Airlines, hotels, travel & tourism

The end of the low cost era

You have heard this before – the cost of flying is going to go up. In 2009, climate change advisers warned the era of cheap flights was over because of their role in climate change. Now the reason is oil prices, now sitting at $US120 a barrel. The price of oil is 32% of the total cost of flying and for budget airlines, more like 50%, so there is little room for airlines to do anything but raise ticket prices.

During the first half of this year, fuel prices jumped 35%. The new company formed by British Airways and Spain’s Iberia – International Airlines Group (IAG) is forecast to spend 4.6 billion pounds this year on fuel. This year, IAG saw a recovery in first and business class travel, where margins are considerably better than in economy. Premium travel is returning to its 1997 peak, before the credit crunch came along. London is also a healthy market and IAG says the North American routes seem surprisingly unaffected by the US debt crisis.

However, air travel accounts for 6-8% of Britain's greenhouse gas emissions. Perhaps a hike in ticket prices is the only way that people will change their flying habits. But if it’s true that people no longer care about climate change because they can buy their way out of it (see Climate change matters – or does it?), then high fuel prices will make little difference in the long run.

You could have a risk profile at airports

Next time you’re standing at airport bag security waiting for the person in front to remove his laptop and toothpaste, it may be the last. The International Air Transport Association (IATA) is working to make airport security cheaper by classifying people on risk, for example, “normal”, “enhanced” and “known traveller”.

The “known” traveller would have to provide background information to governments about themselves, their travel arrangements, and payment method. Then they could expect limited scanning of themselves and their baggage. But the more risky traveller would have to submit to body scans and explosive trace detectors, as well as baggage scanning.

The program of risk profiling is trialling now at four airports in the US and could be operating globally in 3-7 years. Until then, airport security will continue to be an expensive and time-consuming process – the industry has spent $US4.7 billion each year since 9/11. It seems like a criminal waste of resources, given that most passengers are no threat at all. We think risk profiling seems sensible but some of the decisions are likely to be controversial.

Start your marriage on the stormy seas

For some reason, people love the idea of getting married at sea! More oddly perhaps, British law forbids weddings on the ocean waves. This has created problems for the UK shipping line, Cunard, which is losing valuable business to ships that are registered outside UK territories. Bermuda and Malta, for example, allow captains to perform weddings.

This leaves Cunard in a difficult situation. The company can continue to lose the business, designate one ship as a “wedding ship” and reregister it in another territory, or reregister all its ships outside the UK. This would be a politically difficulty move. Carnival Cruises, Cunard’s US parent, has been performing weddings since 1998 around the Caribbean, South America and the US and couples pay from $US2,250.

Weddings are not the whole story of course. The recently introduced Equality Act requires UK companies to pay EU nationals the same as British staff, so shipping companies are facing higher employee costs. Companies that reregister could potentially avoid these costs - and conduct weddings on their ships. A marriage made in heaven perhaps?

How the Chinese are travelling

The Chinese are taking holidays and, according to the World Tourism Organization, there will be 100 million Chinese tourists travelling overseas by 2020. In 2010, there were over 57 million Chinese tourists abroad, spending around $US48 billion. It is no surprise that many countries will be looking for a share of those lucrative tourist dollars.

Where are the Chinese going? According to the US Department of Commerce, America is the place, with arrivals from China (excluding Hong Kong) up 53% in 2010 and set to skyrocket 274% from 2012-2016. First timers want to see the big cities, and they like to take part in tours run by Chinese agencies. They also want value for money. A Visit USA Center, recently set up in Shanghai, recently removed a travel wholesaler from its list because it charged upfront low prices and then hit visitors with lots of add-on costs once they arrived.

Another beneficiary of Chinese tourism is Thailand. Already the number of Chinese tourists ranks third after Malaysian and Japanese and will be the biggest source of foreign tourism in 2-3 years.

In Europe, France seems to have gained Chinese favour. While there were 550,000 visitors last year, it is expected there will be 1-2 million visiting Paris by 2020. The Louvre already provides Chinese language information and many other destinations in France and other countries will have to jump across the language divide to attract this group.

While the Chinese are hard negotiators when it comes to money, they also like to go shopping and much of this is spent on luxury brands. More than a quarter of Chinese travellers say shopping takes up the largest share of their spending (they spent $US55 billion overseas in 2011). Many luxury brands are cheaper overseas than they are at home. For example, Chinese have always been the biggest spenders in France (22% of the total), spending $US938 million on duty-free shopping in 2010.

No country can afford to ignore the potential of Chinese tourism and it will interesting to see what changes they make to their tourist attractions. We think, for example, that most Westerners are used to being “ripped off” on holiday, and they expect to have to pay too much for simple items like a bag of hot chips at a theme park. Will the influence of Chinese thriftiness make any difference to this in the long run?

Tourists at the bottom of your garden

Travellers are increasingly looking for an authentic experience when they go overseas, eschewing smart hotels for more homely stays that reflect the place they are visiting. Airbnb.com has capitalised on this trend, helping people rent out their houses, flats or rooms to people all over the world. Now we have campinmygarden.com, a site launched in April 2011 where you can register to yes – camp in someone’s garden!

According to its founder, Victoria Webbon, “Everyone will welcome and be welcomed into our gardens with open arms and hearts, sharing in one passion for the universal adventure that is life”.

Your garden literally becomes a temporary campsite for someone and it is free to advertise. Webbon suggests people be clear whether they are offering "bamping" (basic camping) or "glamping" (glamorous camping) and cautions, among other things, not to contact their local Council about it. The website lists countries all over the world as possible garden campsites but you won’t yet find one in Botswana.