle travellers a fare differentiation was required. Carriers moved away from simply discounting their standardised global gross fare pricing and introduced corporate nets, yield managed specials and additional one-off deals.In one class alone you could end up with over a dozen fares each with their own restrictions and availability allocations.
The result was twofold. Firstly the ability to interchange tickets between airlines disappeared and secondly the need to mitigate pricing concessions made them look harder at their costs. Their distribution costs to be precise.
They found themselves in a real dilemma. The need to compete and discount was obviously threatening their profits (what there were) and simultaneously two other things happened. Low cost carriers with a totally different price model arrived who had to worry far less about convenience, timetables, airport locations and service which in turn encouraged corporations to view travel in a far more commoditised way. So, on one side they had to compete with carriers with a considerably lower cost base/tariff and on the other, a customer with a much harder stance towards price.
What became clear was that they could not continue paying the full cost of distributing their products whilst competing with new entrant pricing combined with more savvy buyers.Something had to give and what ‘gave’ was the air distribution model. After all, if you cannot beat the no frills airlines and professional buyers then the only option was to join them and challenge elsewhere in the travel merry-go- round.
I think their objectives were a mixture between the sound and the inevitable. The markets had clearly changed and if the end customer really wanted transparency and a lower cost model then give it to them. Whether they really wanted or needed it in the first place is a discussion for another day. Many of the arguments today are revolving around the desire for commoditisation coming head to head with the necessity for flexibility and uniformity of information and access.
There is another key influencing factor which is technology. Part of the reason why the main airlines feel both desirous and capable of change is that, for the first time there are other potential technology solutions out there. That is to say they are there if, and only if, the end users really do expect them to act individually rather than collectively with other provider’s inventory. Hence the current pressures on the GDS who provide all encompassing booking services and charge a high price for doing so. There is no way any individual airline can provide the diversity and product span that a GDS does.
The airlines (individually and at varying speeds) have called time on paying full distribution costs for all services to all customers. Unfortunately I do not see their goal as eradicating such costs. Their objective is to find what they see is the right home for these costs and then try to ensure the savings are not taken away by having to reduce prices to compensate the travellers, who will undoubtedly have to pay. Unless as I mentioned earlier a cog taken out of the distribution wheel. but which one?
So are there any expendable cogs? In some sectors of the market then probably yes. However, only if people recognise what they want and are prepared to accept the consequences and constraints of such. I think the line will be drawn between those corporations that want a controlled, managed and reported programme and others that choose a more deregulated approach where cheapest flights and few management ‘frills’ are acceptable.
If you want travel management you need knowledge and control. In order to do this you need someone to consolidate travel in all forms and package it into controllable chunks from as few sources as possible. At present this is best done through a GDS booking system, a travel management company and a mandated card programme. You take overall control of your travel, accept the price of doing so and form the right balance between value and all the other broader elements that complement your company ethos. Does anybody with a travel programme really want to run around numerous individual online airline sites and compare them when a GDS already does that in a one-stop environment?
On the other side if you want to maximise trip by trip savings there is no reason why approaching the cheapest distribution source and exploiting it until another one comes along is not the right way. To be frank the cheapest booking cost would be by going to an airline direct either independantly or through a TMC which is why carriers like American Airlines, Lufthansa etc are differentiating pricing and availability dependant on where the booking comes from. It does not by any means guarantee that overall trip price will be lower but the reservations element may be.
What I am begining to see happening is that airlines are finally differentiating between varying corporate needs and handling them individually. This part I applaud even though it has taken a long time and has a way to go. They are beginning to see the contrast between travel management and the very different service provided through Online Booking Agencies (OTAs) which, despite all the hype, focus on a different and smaller market that has a different list of demmands. It is this SME market and the OTAs that service them that are taking the brunt of current airline initiatives. The rest will follow.
Before I conclude let me set out the distribution milestones again as I see them:
1) Airlines have mainly eradicated standard agency commission payments but have failed to stop override and incentive payments. Whilst not totally successful it has enabled them to target better those they want to reward to a greater and more productive effect.
2) Agents responded by passing their new costs to the corporations by changing their contracts to management/transaction fees. End result? Most agencies protected their income and some grew it by ensuring remaining income from the airlines stayed with them and not passed on within their client deals. Airlines were forced to reduce prices to compensate customers.
3) GDS/Airline negotiations became far more aggressive. When you look at what airlines have to pay them, even for passenger cancellations and suchlike it is hardly surprising. Some airlines started charging TMCs for certain bookings to gain compensation. TMCs passed these costs on to the corporations but are still incentivised by GDSs which make airlines pretty mad as it is their fees that are funding them.
4) Various airlines changed some of the remaining IATA regulations regarding payment to shorten credit terms with TMCs and escalate penalties for perceived non compliance. A very much hidden cost that again the customer ended up collecting.I find it quite alarming how much cost comes into the chain via IATA and its interpretation of their own rules.
5) Credit/charge card usage has increased because of 4) as individual countries cut agency credit by 50% or more meaning TMC passed on the casflow deterioration to customers resulting in this migration to plastic . Ironic really as this area is very much a top target for airline cost reduction. Cards, like GDS charge wide and varying merchant fees to suppliers and these will be attacked robustly and very soon.
Where will this evolution take us? Airlines will continue fighting distribution costs. Instead of taking them all and then charging travellers through price they will try to dump them and leave the customer to pay separately. Meanwhile they will compensate by offering lower cost alternatives to those prepared to book direct. The battlefronts will be GDS fees, credit card merchant fees, cost of credit, TMC incentives and service deliverables. The customer will get what they say they want which is transparency and a unit price for everything. Currently I do not believe actual cost will go down. It will simply be realigned and will probably go up. If prices go down any further then there will be less suppliers, less choice and devolution not evolution.
It does not make sense that suppliers should pay for everything and then charge a correspondingly high price. Equally it does not make sense that the traveller gets all the bills and tries to negotiate their way out of them. I expect it is the way of the world and will provide yet newer business opportunities but regrettably the same old regurgitating costs.
Wednesday, 19 January 2011
My life in bars – Part 1
I sat in the bath last Saturday night trying to soak away the pain and bruising caused by my latest stroke of bad luck in a bar when it suddenly dawned on me how many times I have ad unfortunate experiences in such places. Obviously none of these ‘experiences’ had been my fault. I just seem to have the knack of being in the wrong bar at the wrong time and getting into bizarre circumstances.
Take last weekend for example. I was in a hotel bar with a few friends enjoying some old memories when one of them reminded me of my favourite Superman joke from years gone by. Now the whole point of this joke is that you have to tell it whilst doing impressions of the super-hero and, after alarmingly little encouragement I said I would tell it again for old time’s sake.
The first thing I had to do was dress the part so off I went to the toilet and came back wearing my underpants outside my trousers, a borrowed tablecloth stuffed out my collar to make a cape and the letter S drawn on my shirt with lipstick. By this time I had drawn the attention of the rest of the residents and particularly the bar manager who looked on with growing concern. To the encouragement of my friends I literally threw myself into the role.
The joke explains how Superman and Batman were in a similar bar having a drink after a hard day’s crime fighting. Superman was telling how he had saved a child from a giant shark, the world from annihilation and finally had an incredible experience with Cat Woman. I told the joke in words and movement and somehow managed to stay upright despite leaping and lunging all over the place. Did I tell you it helps to be drunk to enjoy this joke?
Anyway, the end of the ‘joke’ is when he was on the way to the bar and saw Cat Woman. She was lying naked on the roof of a building making mewling noises and swaying her hips in a provocative fashion. Poor old Superman could not resist so he flew down and engaged her in frantic and passionate love-making. All was going well and I think I was simulating it all quite adequately until it came to the punch line.
Batman turns to Superman and says “Gee Superman, I bet she was surprised”. To which Superman replies “Not half as surprised as the Invisible Man”
At that point I jumped in the air…and went through the coffee table I had been standing on. This brought this sorry tale to a sudden and bloody end. Actually it took a while to separate my leg from the table but straight after that I was escorted to my room. At least they laughed at my joke I thought, but, if truth were known it was me crashing through the table that people thought both funny and just!
Take last weekend for example. I was in a hotel bar with a few friends enjoying some old memories when one of them reminded me of my favourite Superman joke from years gone by. Now the whole point of this joke is that you have to tell it whilst doing impressions of the super-hero and, after alarmingly little encouragement I said I would tell it again for old time’s sake.
The first thing I had to do was dress the part so off I went to the toilet and came back wearing my underpants outside my trousers, a borrowed tablecloth stuffed out my collar to make a cape and the letter S drawn on my shirt with lipstick. By this time I had drawn the attention of the rest of the residents and particularly the bar manager who looked on with growing concern. To the encouragement of my friends I literally threw myself into the role.
The joke explains how Superman and Batman were in a similar bar having a drink after a hard day’s crime fighting. Superman was telling how he had saved a child from a giant shark, the world from annihilation and finally had an incredible experience with Cat Woman. I told the joke in words and movement and somehow managed to stay upright despite leaping and lunging all over the place. Did I tell you it helps to be drunk to enjoy this joke?
Anyway, the end of the ‘joke’ is when he was on the way to the bar and saw Cat Woman. She was lying naked on the roof of a building making mewling noises and swaying her hips in a provocative fashion. Poor old Superman could not resist so he flew down and engaged her in frantic and passionate love-making. All was going well and I think I was simulating it all quite adequately until it came to the punch line.
Batman turns to Superman and says “Gee Superman, I bet she was surprised”. To which Superman replies “Not half as surprised as the Invisible Man”
At that point I jumped in the air…and went through the coffee table I had been standing on. This brought this sorry tale to a sudden and bloody end. Actually it took a while to separate my leg from the table but straight after that I was escorted to my room. At least they laughed at my joke I thought, but, if truth were known it was me crashing through the table that people thought both funny and just!
A Blogger in Paradise - Maldives
I went on holiday in The Maldives last month and such a great time that I thought I would report on how to get there from the UK. and what to expect. I have now stayed at Cocoa Island, Mirihi, Conrad Rangali and Lily Beach so if anyone wants the lowdown on any of these places let me know.
I usually try to inject some humour in these blogs and I did have a few moments of amusement while out there. The last island I stayed at was Lily Beach which is an all inclusive resort and hence it could be a bit lively in the evening. I was minding my own business in the bar one night when this very large gentleman from Frankfurt sat down next to me. Actually he plunged more than sat and the contents of his scotch glass flew over his shoulder into a plant pot.
Not to be outdone he lurched off the seat, went to the bar for another, staggered back, aimed his bottom at the seat and plunged down again. Another double scotch shot over his shoulder into the pot. I think he lost about four out of five of his whiskies until, on his final plunge he too shot back into the plant pot. The next morning on the way to breakfast I stopped at the plant pot. The palm growing out of it had snapped and the leaves had turned yellow.
The only other excitement of note was when a Korean couple ran their pedalo aground on the island reef. They did not seem too worried as they started taking pictures of each other being rescued. And of course there was a lady from London who threatened to report me because I killed an ant that was walking up the side of my Tiger beer!
Anyway, back to my report:
So what is your idea of a holiday paradise and more importantly, does it exist outside your imagination in this modern well travelled world? You may want somewhere sunny and warm. A desert island, but not too deserted and not so primitive you cannot enjoy your creature comforts. You will want to be safe, relaxed and be lazy or active as and when the mood takes you. To enjoy nature at its most spectacular but still sleep in clean white sheets listening to the water lapping around and wondering if should have eaten so much lobster at the moonlit barbecue.
Well this year I lived my dream. I found the Maldives. Obviously I had heard of them before but I never once thought they could possibly be as good as the hype. 40 years in travel had taught me that you can never totally believe the brochures, websites and superlatives from other people each with their individual ideas on perfection. Besides, I thought, the Maldives were hard to get to and so very far from civilisation. So let me tell you how an old travel hand got it wrong.
Firstly I discovered that British Airways had started flying non stop to Male, the capital. You can also go direct on a Thomson charter or using a through flight via Colombo on Srilankan. If you are willing to change aircraft there are excellent connections via Dubai or Doha on Emirates or Qatar Airways respectively. These connections are very slick and usually quite painless. Some people even split their holidays with a week in Dubai and then again in the Maldives. I chose direct with BA as I got a good price and a non stop flight is more likely to get you there quickly and with your baggage.
The next obstacle in my mind was getting to my chosen island. You see the international flight lands at an airport island next to the capital Male and you still need to go either by air or speedboat to your resort. Trouble and stress I immediately thought. Wrong. They operate like a well oiled machine. As soon as you pass through customs the resort team is waiting. You either walk across the road to a waiting speed launch or onto an air-conditioned bus to whisk you and your bags to the seaplane terminal 5 minutes away.
This final short transit transforms from a chore to a plus point of the holiday. Your sea plane is usually waiting there for you. If there is any delay then most of the resorts have lounges that look over the lagoon where you can watch the coming and going. The planes are loads of fun. Yes, they are a bit noisy and yes they can sometimes get a bit hot but this is more than made up for by the thrill of take off and landing and the breathtaking views of the coral atolls you fly over. A magical experience and one to be anticipated not dreaded.
One thing to remember though is that the weight allowance on these planes is 20 kilos regardless of what you may have been allowed on your incoming international flight. Excess baggage charges are quite reasonable but bear in mind there are aircraft weight constraints which might mean they could hold a bag back for the next flight. It is always a good thing to have one bag which you keep close containing immediate essentials just in case.
The longest flight is usually around 40 minutes but more often under the half hour. You land on the sheltered side of the resort and the seaplane taxis up to a floating pontoon. From there you board the resort launch for the very short hop to the reception pier. Usually by this time you would have been given iced towels and bottled water and an enthusiastic greeting from the local staff. And yes, they really do seem to mean it as these are small islands and I think they genuinely look forward to seeing new faces.
There are numerous resorts with all types of accommodation and meal plans. You can stay in beach villas or my favourite which are built over water on stilts. Some are basic but clean and others have their own spa, pool and decking. The food and drink has to be imported (as do the chefs) and is of the highest quality and range. Most ingredients are from Australia except for the fish which is mainly locally caught using traditional methods.
So there you are, sitting on your decking and gazing out at your very own picture postcard Desert Island and aquarium but with everything you need available if you want it. Everywhere I went my mobile, blackberry and computer worked if I wanted them. I once phoned into a company conference call when sitting on a lounger under a sun umbrella with a cold beer and a staff member next to me cleaning my sun glasses! By now you have ditched your shoes and probably not wear any again until you leave.
The Maldives is a wonderful place and it did not disappoint me once. It is safe, welcoming scenically stunning and full of warm spirited friendly people. My only regret was going home. If you ever want a once in a lifetime trip go to the Maldives…except I suspect you will try to go again and again afterwards. Once you have swum with whale sharks and manta rays you become hooked!
I usually try to inject some humour in these blogs and I did have a few moments of amusement while out there. The last island I stayed at was Lily Beach which is an all inclusive resort and hence it could be a bit lively in the evening. I was minding my own business in the bar one night when this very large gentleman from Frankfurt sat down next to me. Actually he plunged more than sat and the contents of his scotch glass flew over his shoulder into a plant pot.
Not to be outdone he lurched off the seat, went to the bar for another, staggered back, aimed his bottom at the seat and plunged down again. Another double scotch shot over his shoulder into the pot. I think he lost about four out of five of his whiskies until, on his final plunge he too shot back into the plant pot. The next morning on the way to breakfast I stopped at the plant pot. The palm growing out of it had snapped and the leaves had turned yellow.
The only other excitement of note was when a Korean couple ran their pedalo aground on the island reef. They did not seem too worried as they started taking pictures of each other being rescued. And of course there was a lady from London who threatened to report me because I killed an ant that was walking up the side of my Tiger beer!
Anyway, back to my report:
So what is your idea of a holiday paradise and more importantly, does it exist outside your imagination in this modern well travelled world? You may want somewhere sunny and warm. A desert island, but not too deserted and not so primitive you cannot enjoy your creature comforts. You will want to be safe, relaxed and be lazy or active as and when the mood takes you. To enjoy nature at its most spectacular but still sleep in clean white sheets listening to the water lapping around and wondering if should have eaten so much lobster at the moonlit barbecue.
Well this year I lived my dream. I found the Maldives. Obviously I had heard of them before but I never once thought they could possibly be as good as the hype. 40 years in travel had taught me that you can never totally believe the brochures, websites and superlatives from other people each with their individual ideas on perfection. Besides, I thought, the Maldives were hard to get to and so very far from civilisation. So let me tell you how an old travel hand got it wrong.
Firstly I discovered that British Airways had started flying non stop to Male, the capital. You can also go direct on a Thomson charter or using a through flight via Colombo on Srilankan. If you are willing to change aircraft there are excellent connections via Dubai or Doha on Emirates or Qatar Airways respectively. These connections are very slick and usually quite painless. Some people even split their holidays with a week in Dubai and then again in the Maldives. I chose direct with BA as I got a good price and a non stop flight is more likely to get you there quickly and with your baggage.
The next obstacle in my mind was getting to my chosen island. You see the international flight lands at an airport island next to the capital Male and you still need to go either by air or speedboat to your resort. Trouble and stress I immediately thought. Wrong. They operate like a well oiled machine. As soon as you pass through customs the resort team is waiting. You either walk across the road to a waiting speed launch or onto an air-conditioned bus to whisk you and your bags to the seaplane terminal 5 minutes away.
This final short transit transforms from a chore to a plus point of the holiday. Your sea plane is usually waiting there for you. If there is any delay then most of the resorts have lounges that look over the lagoon where you can watch the coming and going. The planes are loads of fun. Yes, they are a bit noisy and yes they can sometimes get a bit hot but this is more than made up for by the thrill of take off and landing and the breathtaking views of the coral atolls you fly over. A magical experience and one to be anticipated not dreaded.
One thing to remember though is that the weight allowance on these planes is 20 kilos regardless of what you may have been allowed on your incoming international flight. Excess baggage charges are quite reasonable but bear in mind there are aircraft weight constraints which might mean they could hold a bag back for the next flight. It is always a good thing to have one bag which you keep close containing immediate essentials just in case.
The longest flight is usually around 40 minutes but more often under the half hour. You land on the sheltered side of the resort and the seaplane taxis up to a floating pontoon. From there you board the resort launch for the very short hop to the reception pier. Usually by this time you would have been given iced towels and bottled water and an enthusiastic greeting from the local staff. And yes, they really do seem to mean it as these are small islands and I think they genuinely look forward to seeing new faces.
There are numerous resorts with all types of accommodation and meal plans. You can stay in beach villas or my favourite which are built over water on stilts. Some are basic but clean and others have their own spa, pool and decking. The food and drink has to be imported (as do the chefs) and is of the highest quality and range. Most ingredients are from Australia except for the fish which is mainly locally caught using traditional methods.
So there you are, sitting on your decking and gazing out at your very own picture postcard Desert Island and aquarium but with everything you need available if you want it. Everywhere I went my mobile, blackberry and computer worked if I wanted them. I once phoned into a company conference call when sitting on a lounger under a sun umbrella with a cold beer and a staff member next to me cleaning my sun glasses! By now you have ditched your shoes and probably not wear any again until you leave.
The Maldives is a wonderful place and it did not disappoint me once. It is safe, welcoming scenically stunning and full of warm spirited friendly people. My only regret was going home. If you ever want a once in a lifetime trip go to the Maldives…except I suspect you will try to go again and again afterwards. Once you have swum with whale sharks and manta rays you become hooked!
Sunday, 9 January 2011
Children behaving badly – Unmins
What is an Unmin? It is short for Unaccompanied Minor which is an airline term for children travelling on aircraft alone. In the vast majority of cases they are schoolchildren travelling too or from their parents’ overseas posting during holiday times. Frankly they can be an absolute pain in the butt. I should know. I was one.
These kids are handed over at the airport to an airline employee (often known as an ‘Auntie’) whose job it is to escort them to their final destination. Each child is supposed to wear a neck ribbon with a plastic pouch containing their documentation and identifying them as ‘young travellers’. If I recall my documents went in my back pocket and the pouch got flushed down the first toilet. Perhaps this is why so many airport toilets get blocked?
Actually you might be amazed by what gets flushed down airport toilets especially the one just before customs. I have seen everything from drugs to diapers and once a cardboard box of dried Nigerian fish. The most interesting thing I saw was a man taking one small suitcase and putting it into a second larger one. He then went to the baggage handling desk and reported the small case as missing whilst stating it was full of valuable designer clothes! Anyway, I digress, back to the Unmins.
As an airline manager based in Africa it was partly my job to manage these thrice yearly migrations, especially as I knew most of the parents in the region. I felt responsible for getting little Katie or Josh back to the bosom of their family although frankly I think the last person they needed or wanted to see was me. I think they felt I cramped their style somewhat especially as, with my childhood experiences, I knew all their tricks.
The girls were probably the worst. They would arrive at the airport all demure in their school uniforms and behave like butter would not melt in their mouths. Until they got on the plane that is. Immediately the seat belt light went off they would dash to the toilet where they created a long slow moving queue. Woe betides any aging gentleman traveller with a weak bladder because relief would be a long time coming.
What came out was not what went in. The plain little uniformed schoolgirl had transformed into an excellently made up woman in tight fashionable clothes that walked up the cabin aisle like it was a catwalk and then ordered a large gin. It all became very confusing and I once outraged a young woman from Barclays Bank by insisting she took her tarty clothes off and got back into her uniform!
The worst time was night flights. They used to party hard especially when the smuggled alcohol came out. I once caught two kids ‘at it’ under a blanket until I poured the contents of an ice bucket over them before things went too far. Another budding entrepreneur was charging boys $1 a feel. One irate passenger complained to me that the two children in front of him were drunk and rowdy. He said he was someone senior in giant oil company and there would be consequences. I did not have the heart to tell him the two kids were sons of his Chief Executive.
These Unmins did have their uses as some savvy passengers began to discover. They travelled the same routes all the time and knew the aircraft and any transit stops backwards. If you followed them you found all the short cuts, best bars and cheapest duty free sales and could save time and money. It was uncanny the way they knew which immigration queue was going to move fastest.
It was a relief to get to our destination. Women used to rush to the toilet and come out girls again. Strong mints were chewed to hide the smell of alcohol on breath and those ghastly pouches were placed over necks. They would walk off the plane like angels and choirboys. Occasionally we would have to grab one who tried to wander off and I once had to stop a lad skateboarding down the taxiway at Lusaka after a Boeing 737.
Everyone used to breathe a sigh of relief. Until it was time for them to go back to school that is!
These kids are handed over at the airport to an airline employee (often known as an ‘Auntie’) whose job it is to escort them to their final destination. Each child is supposed to wear a neck ribbon with a plastic pouch containing their documentation and identifying them as ‘young travellers’. If I recall my documents went in my back pocket and the pouch got flushed down the first toilet. Perhaps this is why so many airport toilets get blocked?
Actually you might be amazed by what gets flushed down airport toilets especially the one just before customs. I have seen everything from drugs to diapers and once a cardboard box of dried Nigerian fish. The most interesting thing I saw was a man taking one small suitcase and putting it into a second larger one. He then went to the baggage handling desk and reported the small case as missing whilst stating it was full of valuable designer clothes! Anyway, I digress, back to the Unmins.
As an airline manager based in Africa it was partly my job to manage these thrice yearly migrations, especially as I knew most of the parents in the region. I felt responsible for getting little Katie or Josh back to the bosom of their family although frankly I think the last person they needed or wanted to see was me. I think they felt I cramped their style somewhat especially as, with my childhood experiences, I knew all their tricks.
The girls were probably the worst. They would arrive at the airport all demure in their school uniforms and behave like butter would not melt in their mouths. Until they got on the plane that is. Immediately the seat belt light went off they would dash to the toilet where they created a long slow moving queue. Woe betides any aging gentleman traveller with a weak bladder because relief would be a long time coming.
What came out was not what went in. The plain little uniformed schoolgirl had transformed into an excellently made up woman in tight fashionable clothes that walked up the cabin aisle like it was a catwalk and then ordered a large gin. It all became very confusing and I once outraged a young woman from Barclays Bank by insisting she took her tarty clothes off and got back into her uniform!
The worst time was night flights. They used to party hard especially when the smuggled alcohol came out. I once caught two kids ‘at it’ under a blanket until I poured the contents of an ice bucket over them before things went too far. Another budding entrepreneur was charging boys $1 a feel. One irate passenger complained to me that the two children in front of him were drunk and rowdy. He said he was someone senior in giant oil company and there would be consequences. I did not have the heart to tell him the two kids were sons of his Chief Executive.
These Unmins did have their uses as some savvy passengers began to discover. They travelled the same routes all the time and knew the aircraft and any transit stops backwards. If you followed them you found all the short cuts, best bars and cheapest duty free sales and could save time and money. It was uncanny the way they knew which immigration queue was going to move fastest.
It was a relief to get to our destination. Women used to rush to the toilet and come out girls again. Strong mints were chewed to hide the smell of alcohol on breath and those ghastly pouches were placed over necks. They would walk off the plane like angels and choirboys. Occasionally we would have to grab one who tried to wander off and I once had to stop a lad skateboarding down the taxiway at Lusaka after a Boeing 737.
Everyone used to breathe a sigh of relief. Until it was time for them to go back to school that is!
Saturday, 8 January 2011
What does a hotel brand really mean?
Does that seem a weird question? Probably so but what I am trying to say is, does the logo over the door actually mean, or importantly guarantee anything? Is it saying ‘This is a Hilton, Holiday Inn, Four Seasons or whatever and this means you should expect and get what that brand markets?
This question is borne from spending many years trying to truly understand and make sense of the hospitality industry. It is a vital sector yet commentators and industry bodies barely notice it when compared to say airlines. What does make it so very different? And why should anyone need to care?
I think the difference is ownership hence my original question. You see there are quite a few different ownership scenarios within a single brand. Because a hotel displays say Hilton over the door does not mean it is owned by Hilton. Very often it is owned by someone completely different but Hilton has the management or marketing contract to run it and is employed by the owner to deliver an agreed profit. They are an employee of the owner and have to act accordingly.
So what I am saying is that if you negotiate with a hotel chain you may not be speaking to someone who has absolute control over policy, inventory or pricing with all their properties. Hence you can find yourself in a position where various properties opt out of some commercial agreements which are good for the whole family but not for them. It is a bit like a global TMC who has to sacrifice profit in one location to deliver a good deal in other countries. Most TMCs have had to come to terms with this but I do not think hotels have.
The issue becomes even more convoluted when you are dealing with hotel consortiums. These are mainly pure marketing organisations where hotels (of a certain comparable quality) link their properties to an umbrella brand in order to take on the big boys and achieve global coverage. Again, this does not mean that such consortiums can tell these hotels what to do as far as pricing and inventory is concerned.
Probably still the most influential person in any hotel is its General Manage who can, and do, instruct their reservations office to close out heavily discounted negotiated corporate rates if they think they can sell for more. Even worse for the bigger corporations is when their travellers tell them that the hotel ‘price at the door’ is cheaper than that negotiated by their procurement department. Sounds familiar?
Another side effect of confused and disparate ownership is the woeful lack of management information you get fro the hotel industry. The only really useful thing IATA does for airlines is it provides a standardised language and reporting base that is essential for meaningful information. Hotels do not have this type of global format hence they all do things in different ways. You really would be shocked by how little they know about their customers and what they spend.
So what am I trying to say? I am advising all buyers to find out exactly what control/ownership of key properties a chain or consortium has. Maybe you should insist on key contract clauses like last room availability and lowest price on the day. Perhaps require countersignature by the GMs of the main hotels confirming they understand and support the contract. Finally, why not think of ways to make your oh so wise travellers become willing watchdogs by actively encouraging them to test the system. You know how they love it so!
By the way, I have mentioned a few hotel brands in this post. This has been purely for general illustrative purposes only and does not imply that I was refering directly to them.
This question is borne from spending many years trying to truly understand and make sense of the hospitality industry. It is a vital sector yet commentators and industry bodies barely notice it when compared to say airlines. What does make it so very different? And why should anyone need to care?
I think the difference is ownership hence my original question. You see there are quite a few different ownership scenarios within a single brand. Because a hotel displays say Hilton over the door does not mean it is owned by Hilton. Very often it is owned by someone completely different but Hilton has the management or marketing contract to run it and is employed by the owner to deliver an agreed profit. They are an employee of the owner and have to act accordingly.
So what I am saying is that if you negotiate with a hotel chain you may not be speaking to someone who has absolute control over policy, inventory or pricing with all their properties. Hence you can find yourself in a position where various properties opt out of some commercial agreements which are good for the whole family but not for them. It is a bit like a global TMC who has to sacrifice profit in one location to deliver a good deal in other countries. Most TMCs have had to come to terms with this but I do not think hotels have.
The issue becomes even more convoluted when you are dealing with hotel consortiums. These are mainly pure marketing organisations where hotels (of a certain comparable quality) link their properties to an umbrella brand in order to take on the big boys and achieve global coverage. Again, this does not mean that such consortiums can tell these hotels what to do as far as pricing and inventory is concerned.
Probably still the most influential person in any hotel is its General Manage who can, and do, instruct their reservations office to close out heavily discounted negotiated corporate rates if they think they can sell for more. Even worse for the bigger corporations is when their travellers tell them that the hotel ‘price at the door’ is cheaper than that negotiated by their procurement department. Sounds familiar?
Another side effect of confused and disparate ownership is the woeful lack of management information you get fro the hotel industry. The only really useful thing IATA does for airlines is it provides a standardised language and reporting base that is essential for meaningful information. Hotels do not have this type of global format hence they all do things in different ways. You really would be shocked by how little they know about their customers and what they spend.
So what am I trying to say? I am advising all buyers to find out exactly what control/ownership of key properties a chain or consortium has. Maybe you should insist on key contract clauses like last room availability and lowest price on the day. Perhaps require countersignature by the GMs of the main hotels confirming they understand and support the contract. Finally, why not think of ways to make your oh so wise travellers become willing watchdogs by actively encouraging them to test the system. You know how they love it so!
By the way, I have mentioned a few hotel brands in this post. This has been purely for general illustrative purposes only and does not imply that I was refering directly to them.
Tuesday, 4 January 2011
Passengers Behaving badly – Concorde
I really have been a very lucky man in that I have flown Concorde at least a dozen times. During those flights I encountered many strange and downright surreal moments but none that had the same impact as one flight from Barbados to London.
We were coming towards the end of a two week holiday when the phone call came. It was BA and they asked us if we would possibly mind flying back two days early as one of their jumbos had technical problems creating an enormous backlog of passengers needing to get home. They had decided to offer ‘selected’ travellers the chance of returning earlier using spare seats on their daily Concorde service.
My wife Judith was not amused by the proposed shortening of our holiday but Anna (our daughter) rightly realised that this might be the one chance in her lifetime to fly on this beautiful aircraft so we agreed. Our decision was also helped by the fact we were on agent discount tickets which meant it was practically certain we would be the first to be chucked off our booked flight anyway!
Having decided to make the most of it we arrived at Bridgetown airport in plenty of time to enjoy the lounge and board the flight. At the risk of sounding snobbish we could not believe the state of the people in the departure lounge who were presumably waiting for a charter flight. They were noisy and mainly drunk with numerous wild kids that were left to run amok throughout the building. It was one of those groups you sometimes see and thank your lucky stars they were someone else’s problem. We retreated to the first class lounge and hid until our flight was called.
Finally they announced boarding and off we went to the aircraft. The place was still bedlam as the rampaging hordes had been tanking up on duty free spirits but we got through most of them by the time we found our gate. We stopped and waited but felt more and more uneasy as the near rioting holiday makers started lining up behind us. We then realised that these folk had received the same phone call from BA and were coming with us. It seems the only folk prepared to give up a day or two of their holidays were those on the cheapest packages and agency/airline staff.
The looks on the cabin crews faces was a picture. There was Concorde, the ultra first class flagship of the BA fleet. The aircraft of choice of film stars, diplomats, and captains of industry. And it was filling up with drunks, delinquents and rapacious souvenir hunters that were totally committed to wringing every last benefit of their once in a lifetime trip.
We roared off into the sky and the fun started almost immediately. Practically every stewardess call button was pressed simultaneously and all you could hear above the engines was the staccato calls of drinks orders and the yells from children as they ran up and down the aisle. One of the stewardesses started crying saying she had been groped and the bonafide Concorde passengers squeezed themselves as far forward as possible abandoning two thirds of the aircraft to the mob. There they were being taunted by a bear of a man with a huge stomach and a torso decorated by tattoos and a string vest with no armpits. He was waving a bottle of Dom Perignon champagne by the neck whilst demanding they sing with him.
The next parts of the plane to be hit were the toilets. Some small child started a trend by graffitiing the walls with rude drawings and badly spelt words . He had a huge imagination. They and the rest of the cabin were stripped of anything that was not firmly attached including some seat upholstery and life jackets. It was an absolute nightmare that was only slightly relieved when the captain threatened to have them all arrested on arrival. It was something I have never witnessed before or since but I found out afterwards that they were not a random crowd but in fact a large wedding group returning home. No wonder they all looked like each other and gelled so well! I understand the aircraft had to be taken out of service after for a few days.
My other trips on Concorde were far less eventful. The only thing I particularly noticed was the slightly inquisitive and smug way passengers used to look at each other. Almost like a very exclusive mainly new money club. I did have one more funny moment when I was waiting outside one of the small toilets. They really were tiny and I could hear someone manoeuvring clumsily inside. Finally the door opened and a man came out. I was halfway in when I noticed there was a woman still in there arranging her clothes. I had heard of the ‘mile high’ club before but not the ‘stratosphere’ version.
It was a wonderful aircraft and I wish it was still flying
We were coming towards the end of a two week holiday when the phone call came. It was BA and they asked us if we would possibly mind flying back two days early as one of their jumbos had technical problems creating an enormous backlog of passengers needing to get home. They had decided to offer ‘selected’ travellers the chance of returning earlier using spare seats on their daily Concorde service.
My wife Judith was not amused by the proposed shortening of our holiday but Anna (our daughter) rightly realised that this might be the one chance in her lifetime to fly on this beautiful aircraft so we agreed. Our decision was also helped by the fact we were on agent discount tickets which meant it was practically certain we would be the first to be chucked off our booked flight anyway!
Having decided to make the most of it we arrived at Bridgetown airport in plenty of time to enjoy the lounge and board the flight. At the risk of sounding snobbish we could not believe the state of the people in the departure lounge who were presumably waiting for a charter flight. They were noisy and mainly drunk with numerous wild kids that were left to run amok throughout the building. It was one of those groups you sometimes see and thank your lucky stars they were someone else’s problem. We retreated to the first class lounge and hid until our flight was called.
Finally they announced boarding and off we went to the aircraft. The place was still bedlam as the rampaging hordes had been tanking up on duty free spirits but we got through most of them by the time we found our gate. We stopped and waited but felt more and more uneasy as the near rioting holiday makers started lining up behind us. We then realised that these folk had received the same phone call from BA and were coming with us. It seems the only folk prepared to give up a day or two of their holidays were those on the cheapest packages and agency/airline staff.
The looks on the cabin crews faces was a picture. There was Concorde, the ultra first class flagship of the BA fleet. The aircraft of choice of film stars, diplomats, and captains of industry. And it was filling up with drunks, delinquents and rapacious souvenir hunters that were totally committed to wringing every last benefit of their once in a lifetime trip.
We roared off into the sky and the fun started almost immediately. Practically every stewardess call button was pressed simultaneously and all you could hear above the engines was the staccato calls of drinks orders and the yells from children as they ran up and down the aisle. One of the stewardesses started crying saying she had been groped and the bonafide Concorde passengers squeezed themselves as far forward as possible abandoning two thirds of the aircraft to the mob. There they were being taunted by a bear of a man with a huge stomach and a torso decorated by tattoos and a string vest with no armpits. He was waving a bottle of Dom Perignon champagne by the neck whilst demanding they sing with him.
The next parts of the plane to be hit were the toilets. Some small child started a trend by graffitiing the walls with rude drawings and badly spelt words . He had a huge imagination. They and the rest of the cabin were stripped of anything that was not firmly attached including some seat upholstery and life jackets. It was an absolute nightmare that was only slightly relieved when the captain threatened to have them all arrested on arrival. It was something I have never witnessed before or since but I found out afterwards that they were not a random crowd but in fact a large wedding group returning home. No wonder they all looked like each other and gelled so well! I understand the aircraft had to be taken out of service after for a few days.
My other trips on Concorde were far less eventful. The only thing I particularly noticed was the slightly inquisitive and smug way passengers used to look at each other. Almost like a very exclusive mainly new money club. I did have one more funny moment when I was waiting outside one of the small toilets. They really were tiny and I could hear someone manoeuvring clumsily inside. Finally the door opened and a man came out. I was halfway in when I noticed there was a woman still in there arranging her clothes. I had heard of the ‘mile high’ club before but not the ‘stratosphere’ version.
It was a wonderful aircraft and I wish it was still flying
Monday, 3 January 2011
Direct Connect – The first significant skirmish in a long campaign.
Christmas is supposed to be a time of peace and goodwill to all men but it also heralds the onset of a new year and, in turn, leads to encouragement of change. This can be illustrated by American Airlines who gave TMCs and their clients an early Christmas present of new cost and selected online agencies (OTAs) in particular to feel their power. The OTAs have started to respond with Expedia pulling American from their inventory. Obviously a lot more complex than that but you got the drift?
Immediately both sides are claiming victory. AA say their volume is growing and Expedia say they are not losing business. Meanwhile the travel world looks on at this test case. People really want to see if an OTA (or any TMC for that matter) can successfully move business or if airlines really can call all the shots. Whoever is perceived as the winner may set a radical trend in the industry and possibly change it considerably. Certainly if AA succeeds then many will follow after them
The trouble is that in reality this test of strength will prove very little in the business travel arena. Reason being that companies like Expedia hold only a pin prick of the worlds corporate travel market and the little they have is mainly towards the lower end in company size terms. In my personal opinion what American has done is picked a soft target to start with. The giant TMCs with their giant corporate accounts would be a different matter altogether. A smaller entity with a different client-base and business model is much easier quarry but one which they can get much tactical mileage from.
For instance how can anyone state at this very early stage that they are wining this argument? American says they grew in December. Big deal. This cannot be zeroed down to success in this issue. Growth compared to what? Has not economic recovery got more to do with it? How much of American’s corporate market share is Expedia anyway? Yet they sagely point to some meaningless figures.
I do not think there will be any winner in this but I can say with a fair degree of certainty that the argument is a precursor to major industry change. Is that so bad? Probably not but with all change there is pain attached. Pain moves around the supply chain as quickly as cost and usually goes full circle. The airline will add cost and work to the TMC, The TMC will go to their clients, increase their charges and tell them why. The big corporate will go to the airlines and mitigate their increased cost by demanding compensation through their deal. The model has changed. But has it really and to whose benefit?
Like everyone else I will watch with interest and try to read between the lines to see where this will take us. As for the forthcoming figures and rhetoric? I will take them all with a pinch of salt and suggest you do the same.
Immediately both sides are claiming victory. AA say their volume is growing and Expedia say they are not losing business. Meanwhile the travel world looks on at this test case. People really want to see if an OTA (or any TMC for that matter) can successfully move business or if airlines really can call all the shots. Whoever is perceived as the winner may set a radical trend in the industry and possibly change it considerably. Certainly if AA succeeds then many will follow after them
The trouble is that in reality this test of strength will prove very little in the business travel arena. Reason being that companies like Expedia hold only a pin prick of the worlds corporate travel market and the little they have is mainly towards the lower end in company size terms. In my personal opinion what American has done is picked a soft target to start with. The giant TMCs with their giant corporate accounts would be a different matter altogether. A smaller entity with a different client-base and business model is much easier quarry but one which they can get much tactical mileage from.
For instance how can anyone state at this very early stage that they are wining this argument? American says they grew in December. Big deal. This cannot be zeroed down to success in this issue. Growth compared to what? Has not economic recovery got more to do with it? How much of American’s corporate market share is Expedia anyway? Yet they sagely point to some meaningless figures.
I do not think there will be any winner in this but I can say with a fair degree of certainty that the argument is a precursor to major industry change. Is that so bad? Probably not but with all change there is pain attached. Pain moves around the supply chain as quickly as cost and usually goes full circle. The airline will add cost and work to the TMC, The TMC will go to their clients, increase their charges and tell them why. The big corporate will go to the airlines and mitigate their increased cost by demanding compensation through their deal. The model has changed. But has it really and to whose benefit?
Like everyone else I will watch with interest and try to read between the lines to see where this will take us. As for the forthcoming figures and rhetoric? I will take them all with a pinch of salt and suggest you do the same.
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