Power Struggle Drives GTA Sale to Hotelbeds. And Then There Was One.
The tour and travel industry’s largest bedbank, Hotelbeds, has announced that it is acquiring GTA, and major consolidation within the bedbank segment of the travel and tourism industry has ended for a while. The Hotelbeds announcement last week announced that it is acquiring the second-largest (GTA) came just two months after it announced that it is also buying the third largest (Tourico Holidays).
A source inside Hotelbeds told the Inbound Report that while GTA, Hotelbeds and Tourico are merging, the Tourico Holidays brand would remain intact at least for the foreseeable future as the new-and-larger company seeks to take advantage of the pre-bought room blocks Tourico has contracted for in many major cities, as well as the latter’s technology prowess.
The rationale for the merger was a power struggle on two fronts: first, bedbanks and hotels on the buying side, where leverage has been undermined due to the consolidation last September of Starwood and Marriott chains; and, second, on the selling front with the two online travel agencies, Expedia and Booking.com, leading the front.
A Timeline: Last week’s transaction has a history that had its genesis in the inability of the previous owners of GTA (it is more than 40 years old) to fold it into their operations. Travelport, headquartered in the UK, sold GTA to Zurich-based Kuoni in 2011 but Kuoni, which was well behind the curve in adapting to new technology and still reeling from the wake of the Great Recession of 2008-09, could never configure it into its system, which included national Kuoni brands in Europe and India.
As Kuoni began selling off components for needed cash and to cover losses, TUI, Europe’s largest travel company, began conducting a strategic review of its company, in anticipation of its merger with parent company TUI AG, which came about in December 2014. Within a year, TUI announced that it was prepared to sell Hotelbeds, which is headquartered in Palma de Mallorca, Spain. Following is brief timetable of the key actions that led to last week’s acquisition.
What it Could Mean for the Industry: The big question to be answered going forward is: What will the impact of bed bank consolidation on the wholesale travel industry? For starters, it means the following:
1. Hundreds of people all over the world will become redundant and probably lose their jobs.
2. Some of the more entrepreneurial ones will use their experience and contacts to open new receptive style companies in their markets.
3. In some ways, we are going back to the 1990s era, with a preponderance of traditional receptive tour operators selling mostly service and niche tour group programs.
4. Destinations will now have only one high volume bed bank instead of three competing for hotel
contracts in their markets.
5. No one knows what the management team will look like, although Joan Vilà, the current Hotelbeds CEO, remained in place after Cinven Capital Management and the Canada Pension Plan Investment Board acquired Hotelbeds from TUI.
6. Tourico has invested heavily in its Tourism Academy, which has schooled and placed some 300 graduates of the program in Tourico jobs. It has become founder Uri Argov‘s pet project. Will this be spun off into a separate project or will it folded into Hotelbeds?
One More Thing: The move coincides with the final stage of the implementation of a single, global TIU brand. Along with divesting itself of Hotelbeds last year, TUI recently (February 2017) sold Travelopia, its portfolio of 50 specialty operator brands—some of them quite well known—and is supposed to fold all remaining independent brands (such as Thomson and First Choice in the UK) into the single TUI brand. TUI has made it clear that it wants to be the global tour operator brand.
Is the U.S. Government Anti-Immigrant?
To Some, the Toll Seems to Suggest Such: Recent actions and discussion points raised both publicly and informally by officials and sources in the Trump Administration suggest that it is not merely a travel ban targeting six Muslim-majority nations that belies an anti-immigrant attitude. That is, the combination of a travel ban—first called for in a Jan. 27, 2017 executive order signed by President Donald Trump—along with other possible measures that are attracting a wave of critical comment and expressions of concern from both overseas as well as within the United States that such actions will have a seriously negative impact on the number of people from other countries visiting the USA.
Briefly, here is a quick summary of recent key actions and proposals on the subject by the Trump Administration, as well as two reactions to/consequence of these actions and proposals.
- After an executive order signed by President Trump on Jan. 27 was blocked by both a Federal District Judge and a Federal Appellate Court, President Trump signed another order that was scheduled to go into effect on March 16 that would have restricted travel by individuals from Libya, Sudan, Syria, Iran, Yemen and Somalia. (Iraq, included in the first executive order, was removed from the second.) Another Federal District Judge blocked the second executive order from going into effect; that blocking order is under appeal. Criticism of both of Trump’s executive orders has been, to put it mildly, widespread.
- On April 18, Trump signed another executive order affecting the H-1B visa program, which admits foreign workers to the U.S., used largely by the tech and IT industries. The order is meant to modify or replace the current H-1B visa lottery with a merit-based system that would restrict the visas to highly skilled workers. Currently, graduate students from India and China heavily populate the numbers of visa recipients chosen by the lottery. New qualifications would push income requirements up and keep out students from some nations studying in the United States. “The change in the H-1B visa mainly targets Indians, but it may also cause worries among Chinese students,” an employee from a U.S.-based migration agency told the Beijing-based Global Times.
- In comments given wide coverage in Western Europe, U.S. Homeland Security Secretary John Kelly has suggested that, because of concerns over safety, security and terrorism, it is probably time to review the Visa Waiver Program (VWP). Currently, 27 out of the 38 nations that are covered by the program are located in Europe and Scandinavia. Kelly said the program’s existing rules should be reviewed amid concerns over terrorism. Under the VWP, travelers from the 38 nations do not need a visa. Instead, they register their travel plans online through the Electronic System for Travel Authorization (ESTA) regularly. “We have to start looking very hard at that program,” said Kelly, who told The Independent that he feared Isis fighters were using VWP to enter U.S., warning America was the “Super Bowl in terms of terrorists.”
- Visitors to the United States would be asked to turn over their cellphones to U.S. Customs and Borders Protection (CBP) agents and to answer questions regarding passwords and political ideology should the U.S. Department of Homeland Security (DHS) implement new measures that have been floated by DHS as a part of the Trump Administration’s proposed “Extreme Vetting” of overseas travelers to the USA. Asked about the proposals, DHS Secretary Kelly estimated that one-half of one percent of travelers would have their phones inspected. Even so, one-half of one percent equals about 200,000 visitors to the USA, based on the number of travelers (40 million) expected to visit the USA in 2017.
- Of the many stories pointing to the impact of the above, one that stands out is the announcement by Emirates, the Middle East’s largest airline, that it has reduced its flights to the U.S. The Emirates hub at Dubai International Airport, the world’s third-busiest, has helped establish the location as a major connecting point for travelers who were affected by President Donald Trump’s executive orders temporarily halting entry to citizens of six countries. Emirates said the flight reductions will affect five of its 12 U.S. destinations, with the first cutbacks starting next month. A statement from the airline said, “The recent actions taken by the U.S. government relating to the issuance of entry visas, heightened security vetting, and restrictions on electronic devices in aircraft cabins, have had a direct impact on consumer interest and demand for air travel into the U.S.”
- The former chair of Brand USA for nearly two years and one of the most visible leaders of the U.S. travel and tourism industry, Arne Sorenson, president and CEO of Marriott International, told the Financial Times in a recent interview at the official opening of the Marriott Marquis hotel in Houston, Texas that tourists were the most likely group to avoid trips to the U.S. this summer. While some travelers were being deterred by the strong dollar, Sorenson said the Trump administration’s efforts to impose a travel ban on visitors from some countries had harmed the country’s reputation as a friendly destination. “The [new US administration’s] actions around travel are not helpful,” he told the Financial Times, adding, “There’s no doubt about that. There’s no way to anticipate that they will be good news.”
USA to Ban Laptops on Flights from UK?
Midst a flurry of recent news reports from various sources, it appears that the Trump Administration is considering prohibiting passengers flying to the United States from UK airports from taking laptops with them into the aircraft cabins. The proposed ban would be similar to one already imposed on travelers from certain Middle Eastern countries. (Passengers must stow their devices in checked-in baggage on flights from the affected airports in Egypt, Jordan, Kuwait, Morocco, Qatar, Turkey, Saudi Arabia and the UAE. These nations are U.S. allies and none are covered by the Trump Administration’s pending executive order that would ban travelers from six other mostly Muslim nations) The ban is apparently a reaction to reports of plans to equip an iPad with explosives.
According to the unnamed sources, British officials understand that their US counterparts are looking at extending the ban—it prevents any electronic devices larger than a smartphone being taken as carry-on luggage—to flights from Europe.
Hours after sending a “confidential” edict from the U.S. Transportation Safety Administration (TSA) to airlines, sources said, the Trump Administration hastily arranged a press briefing to explain that the ban had been imposed after intelligence emerged that terrorists favored “smuggling explosive devices in various consumer items.” The TSA directive is understood to be valid until October 14.
A Most Important Component in Indian Travel is … Food
But Younger Travelers are More Inclined to Try Local Cuisine … and a host of other issues to consider in the Indian market. From the current March-April issue of India Outbound magazine is this interview with Guldeep Singh Sahni, president of the Outbound Tour Operators Association of India (OTOAI), conducted by June Mukherjee.
Q: How has the evolution of Indian outbound market been so far? How do you foresee the immediate future?
Sahni: The statistics show very clearly how outbound tourism is evolving. The Government of India has given a figure of 18.6 million outbound Indian travelers in 2015. By now, it must be 20 million in 2016-17. The UNWTO has predicted 50 million people travelling out of India by 2020 and I can see it happening sooner. Despite global recession, India is doing quite well in various sectors. Indians want to take their children out of India, show them the world, because now for them, it is not only luxury or leisure, but, it is more like a necessity and part of bringing up their children.
Q: While entering the Indian market, many tourism boards find it difficult to understand the Indian outbound tourist needs and characters. How does an association like OTOAI help in breaking the ice?
Sahni: I have interacted with many tourism boards very closely and quite regularly. We inform and educate them about the culture of the Indian market. We are late-risers; we decide late; we bargain and we make last minute changes. But, once people know the volume India is trading in, they become okay. They don’t want to change our culture; only initially they get a shock when they don’t know about how things are in India and try to compare with other countries. Once they get exposed to the volume and potential of Indian outbound market, the spending that an Indian traveler can do, they get acquainted to it. The more our associations interact with the tourism boards, the more we are able to inform them, educate them about the cultural way of working. Gradually, they become comfortable with the system and the pattern.
Q: When tourism boards are adjusting their products for the Indian travelers, what specific aspects should they keep in mind?
Sahni: Food, I think, is one of the most important aspects for the Indian travelers. But, there has been a changing pattern of outbound travelers nowadays, with more young travelers travelling out of India. Hence, the demand of authentic or conservative Indian food is also diminishing as the young India travelers are relatively open to experimenting with a particular country’s cuisine. Right now, what is required is to adapt with the last minute changes when they go to a destination and suddenly want to do certain things that they didn’t know about or planned about. So, they do make a lot of last minute changes in the itinerary. Now, as much as those new requests could be accommodated, the traveller will have more satisfactory experience from that trip. The overseas tour operators are also getting geared to handle this kind of situation more and more. Earlier, they used to think that Indian budget travelers would like to only economize, but today’s budget travelers also want luxury within their budget. If they are staying for five nights in a country, they will spend three nights in a budget accommodation, but will spend two nights in a super luxury hotel. The traveler is evolving; the supplier is evolving too. Understandably, shopping is not ‘the thing’ anymore as every kind of brand is now available in India, but, if there are some ‘wonders of the world’, people will spend money to see or experience them. People are now also spending money to go for adventure sports, which was not a traditional thing for Indian tourists.
Q: What is the changing profile of Indian outbound travelers?
Sahni: Indians have always travelled in groups, mainly with families and friend if not for business travel. New trends are visible nowadays, like solo woman, women’s group, even the elderly group. It becomes easy and comfortable for the operator to cater to the need of the group. This way, a majority of youth is travelling. A group may travel for a jazz music fest, for Formula 1 race or Wimbledon. Kitty party groups, couples in groups are also the new trends going together. My company has even done a honeymooners’ group tour. Nowadays, kids study, grow up and marry around the same time. They plan to do their honeymoon together, to have better friendship bonding among new spouses and better time spending. A lot of experimenting is happening in India. Large group of even 150 people attending exhibitions or conferences is now a very common thing for us.
Q: From a geographical perspective, beyond the UK, the US and some Asian countries, what are the newer destinations in demand?
Sahni: Eastern European countries are in demand for the last couple of years. The US is now getting more than one million people from India every year. Canada is showing good numbers during winters. If you look at the Pacific, new places like Bora Bora, Fiji and Guam are in demand. Japan is showing good numbers. People are going to places like Kenya and the Scandinavian countries. South America is also growing in demand. You have to have more knowledge and new information for your clients.
Q: From OTOAI’s perspective, what are the challenges that you see need to be addressed with the support of Government of India and what should the new strategy be to give a big push to Indian outbound tourism sector?
Sahni: We work with various tourism boards and various suppliers. We have very strict criterion for membership – tourism boards and airlines are our members other than top outbound tour operators. Allied service providers and travel media are also our members. With Goods & Services Tax coming into effect, we can foresee a lot of confusion. OTOAI will study the matter and will have dialogue with the government to see how outbound tourism is going to be impacted. We don’t want dual taxation; we don’t want services provided by other countries to be taxed in India; we don’t mind our profits being taxed, but of course not their services.
Q: What are the latest outbound travel trends?
Sahni: Business travel will always be high as the industry is doing well and export is showing upward movement. In terms of leisure, wedding and MICE are really showing good results for us. We are getting good proposals from overseas, which can even accommodate 1,000 people, flights that can accommodate so many people over one or two days. Besides, study tours and exchange programs are also happening. It is also reported by the industry that adventure sports is in high demand. Outbound tourism should be one leg of tourism growth of India, which is yet to be recognized fully by the government. Our demand is to be included in the dialogue. Not because we want any kind of funding; we do get a lot of funding from various countries. But, we definitely want to make sure that the standards and integrity are maintained to the best order.
Q: What are your plans for the next convention and this year’s activities?
Sahni: Either we will do a convention or we will do a mega-fam. We will be working closely with tourism boards, on their customized specialist programs. Then we will speak to government on GST and its impact. We will also see how outbound can help government’s inbound initiatives. Any new destination that comes to India, we will let them know in the best possible way, what the Indian travelers’ requirements are and of course be a resource center for all the information that they will need to understand the Indian travelers.
Is Donald Trump or a Strong Dollar Deterring Brits from Visiting USA?
Apparently Not: The latest monthly figures from the UK Office for National Statistics (ONS) show that travel by Britons to North America (usually 90 percent or more of this total is to the U.S.) increased by 23 percent in February 2017 vs. the same month in 2016. This spike followed a nearly 17 percent year-on-year decline for the month of January 2016 vs. January 2017.
When the January figures came out last month, there was much speculation in the UK travel trade that the drop-off in February travel could have been due to UK travelers canceling their plans to visit the United States because of a negative reaction to the new U.S. President, Donald Trump. It’s difficult to make a correlation that is statistically justifiable, so we’ve prepared the following table that puts the January 2017 decline and the February 2017 increase in a larger context.
Other notes on the latest ONS release:
—For the last three months measured (December, January and February) travel to the USA by Britons was up by 4 percent.
—For the year-to-date total of 2017 (January and February) vs. the year-to-date total for the same two months in 2016, travel to the USA by Britons is up by 1 percent.
—For the last 12 months for which data are available (March 2016 through February 2017), travel to the USA by Britons is up by 3 percent over the comparable period a year before.
The strong U.S. dollar seems to have had little impact. The increase in travel seen in the above table comes despite the fact that that the British pound fell from $1.44 vs. the dollar on April 23, 2016 to $1.22 six months later on October 23, 2016, and rested at $1.28 earlier this week on April 23, 2017.
Low Fares May Offset other Factors: Perhaps contributing to the resilient outbound travel numbers on the part of Brits is the fact that airfares from the UK have dropped by an average of 10 percent over the past 12 months with long-haul ticket prices down by an average of 7 percent, according to fare comparison site Skyscanner.
The site said the biggest price drop was on flights to Vancouver, with fares down 18 percent year on year; fares to Boston were down by 13 percent; and fares to Las Vegas were about 9 percent less. (There were no other major North American cities listed in the Skyscanner release announcing the results of its study.)
Getting to Know Our Receptive Tour Operators through TourOperatorLand.com
A major feature of the NAJ Group, publisher of the Inbound Report, is its website, TourOperatorLand.com, the one-stop resource center for tour operators and professional travel planners who are searching for new itineraries, DMO and supplier contacts, brochure content and—for many, a most important service—royalty free photos. TourOperatorLand (TOL) content, contacts and photo stock are regularly updated so that receptives can market their tours and products with up-to-date information.
From time to time, we talk with receptives listed in TOL to find out how they are using the TOL site and ask for suggestions and insights on how to make it current, relevant and user friendly. We spoke recently with Alina Luncean, operations manager, Canadian Travel Partners, which is headquartered in North Vancouver, British Columbia. Following is an excerpt from our conversation.
TOL: What is Canadian Travel Partners?
Alina Luncean: We are a receptive operator based in Canada and we’ve been in business for 20 years. The difference between us and other receptive operators is that we do only customized tailor made tours for groups.
TOL: How did you first discover TourOperatorland.com?
Alina Luncean: I met someone at the Go West trade show who demonstrated it for me and we’ve been using it ever since.
TOL: What do you use it for?
Alina Luncean: It’s a wonderful thing you have here. We always use it to look up motorcoach companies that are recommended by you because they are reliable and use group-friendly restaurants. And I’ve used it to find the destination contact person because sometimes we need their help with hotel recommendations.
TOL: What was the reason for you most recent visit to the site?
Alina Luncean: That was my colleague Oliver, he used it to download photos that we need to build an entire program to the U.S. West and East on our website.
TOL: What is the main value that you find for TourOperatorLand?
Alina Luncean: It saves us a lot of time. It’s as though the site has been designed for us. All the other supplier and city websites are set up for consumers and it takes forever to find what we really need. And you have a lot of stuff we can’t find on Google.
For a free demonstration contact betsy@touroperatorland.com or visit www.touroperatorland.com.
Tesla GigaFactory—a New Magnet for Chinese Visitors to Nevada
In the quiet chatter that dominates cyberspace conversations, there are few destinations or attractions hotter than the Tesla gigafactory in Storey County, Nevada—about 21 miles east of downtown Reno and a few miles off Interstate 80, which puts the facility about 2,963 miles west of New York City and just south one of the most heavily traveled and connected U.S. Interstate highways.
And nowhere is there more quiet chatter, apparently, than in China, where the word has established the factory, which manufactures batteries for the lithium battery-powered Tesla vehicle, as a “must-see” attraction.
This fact became clear to Nevada Lt. Governor Mark Hutchinson, reports the Reno Gazette-Journal, during a 10-day trade mission to China. The Chinese, he said, regard the factory as a major attraction. In fact, Hutchison said, he saw so much interest in the Tesla gigafactory among the Chinese that he wants to talk to Tesla officials about official tours through the gigafactory. At 5.5 million square feet, the gigafactory is reportedly the biggest building in the world in terms the amount of the earth’s surface that it covers.
“One of my biggest takeaways from the trip is to speak to Tesla officials and just let them know (about the interest in the Tesla factory),” Hutchison said during an April 19th “Nevada Newsmakers” show. “I don’t know if they are interested or not interested but the big attraction, at least for the Chinese traveler, would be a tour through Tesla.” (You can view the program at http://www.nevadanewsmakers.com /)
“That came up repeatedly through my time in China,” added Hutchison, whose trip took him to Guangzhou, Hong Kong, Shanghai and Beijing. “Tesla was a big topic of conversation when I was over there. The Chinese tourists, the travelers, all of those who we met with, all loved the Tesla company and they wanted to come out and see the gigafactory.”
Hutchinson indicated that the Chinese tourism officials he met were also pleased with the recent meeting between Chinese President Xi Jinping and U.S. President Donald Trump. “It is interesting,” Hutchison said. “A lot of the Chinese I spoke to as well had a favorable impression of Donald Trump. And particularly, after that meeting (between Xi and Trump). They were worried about that meeting because of the rhetoric that came out of the (U.S. presidential) campaign. After that meeting, they were not only optimistic views about President Trump but also about the United States.”
To view a video tour of the Tesla factory, visit: https://www.youtube.com/watch?v=ib1KKHGYmLQ
Join NAJ’s Favorite Sales Mission Series
The NAJ Group, publishers of the Inbound Report, has joined with Explore Marketing and will be a part of the latter’s annual sales mission tour—both in the U.S. and abroad—that begins less than two weeks after IPW and concludes next January in New York City. The four missions, co-sponsored by NAJ’s www.touroperatorland.com b2b website, will bring participants together with both USA-based receptive tour operators and international tour operators abroad that, combined, sell to every major regional overseas source market for inbound tourism to the USA.
The schedule and brief description of the four sales missions comprise the following:
Florida, June 19-23, 2017: This mission will include up to 15 sales calls in Orlando and Miami to South American, Indian and European receptive tour operators, as well as a casual luncheon for participants.
Germany and Switzerland, July 17-21, 2018: This mission will includes a planned series of 10 sales calls with key German and Swiss tour operators across Zurich, Switzerland, as well as Frankfurt, Hannover and Hamburg, Germany.
Los Angeles, December 4-8, 2017: The group will be making 20 sales calls to Asian and European receptive operators, and include a luncheon with Chinese receptive tour operators for up to 40 attendees.
New York City, January 8-11, 2018: Currently, this mission includes 15 sales receptive tour operators who sell to Asian and European markets, as well as a casual luncheon for those participating.
“Stefan Merkl, who president of Explore Marketing, is leading the sale missions. He is an experienced tour and travel professional who’s worked as a senior sales and marketing professional for both travel suppliers and DMOs,” said Jake Steinman, founder and CEO of the NAJ Group. “He has developed an extensive network of tour operator and receptive tour operator partners who he has worked with over the years, affording those who take part in his sales missions up-close opportunities with operators that simply don’t exist at trade shows or traditionally sponsored sales missions that move larger numbers of participants from session to session.”
Those seeking more information on any of the sales missions can visit: www.explore-marketing.com. Or, you can contact Stefan Merkl directly at 415-320-9307. He can also be reached at: stefan@explore-marketing.com.
HODGE PODGE: Shifts, Shakeups and Occasional Shaftings in the Tour and Travel Industry
Dnata has appointed John Taker as its purchasing director. Taker joins from Kuoni/GTA where he was vice president, sourcing. Previously, he was purchasing director at Virgin Holidays for more than 10 years. Taker will be responsible for dnata travel’s global buying strategy, excluding Europe.
Christopher Barrett has returned to the travel and tourism industry as the new president of the Pocono Mountains Visitors Bureau. He comes to the position from his job as executive vice president and chief operating officer at Target Media and Digital in Harrisburg, Pa. Previously, he has been president and CEO of the Pennsylvania Dutch CVB. Barrett succeeds Carl Wilgus, who retired after nearly nine years in the post; previously, Wilgus had served as state tourism director in Idaho for more than 20 years. Barrett gained nationwide attention in the midst of the 2008-09 Great Recession when, referring to year-on-year tourism business trends, he said that “Flat is the new up.”
Rafael Galeto has joined the B2B team at the Brazilian operator Grupo Trend as a sales manager, as the latter strengthens its travel agency service team in the state of Paraná, just south of São Paulo. Galeto, who has 13 years of experience in the industry, will report to the South Regional sales manager, Daniel Moser.
Sofia Michel joined Paris-headquartered Hcorpo as a business developer, charged with expanding the portfolio of key accounts from the Paris-based global company—its U.S. offices are in New York—whose B2B reservation platform works with 400,000 hotels. Michel, who started her career at the Franco-American Chamber of Commerce in Boston, has held several sales management positions in the Europe/Middle East/Africa, North America and Asia-Pacific markets for Concorde Hotels & Resorts, Hyatt and FRHI Group.
Randy Fiveash, director of the Connecticut Office of Tourism, has been named chairman of the Discover New England board of directors for 2017-18. As chairman, Fiveash will be tasked with increasing global awareness of the region as a four-season destination; helping New England businesses reach international audiences and expanding tour operators’ familiarity with regional attractions. Fiveash has been Connecticut’s tourism director since late 2008.
Copa Airlines has announced the appointment of Emerson Sanglard as its new general manager for Brazil. He’s spent the last four years in charge of the company’s marketing department for South America—this is In addition to 22 years of experience in companies such as General Motors and Petrobras.
In the UK, Cosmos Tours & Cruises has re-launched as Cosmos and announced a totally new website with an agent booking portal. The “Cosmos” brand name was originally used by the company’s former parent, the Monarch Travel Group, for its mainstream holiday program, but the group decided to drop the brand and rename its holiday operation Monarch last year. Cosmos Tours & Cruises subsequently gained the legal right to use the nam
