01.01.2012 Aviation, Hotel, Values

Crisis? What Crisis?

“Our Heads Are Round so our Thoughts Can Change Direction” [Francis Picabia]

German Tourism Association DTV reports a record year in German Tourism¹, German Airport Association ADV reports a passenger record² – the same news reaches us from all over the world… Crisis? What Crisis?

Airplus³ and American Express⁴ published their outlook for 2012, expecting a stable market, more meetings, but increasing cost for air and accomodation… Crisis? What Crisis?

Airbus Industry reports a record order backlog, with the Airbus 320-family (mostly 319+320) being the most demanded aircraft in the world today… Crisis? What Crisis?

Yes, what crisis? The average income of a senior manager in the “Fortune 500” across the world has multiplied in the past five years (at least doubled), at the same time, the average income of a worker in the same company has decreased (thanks to inflation and loss of monetary value)… My tone now becoming sarcastic: Crisis? What Crisis?

Throughout the world, increasing natural disasters are reported to be a result of Global Warming. But our politicians cannot agree on counter measures. The EU Emission Certificate Trading is challenged by the main emitting countries, namely China, the U.S., but also Russia… Crisis? What Crisis?

The Greece Prime Minister informed the EU years ago about the inevitable bankruptcy. The politicians avoided that at all cost, their delay tactics gave the banks the opportunity to move all risk from the banks to the tax payers. Thank you Mr. Ackermann, thank you Mrs. Merkel! Thanks to such “politics”, no longer the banks are “challenged”, but the European states are! This is no “sitting it out” of our representatives of state, but I call it criminally corrupt! Crisis? What Chrisis?

The U.S., it’s currency being the lead world currency, is brought close to a bankruptcy in itself, thanks to the Republican “opposition”. How stupid can such a (Republican) “representative of state” be?
But: The German Minister is caught having copied his doctorate work – “Guttenplag” has been a nominee for the word of the year. Our Federal President is being caught taking credit and other benefits (free flights or holidays) from industry managers. And while corruption is forbidden and you can go to jail for it, lobbying invests record amounts last year – securing the politicians to vote in their favor. And not just our former Chancellor Schröder is safely and well paid employed by an industry, he secured long-term deals and commitments with during his state of power… Bunga-Bunga! Crisis? What Crisis?

Russia is corrupt? At least you know that! The Arab Spring is in danger to become a barrel burst in Egypt? Global Warming is no issue, but the tourism industry is the milk cow to the politicians (whereas in the Middle East they are a factor to support commercial development). Crisis? What Crisis?

I tell you what crisis we have:

The Bank Crisis: The banks are the real power in governments.

The Political Crisis: Our politicians do not represent the people, nor any strategies or ideas: They simply represent the lobbies that pay them fortunes and do everything to keep in power, not to loose these honey pots!

If they would have any “strategy”, they would make the beer-tab-tax-report a reality and safe millions of Euro in tax administrative cost. They would make travel and tourism a strategy. They would seek minimum wages and support future development like solar industry – and not add tax burdens on them. As they would support families, enabling them to combine business and family – and have day care for the children (something I found painfully amiss myself last year!)

Crisis? What Crisis?

Food For Thought…

Sources:
¹ FVW | ² FVW | ³ FVW | ⁴ FVW
ARD Monitor Dossiers

07.12.2008 Aviation, Hotel, IT, Sales

Lately major discussions in Germany and online are the various public “rating” sites. Using Qype myself and HolidayCheck for the hotel ratings and reviews, I am a mature online user, able to read as well between lines as when I read the catalogue of a tour operator…

From many of my replies here the extract: It’s hyped. So to get the right perspective, sit back and think about it for some minutes. As you hopefully know Shift Happens, we are facing an information flooding. Where in the “good old days” it was necessary to know the restaurant and hotel critics, the authors of the major travel guides, it is now necessary to also know the major online portals. But it is not necessary to search and review all and any blog entries somewhere. That is “lost in the noise”, just as it was without Internet, where the noise existed (called “word-to-mouth-propaganda”).

Where in the good old days, the books and critics published in print had the main impact to day-to-day operations, the Internet offers another advantage. If you had a bad reputation in the past, it took you at least a year to get an update (new management, renovation, …) into the next edition. In the Internet, this can be promoted much faster.
But as fast, a bad rating can be outsmarted by good customers. If you have a problem with service, it is not the rating that sucks, but you better improve the service quality and proactively market it. Like the good old “We listen to our customers”…

Everything becomes public (and published) these days. But the users resort back to “trusted brands”, of which some (like HolidayCheck) are new, but don’t ignore the value of printed travel guides. It’s a shift from “search available information” to “select”. Where information was rare, it is now flooding us: “Select” means to be able to qualify the valuable information from the noise. And for the rated company to learn, what information has impact on the customers – and which are “just another one” with minor impact.

Do not ignore them. But don’t let the makers of these sites qualify their importance for you. The only ones who can are your customers and you. So if approached by another of these important experts telling you what you have to do: Don’t let them unsettle you. Sit back, think about it. But keep in mind: These tools do have their value and after a hype peak and a disillusionary phase, they’ll be here to stay…

[Update: I did not move from Qype to Yelp, there’s many other such “tools” meanwhile and I was unhappy with the user management of Yelp]

10.08.2008 Hotel, Russia

Winners and Loosers

Russians outnumber German visitors in Antalya. Russians invest in TUI, Air Berlin, Öger Tours and other travel companies being “unsexy” to “traditional”, “Western” investors… Oh god, the Russians are coming…

Eyes on Russia… Lately (as usual: Thanks to a beautiful woman) I learn a lot about Russia. The image shown mostly on TV is misleading. That is an emerging country! Do not look at the old Russians. Look at the young generation, the students! Oh yes, they have a long way to go. But they prosper, figures show a clear trend.

A luxury hotel chain did a check recently, their receptions noting down, which age group visitors mostly belong to. The boom market China was a niche… Germans and British were +90% in the age group 60+, where the Russians were 90% in the age group -40. And they spend four to five times as much “aside” than the good old Europeans.

Shift happens. Are we ready for it?

19.07.2008 Hotel, Sales

The Fairy Tale Of The Best Available Rate

This represents the core of a quite lengthy and detailed discussion.

A hotel manager regretted the change from the RAC-Rate to the BAR (Best Available Rate) and compared it to Yield Management in Aviation.
Three misinterpretations in one sentence…

The rack-rate (off the Rack) has always been – and is – the rate, anyone “selling” a room was allowed to book at. Unconditional. That rate – in that definition – exists until today and must exist.
Many hotels fixed a rate and called it “rack rate”, published on the indoor or in the locker… But the rack rate is as variable through the year(s) as is any other “rate”. So there seems to be a misinterpretation of a definition by some…

What is the Best Available Rate? It”s one of these meaningless phrases, these politicians manqué in Marketing love. See next.

Third misunderstanding: Yield Management.
I experienced the development of yield management in American Airlines, who made this an art first (late 1980s). And it is an art! The definition for yield management was explained to us at an employee conference with Bob Crandall himself (to date a model “airline manager” to me). In short: They are there to optimize the own pricing structure to achieve the “best available selling rate”. To do that, they got tools to monitor the prices of competition, they took into account long term developments, including public holidays, regional vacation periods, congresses, events, … And they talked to the local sales teams to assure to be aware of trends – something you cannot do to date with technology only! Within two years after launching the department, it employed more than 3.000 of the best people American could find or hire and had achieved a revenue increase making that effort very valuable. I do recommend to have a look at the Wikipedia article on Yield Management.
Today, most managers believe, Yield Management is purely technical. But it is a predictive art. Many managers only look at a single puzzle piece: A good yield manager can be worth an entire sales team. But that does not say you can replace it. In most airlines, the yield management rarely speaks to sales, they stick to the “electronic reports and figures”. Stupid, they miss an essential “early warning system”…

Best Available Rate… The boss of my business training (whole sale) emphasized two rules I found invaluable:

Don”t bleed out your supplier. He has to live. If he lives safely, it”s also to your own benefit.
Price dumping is a Pandora”s Box. They undermine the trust in your products.

And there was a joke that at the time was historic already: “You purchase a box of these screws for 1 Dollar, you sell them for 99 cent, how could you?!” Answer: “You stupid don”t understand that. It”s the quantity that counts!”

Our industry (aviation and hotels alike) have paniked themselfes into price dumping. To date, I question the competencies of any manager, blindly following that path. In 1997, a senior airline manager (unquestioned by his peers) alleged that brand has no value any more. Customers would only purchase by price. I did argue strongly against it. And today argue no less for brand. Everyone can sell cheap. But you get no cheap loyalty with customers, you need brand loyalty!

So what is the Best Available Rate? Can that be the dumped price? Is it the best selling rate? How does it link to the Rack Rate? I don”t blame the pricing managers, they only do what their senior managements ask them and express as expectations. But maybe you should reconsider your pricing “policy”? Create one…?

Food For Thought…
Your comments sure welcome!