Le Portee - Hospitality News
Le Portee - Weekly Hospitality News
#15 - EU cities against tourism, OTAs the demand bringers?

#15 - EU cities against tourism, OTAs the demand bringers?

Week 30 - Where EU cities once again are trying to decrease tourism, while the chicken and the egg question is raised about OTAs.

TLDR: Too Long Didn’t Read

Timeshare sales increased by 30% in 2022, but it comes with high costs and limited flexibility. US airlines face challenges with strong demand but lower yields during peak season. OTAs distribute but don't generate demand. Booking.com's Q3 bookings exceed forecast, while Expedia and Tripadvisor fall short. Casai, a short-term rental startup, ceases operations and shares lessons learned. The Greek government offers free trips to evacuated tourists after wildfires. Google wins a court case against bias claims. A take on VW's situation suggests potential benefits for Germany in the long run. A guide offers insights on implementing AI in hospitality.

0. News snippets

Not important enough to expand on, but worth hearing about

STR report indicates positive trends across all US travel statistics this week | Sceptical about Twitter's change to X? Well at least you will be able to see the fight between Musk & Zuckerberg streamed on there! | F&B Sector is demanding more teen workers due to shortages, more specifically changes of legislation.

1. Main Hospitality News

Core news related to the industry

How Europe combats “Overtourism”

Popular European destinations are facing over-tourism issues, causing problems like housing shortages, traffic, pollution, and discomfort for residents and tourists alike.

To address over-tourism, several countries are taking actions such as banning cruise ships from ports, imposing entry fees and restrictions on popular sites, regulating tourist flows, introducing tourist taxes, imposing fines for loud music at beaches, and implementing luggage drop-off systems.

These measures aim to control tourism and maintain the beauty and sustainability of these destinations while providing a positive experience for visitors and locals. More details in the Forbes article.

What was first, demand or OTAs?

Recently a very valuable question was asked over at hospitality net. What makes people decide to go for a specific destination/hotel? Industry experts were given a chance to respond and that they did. Results? From an experience standpoint no, “since destination demand and desire is something predetermined, by the time guests arrive on an OTA”. From a statistics perspective, a very insightful study by Expedia was cited, where only 28% of people go to an OTA to find a destination, the majority starts with social media & meta platforms. Hence, overall OTAs are demand distributors, but not generators.

Mixed Q2 results across OTAs

While Booking.com has upped its Q3 forecast and is seeing an increase of 27% in bookings (from forecasted numbers), Expedia’s Q2 results have also risen, but are below forecast (specifically all sectors besides hotel bookings have not performed as well. At the same time, Tripadvisor has reported similar results. Rising revenue, but “not as good”. The boring world of forecast news is indeed based on makeshift statistics & assumptions that completely ignore the sheer impossibility of calculating the revenue of an entire travel sector without including millions of variables.

Let´s talk Timeshare

Timeshare is a vacation ownership model where individuals buy the right to use a property for a specific period annually. Pros include vacation accommodations at desired locations, but cons include high upfront costs, maintenance fees, and limited flexibility.

Timeshare sales in 2022 increased by 30% and the industry has evolved to offer more flexible club products, leading to higher satisfaction among owners. Despite short-term challenges, the industry's prepaid vacation model and multiple revenue streams make it a promising opportunity for developers and resort owners. The specialist from HVS writes more in detail here.

Short-term rental startup fails, what does the CEO learn?

A recent ceasing of operations has been announced for Casai. A Latin-American company that started in 2019. Lucky for us though the CEO has decided to share his learnings from the failure. In fact, there are 4 in total: Invest more in financial infrastructure (better bookkeeping), More investment in HR and company culture, ignore the 2021 spike in cheap cash (plan for the worst), open up and ask for help sooner or in general. 4 Lessons the rest of us should surely use!

US Airlines face “weird” market

U.S. airlines find themselves in a peculiar market with strong demand for travel but lower yields during the peak summer season. Typically, airlines would cut flights and raise fares to address this situation, but given the high prices and demand, these measures are not effective.

The dynamic is causing airlines to make schedule adjustments and explore growth strategies to balance the strong demand and higher costs, but the overall outlook for the industry remains positive, with some carriers benefiting from a leisure peak flying approach. Several Airlines are relatively immune to the trends due to premium offerings, loyalty programs, and large international networks. More on airline weekly.

Wildfires in Greece? No problem, the government will give you a free trip

With recent wildfires in Greece, and thousands of tourists being evacuated the government has announced a pretty compelling plan. Did your holidays get interrupted by the fires? No problem, since the government is offering 1 free week in Rhodes islands as a “sorry treatment”. A pretty unique approach to trying to restore trust in a destination, let's see if it works!

2. Externalities

Econimics, finance, geopolitics. All have an impact on the hospitality sector.

Google did not skew results in its own favour?

Apparently not, according to the latest judge hearing in the District of Columbia. The judge dismissed the claim that Google was pushing its own products above TripAdvisor and others, due to the evidence being entirely opinion based and not factual. In contrast, a similar case in EU ordered Google to pay 2.4 billion Euros for doing just that with its shopping feature.

VW might fail, but is that bad?

A recent take on VW’s situation is indicating that VW is being outcompeted by Tesla, Chinese revenue might fall (40% of the entire business) and VWs slow adaptation of software development would be the final cherry on top. But is that bad? On one side 2.5 million are directly employed or dependent on the automotive industry in Germany. If they are all fired, what will replace that giant gap? The argument is that innovation will simply push new joiners and current professionals to other sectors, finally freeing up a giant lump of Germanies talent to innovate in tech and therefore benefit the country (which is behind worldwide) much more.

4. Readables

Books, podcasts & the big stuff.

Destination Life-Cycle

Tourist destinations are predestined to have a life cycle, just like hotel buildings or any other business. Richard Butler indeed invented a destination life cycle, which shows various up & downs related to investment & demand. For more read here.

5. Tips & Tricks Tools & SaaS

Any new software you can use? Industry tricks you missed?

How to use AI in hospitality

A recent guide provides insight into understanding & implementing AI features within your hospitality business. With all the talk of “potential” gains we though you might actually use some hands-on advice.

Le Portee - Hospitality News
Le Portee - Weekly Hospitality News
A weekly podcast summarizing the relevant news from the service sector. Everything from industry drama to geopolitics. Backed up with academic research for those times when big statements are questionable. Listen once a week and be fully updated on the industry!