“American Airlines, under fire for poor customer-satisfaction ratings, said Monday it will add check-in and boarding services for top customers including those traveling in first-class or business-class”... Business Week Sep 22, 2008
American Airlines has purportedly just launched a new service, Priority AAcess, that will benefit:
•AAdvantage Gold, Platinum, and Executive Platinum members
•First and Business Class passengers
•Full Fare passengers
•AAirpass Passengers
Priority AAcess, which is set to begin this month, will provide guests with a special check-in gate, a special security line, and a priority “red” lane to board the aircraft ahead of everyone else. Further, if a priority guest arrives at the boarding gate during general boarding, he/she will still be able to cut the general boarding line.
Sounds great, right? The fact of the matter is... this is nothing new! The travelers whom Priority AAccess will benefit have received ALL of the perks of the program for years, EXCEPT the ability to cut the line if you arrive after boarding starts.
This program is great for American in that it makes them sound like they are doing something good for their guests, thereby potentially boosting their customer satisfaction rating and attracting positive press... even though they [American] really just added a name to existing services!
The next reason I feel they did this is that I can see this being used as a potential revenue generator in the new future. I’m going to predict that American begins charging for Priority AAccess in the near future; whether per flight, an annual subscription, or both. The airline industry is all about revenue generators in the current market, and this is just one more possibility in the making.
To make a long story short, there is absolutely nothing new about Priority AAcess. It’s a gimick that has got a fair amount of attention in the airline industry this week. Kudos to American.
Oh well, I’ll still be flying them 5 times next month!
Written By:
Alex Early
Founder & President
The Early Air Way, LLC
Wednesday, September 24, 2008
Where Are The New Hotels?
Look around, do you see many new hotels? Sure there are some, but look for new constructions as of the past 6 months, there are very few. Las Vegas for example, where hotels are built like water flows, has shown a significant slowdown. The largest project in Vegas history, City Center, is nearly frozen. City Center is actually said to be the single most expensive private construction in the history of the United States at an estimated $9.2 billion. Well, the money isn’t flowing in as easily as developers had hoped, and thats true for the entire industry.
Only about three years ago, a hotelier could build a hotel by financing only about 10% of the project personally. The remaining 90% could be financed by bank loans (funded by CMBCs [Commercial Mortgage Back Securities], and mezzanine debt lenders. That is no longer the case.
To understand this, lets take a quick look into the current economic crisis. Because of the real estate (particularly housing) crash, there was a lot of mortgage default. Because of the mortgage default, banks were unwilling to buy CMBCs from your personal banks, the product that makes mortgages possible. With so much less money to give, loans became ever more difficult to get. Because of this, in today’s market, a hotelier needs to front about 40% of the entire construction cost of his/her property in cash!
It makes simply sense. If hoteliers would finance 90% of their project, then there are many more who could afford the project. Financing 40% of projects that can jump into nine and sometimes ten figures is very, very difficult. So you see, there are few hotels being built.
Amazingly, in markets like New York City, this has caused room rates to skyrocket! There are too few rooms to meet the demand, yet its too expensive to build more rooms!
Luckily for City Center, and many of the new hotel projects in this country today, there is foreign money coming in. Dubai hotel companies are at an advantage, and now Indian hotel companies are stepping in as well.
With the Bush administration’s proposed $700 billion Wall Street bailout, the hope is that mortgages will begin to flow again, loans will be attainable, and you will once again see hotels. More importantly, homes will be affordable to more people, very quickly.
Written By:
Alex Early
Founder & President
The Early Air Way, LLC
Only about three years ago, a hotelier could build a hotel by financing only about 10% of the project personally. The remaining 90% could be financed by bank loans (funded by CMBCs [Commercial Mortgage Back Securities], and mezzanine debt lenders. That is no longer the case.
To understand this, lets take a quick look into the current economic crisis. Because of the real estate (particularly housing) crash, there was a lot of mortgage default. Because of the mortgage default, banks were unwilling to buy CMBCs from your personal banks, the product that makes mortgages possible. With so much less money to give, loans became ever more difficult to get. Because of this, in today’s market, a hotelier needs to front about 40% of the entire construction cost of his/her property in cash!
It makes simply sense. If hoteliers would finance 90% of their project, then there are many more who could afford the project. Financing 40% of projects that can jump into nine and sometimes ten figures is very, very difficult. So you see, there are few hotels being built.
Amazingly, in markets like New York City, this has caused room rates to skyrocket! There are too few rooms to meet the demand, yet its too expensive to build more rooms!
Luckily for City Center, and many of the new hotel projects in this country today, there is foreign money coming in. Dubai hotel companies are at an advantage, and now Indian hotel companies are stepping in as well.
With the Bush administration’s proposed $700 billion Wall Street bailout, the hope is that mortgages will begin to flow again, loans will be attainable, and you will once again see hotels. More importantly, homes will be affordable to more people, very quickly.
Written By:
Alex Early
Founder & President
The Early Air Way, LLC
Sunday, September 14, 2008
The Best Hotel Deals...
If you’ve spent a day in hotel school, then the terms “RevPar,” “ADR,” and “% Occupancy” all sound familiar to you. For those of you who don’t know, the terms mentioned are relevant to the practice of Revenue Management.
Revenue Management is a strategy used by providers of perishable products in tourism to maximize revenues. Effective revenue management requires accurate forecasting of demand and a keen knowledge of current costs published by the competition. When looking to buy a hotel room, Revenue Management is on your side through two vendors.
Hotwire, Inc. (www.hotwire.com)
Priceline.com, Inc. (www.priceline.com)
Hotwire and Priceline are unlike all other travel booking sites. Although both sites offer generic hotel booking capabilities that disclose the hotel brand, they offer something far more unique... the “brand blind” booking capability.
When participating hotels forecast empty rooms on a given date, they will allocate those rooms to brand-blind vendors such as Priceline and Hotwire. A brand-name hotel with a solid revenue management department will know almost undoubtably that those rooms WON’T SELL, and otherwise will represent revenue lost forever since a room night is perishable and can be sold just once. The hotel WON’T just drop the prices of its rooms however, because advertising such low rates could potentially bring down the public image of the hotel. If you saw $50/night rooms advertised for a particular 4-star Marriott for example, you might question the quality of the product; hotels know this. I’m here to tell you however that such rates do exist and can be obtained by anyone.
Revenues earned from bookings on Priceline and Hotwire are seen as extra revenue by the hotels as they know they that the rooms really should be empty. The cost MUST cover the housekeeping cost of course, which averages between $10 - $20 per day, per room.
Hotwire
Enter your reservation details into the hotwire system, and you are then presented with various options. The options will display the price, star level, amenities, and general location of the hotel. Remember, they CAN’T display the hotel names in order to protect brand integrity.
There is a secret to hotwire however that a client of The Early Air Way actually pointed out to us... YOU CAN REVEAL THE HOTEL BRAND! Basically, open up hotwire in a second window, and re-sumbit your search as a package “including airfare.” The departure city you select is irrelevant. On this page, you’ll see the names of the hotels. Compare the amenities of the hotels on both pages as well as the star levels and locations. When you have a match of all components, then you will have revealed the brand! Shhh... this is a secret.
Priceline
Priceline will generally get you rates about 20% less than Hotwire, but 50% to 65% less than ALL conventional booking methods. This is only the “Name Your Own Price” function, by the way.
When you name your own price, a good place to start is the hotwire price for a similar hotel category, but discounted by 20%. Another good tool for deciding on a price is the website www.biddingfortravel.com On Bidding For Travel, members post what prices Priceline accepted for each city and which hotels they were assigned. Most likely, you will get placed at one of the same hotels the members of the website were placed in.
You’re technically only allowed to make one Priceline request in a 24 hour period, but the secret to getting around this is just using a different e-mail address for each request.
We use Priceline all the time, and routinely get the following rates just as a few examples:
Westin Downtown Los Angeles: $75/night
Century Plaza Los Angeles: $120/night
Westin New York Times Square: $125/night
Hilton Disneyworld: $65/night
By comparison, here are the discounted Expedia rates for the above hotels:
Westin Downtown Los Angeles: $249/night
Century Plaza Los Angeles: $279/night
Westin New York Times Square: $649/night
Hilton Disneyworld: $174/night
Many people worry about the quality of hotel they will get with Priceline since they can’t reverse the transaction once its done. The fact is, you are able to select the star level and location. If you MUST chose the exact hotel, then Priceline may not be for you. A good review of www.biddingfortravel.com will give you a good foresight of what to expect, however.
Priceline has rates just as spectacular across the globe. For me, it’s a personal favorite when looking for a 4-star hotel. When looking for a 5-star luxury hotel, I’ll either try the Hotwire trick posted above, or will just book the room directly through the hotel at the standard rate.
Trust me, the methods above are THE best ways for getting the cheapest hotel rates. Forget shopping around, and stick with the method given to us by the science of Revenue Management.
The reason it exists may sound complicated, but its going to get you a 4-star hotel room for $50!
Written By:
Alex Early
Founder & President
The Early Air Way, LLC
Revenue Management is a strategy used by providers of perishable products in tourism to maximize revenues. Effective revenue management requires accurate forecasting of demand and a keen knowledge of current costs published by the competition. When looking to buy a hotel room, Revenue Management is on your side through two vendors.
Hotwire, Inc. (www.hotwire.com)
Priceline.com, Inc. (www.priceline.com)
Hotwire and Priceline are unlike all other travel booking sites. Although both sites offer generic hotel booking capabilities that disclose the hotel brand, they offer something far more unique... the “brand blind” booking capability.
When participating hotels forecast empty rooms on a given date, they will allocate those rooms to brand-blind vendors such as Priceline and Hotwire. A brand-name hotel with a solid revenue management department will know almost undoubtably that those rooms WON’T SELL, and otherwise will represent revenue lost forever since a room night is perishable and can be sold just once. The hotel WON’T just drop the prices of its rooms however, because advertising such low rates could potentially bring down the public image of the hotel. If you saw $50/night rooms advertised for a particular 4-star Marriott for example, you might question the quality of the product; hotels know this. I’m here to tell you however that such rates do exist and can be obtained by anyone.
Revenues earned from bookings on Priceline and Hotwire are seen as extra revenue by the hotels as they know they that the rooms really should be empty. The cost MUST cover the housekeeping cost of course, which averages between $10 - $20 per day, per room.
Hotwire
Enter your reservation details into the hotwire system, and you are then presented with various options. The options will display the price, star level, amenities, and general location of the hotel. Remember, they CAN’T display the hotel names in order to protect brand integrity.
There is a secret to hotwire however that a client of The Early Air Way actually pointed out to us... YOU CAN REVEAL THE HOTEL BRAND! Basically, open up hotwire in a second window, and re-sumbit your search as a package “including airfare.” The departure city you select is irrelevant. On this page, you’ll see the names of the hotels. Compare the amenities of the hotels on both pages as well as the star levels and locations. When you have a match of all components, then you will have revealed the brand! Shhh... this is a secret.
Priceline
Priceline will generally get you rates about 20% less than Hotwire, but 50% to 65% less than ALL conventional booking methods. This is only the “Name Your Own Price” function, by the way.
When you name your own price, a good place to start is the hotwire price for a similar hotel category, but discounted by 20%. Another good tool for deciding on a price is the website www.biddingfortravel.com On Bidding For Travel, members post what prices Priceline accepted for each city and which hotels they were assigned. Most likely, you will get placed at one of the same hotels the members of the website were placed in.
You’re technically only allowed to make one Priceline request in a 24 hour period, but the secret to getting around this is just using a different e-mail address for each request.
We use Priceline all the time, and routinely get the following rates just as a few examples:
Westin Downtown Los Angeles: $75/night
Century Plaza Los Angeles: $120/night
Westin New York Times Square: $125/night
Hilton Disneyworld: $65/night
By comparison, here are the discounted Expedia rates for the above hotels:
Westin Downtown Los Angeles: $249/night
Century Plaza Los Angeles: $279/night
Westin New York Times Square: $649/night
Hilton Disneyworld: $174/night
Many people worry about the quality of hotel they will get with Priceline since they can’t reverse the transaction once its done. The fact is, you are able to select the star level and location. If you MUST chose the exact hotel, then Priceline may not be for you. A good review of www.biddingfortravel.com will give you a good foresight of what to expect, however.
Priceline has rates just as spectacular across the globe. For me, it’s a personal favorite when looking for a 4-star hotel. When looking for a 5-star luxury hotel, I’ll either try the Hotwire trick posted above, or will just book the room directly through the hotel at the standard rate.
Trust me, the methods above are THE best ways for getting the cheapest hotel rates. Forget shopping around, and stick with the method given to us by the science of Revenue Management.
The reason it exists may sound complicated, but its going to get you a 4-star hotel room for $50!
Written By:
Alex Early
Founder & President
The Early Air Way, LLC
Friday, September 12, 2008
Brandon To Spend Millions To Block BA/AA Deal
British Airways and American Airlines have been linked together as members of the OneWorld Alliance since 1998, when the OneWorld Alliance was originally created. Unlike most airline partnership agreements however, American Airlines and British Airways have had special restrictions on their partnership within OneWorld due to potential Anti-Trust violations enforced by the BAA at London’s Heathrow Airport for flights to/from The United States, specifically.
Because of said anti-trust restrictions, for the past decade, American and British Airways have not been allowed grant any of their perks to the opposite airline’s members for flights across the Atlantic to/from the United States. For example, if an American Airlines AAdvantage member were flying from Los Angeles to London on British Airways, he/she would earn NO miles in his/her AAdvantage account whatsoever. This follows suit for mileage redemption and elite benefits as well.
Following the recent US/EU OpenSkies Act that has significantly reduced government restriction on the Trans Atlantic market, American and British Airways have been fighting to have their restrictions lifted. American and British Airways have chosen the optimal time to fight these restrictions because the current trend in that market is lifting age-old government restrictions.
Founder and CEO or Virgin Atlantic Airways, Richard Branson, has said that he is prepared to spend millions of dollars to prevent the tie-up between American Airlines and British Airways.
If American Airlines and British Airways do in fact have their anti-trust restriction lifted and are allowed to be true program partners, thus allowing them to offer perks to eachothers members, create codeshare flights, and share internal pricing information; they will jointly share a dominating market share for the Trans Atlantic segment to/from London. The combined operation will offer the most frequent flight schedule, easiest use of frequent flyer miles, and will hypothetically be able to control the pricing for the entire industry crossing the Atlantic to/from London. Naturally, this will undoubtably be felt by Virgin Atlantic’s balance sheet.
Written By:
Alex Early
Founder & President
The Early Air Way, LLC
Because of said anti-trust restrictions, for the past decade, American and British Airways have not been allowed grant any of their perks to the opposite airline’s members for flights across the Atlantic to/from the United States. For example, if an American Airlines AAdvantage member were flying from Los Angeles to London on British Airways, he/she would earn NO miles in his/her AAdvantage account whatsoever. This follows suit for mileage redemption and elite benefits as well.
Following the recent US/EU OpenSkies Act that has significantly reduced government restriction on the Trans Atlantic market, American and British Airways have been fighting to have their restrictions lifted. American and British Airways have chosen the optimal time to fight these restrictions because the current trend in that market is lifting age-old government restrictions.
Founder and CEO or Virgin Atlantic Airways, Richard Branson, has said that he is prepared to spend millions of dollars to prevent the tie-up between American Airlines and British Airways.
If American Airlines and British Airways do in fact have their anti-trust restriction lifted and are allowed to be true program partners, thus allowing them to offer perks to eachothers members, create codeshare flights, and share internal pricing information; they will jointly share a dominating market share for the Trans Atlantic segment to/from London. The combined operation will offer the most frequent flight schedule, easiest use of frequent flyer miles, and will hypothetically be able to control the pricing for the entire industry crossing the Atlantic to/from London. Naturally, this will undoubtably be felt by Virgin Atlantic’s balance sheet.
Written By:
Alex Early
Founder & President
The Early Air Way, LLC
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