State of the industry: December 2015/ January 2016

The entire travel industry was quick to band together in support of Atout France following the horrific murder of several hundred innocents in Paris, The Australian Competition and Consumer Commission’s successful prosecution of several airlines and online travel agents for so-called “drip pricing” is clearly intended to send a warning shot, and more, in this month's 'State of the Industry'.

France under attack

The entire travel industry was quick to band together in support of Atout France following the horrific murder of several hundred innocents in Paris by terrorists last month. The attacks in the ‘city of light’ seemed to bring awareness of the situation to a new level, with many agents reporting their clients were particularly affected at seeing somewhere they had travelled to so often, with such affection, impacted by such an atrocity.

Atout France director for Australia, Patrick Benhamou, thanked the trade for its support, saying “we are hopeful that the city of Paris will remain the favourite city in the world for Australian travellers”. By all accounts his wish will come true, with the impact of the violence on travel patterns thus far seemingly short-lived.

$1 million incentive

The Travel Corporation is putting its money where its mouth is, with the launch last month of the “TTC Great Giveaway”. A prize pool worth $1 million in total will see the company’s largesse reward hundreds of travel consultants for their sales across the various Travel Corporation brands, with the overall winner to receive $50,000 in cash. Brands covered include Trafalgar, Contiki, Insight, Uniworld, AAT Kings, Inspiring Journeys, Adventure World and Busabout – and as well as the $50k major prize there are other levels of rewards including three “tier 2” $25,000 payments and 15 “tier 3” winners each of whom will receive $10,000.

There will also be random draws for two bonus prizes of $10,000 each month during the incentive period, and there are 21 $50,000 prizes, 50 prizes of $2,000 and a whopping 400 $1000 prizes. By all accounts the incentive is having an impact across the industry, and is being seen as another example of a smart promotion by the Travel Corporation to build market share during what is a cyclically lean period for the industry.

Value World Travel goes under

It was intriguing to watch the mainstream media coverage of the collapse of Sydneybased Value World Travel last month. The company, which specialised in Indian VFR travel, reportedly left about 2,000 passengers in limbo – but reports on Channel 7 in particular highlighted the lavish lifestyle of the company’s owners – complete with footage of a wild birthday party they held some years previously – rather than focusing on the distress of affected travellers.

The truth about the collapse is yet to emerge, and a “back of the envelope” calculation estimated around $3 million in losses to the travelling public. However it appears from many of the comments on social media that most of those affected paid by credit card and were confident of receiving charge-backs, but were upset that they were no longer able to secure the bargainbasement – and clearly unsustainable – fares offered by Value World Travel. There were also some wild claims about the impact of the collapse on the consolidator involved which have not been substantiated.

Skills shortage

Some in the industry have for years sounded the alarm about the ongoing skills shortage in travel and tourism – and a new report from Tourism Research Australia has again highlighted the urgent need for more workers in the sector. The 2015 Australian Tourism Labour Force Report estimates that an additional 123,000 staff will be required in tourism and hospitality by 2020 as the sector rapidly expands.

Almost half of these employees will be in skilled positions, the report estimates, meaning a major increase in local recruitment and training is also required. To remedy the situation TRA has urged a relaxation in temporary skilled migration provisions such as 457 visas and working holidaymaker visas “to ensure Australian tourism businesses have enough skilled workers to meet demands”. All states and territories will be impacted, with the Northern Territory and Western Australia said to be “particularly vulnerable”.

CATO strategic plan

Dennis Bunnik from Bunnik Tours has wasted no time since being appointed as the new chairman of the Council of Australian Tour Operators, with the organisation launching a strategic plan last month. The four-pronged approach includes increasing professionalism, advocating on behalf of CATO members, minimising business risk and marketing to build the group’s profile. Another initiative will see CATO members each given a unique registration number, which will be added to their in-store logo with the aim of informing discussion among agents and consumers about the benefits of booking through a local operator.

Bunnik told travelBulletin the new plan was a response to the changing industry environment and the demise of the TCF which means “it’s time for us to stand up”. CATO membership criteria now mandates ATAS participation, while the new direction of the organisation will also see it host a series of education forums kicking off with a session in March 2016 on crisis management.

Travelport boosts Locomote stake

Travelport has further expanded its shareholding in Melbourne-based Locomote, with its now 55% investment making it the majority shareholder. At the same time the company has appointed Sanrda McLeod as its new CEO, while founder and former CEO Philip Weinman is transitioning to become Vice Chairman. Locomote is one of Australia’s fastest growing technology businesses and services a wide range of major corporates with its system which enables them to manage all aspects of their business travel including policy and preference management, bookings, duty of care, authorisation, budgets and expenses from any device anywhere in the world.

Travelport initially invested in Locomote in 2013, with global CEO Gordon Wilson saying the move to a majority stake is consistent with the company’s ongoing drive to develop new digital services and mobile capabilities for the travel industry. “Locomote, which approached the market with a clean slate and a fresh approach, is a key part of how we envision the future,” he said.

Drip pricing pressure

The Australian Competition and Consumer Commission’s successful prosecution of several airlines and online travel agents for so-called “drip pricing” is clearly intended to send a warning shot across the bow of all businesses selling online. Jetstar, Virgin Australia and OTA eDreams were among several companies cited for not fully disclosing all aspects of their pricing at the start of the booking process, instead dripfeeding additions as users completed their purchase making the final price higher than expected.

The ACCC was particularly concerned about a failure to adequately disclose the controversial “booking and service fee” charged on bookings made using most credit cards – which has also been the subject of a Senate enquiry in the last month. It appears that the high profile prosecutions are having the desired effect, with ACCC chairman Rod Sims noting that “it is encouraging that a number of businesses in the travel, accommodation and ticketing industries have adjusted their online pricing practices to improve disclosure of fees and charges since the ACCC began its work on drip pricing”.

Norwegian call centre live

Norwegian Cruise Line is now operating its new Sydney call centre, meaning that for the first time it’s able to service enquiries locally. Following four weeks of intensive training the centre is staffed by five full-time cruise consultants under the charge of Operations/ Contact Centre Manager, Elizabeth Krstevski. The new arrangement will also see all Australasian email communications channelled through the Australian team. Steve Odell, who’s leading the Norwegian Cruise Line Holdings business in Australasia, and recently had his role expanded to cover all of Asia Pacific, said “establishing a local call centre to deliver enhanced service and assistance to local tr
ade was a top priority” when setting up the business here. The call centre will operate 8am-6.30pm AEST Monday to Friday and 8.30am-1pm on Saturday, with Norwegian Cruise Line also committed to providing a response the next business day to any enquiries lodged outside these hours.

At this stage the call centre will only service Norwegian Cruise Line enquiries, with Oceania and Regent Seven Seas to be handled off shore until they switch over to the Sydney office down the track.

VA/EY alliance re-authorised

The ACCC has re-authorised the alliance between Virgin Australian and Etihad, allowing the carriers to continue to coordinate their fares and schedules. Interestingly the renewal was for a five year period – half the ten years requested by the airlines, with the ACCC saying the “considerable growth of traffic to and through the Middle East underscores the dynamic nature of the aviation industry”.


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