United Thinks the Future Looks Like 2023

Good morning from Skift. It’s Thursday, April 20. Here’s what you need to know about the business of travel today.

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Episode Notes

Airline executives, like everyone else, were unable to predict the future of the industry when the pandemic struck in 2020. But United Airlines believes 2023 will give the company a clearer picture of its post-pandemic future, reports Contributor Madhu Unnikrishnan.  

Despite United’s challenging first quarter, Unnikrishnan writes the Chicago-based carrier believes it spotted a noticeable trend during the period. CEO Scott Kirby said during its first quarter earnings call on Wednesday that business travel, historically strong in January and February, hasn’t yet returned to 2019 levels. Kirby added there’s a clear change in seasonality, noting the airline expects both business and leisure demand to peak between March and October. 

United reported $11.4 billion worth of revenue during the first quarter. That’s a 51 percent increase from the same period last year. But the airline lost $256 million during the quarter. 

Next, a growing number of major hotel companies, including Hyatt and Marriott, have launched extended stay brands in recent months. The pioneer U.S. company in the segment, Extended Stay America, is confident it can hold its own against its rivals though, reports Senior Hospitality Editor Sean O’Neill. 

Extended Stay America CEO Greg Juceam cited the company’s extensive experience as a reason for its confidence. Juceam claimed Extended Stay America is essentially the only brand purposely built for extended stay guests, which he said gave it insight on how to effectively serve them. He added the Extended Stay America has no plans to go upscale unlike its competitors.

O’Neill also writes the company’s new owners have made franchising a priority in part because franchising expands its portfolio faster than buying hotels. Juceam said most of its pipeline is currently dedicated to Extended Stay America Premier Suites, a franchise brand it created in 2021. 

Finally, American Airlines recently shook up its airfare strategy to help it gain more control over their distribution. But that move has caused travel agents to see steeper airfares in some of its smaller hubs if they aren’t using the airline’s preferred method of distribution, reports Corporate Travel Editor Matthew Parsons. 

American transferred 40 percent of its airfares to channels powered by the so-called New Distribution Capability, a technology that grants airlines more power over their content. American also offered higher airfares if travel agents insisted on accessing the airline’s airfares through what it describes as third-party legacy technology platforms. Parsons notes many corporate travel agencies still book flights through those platforms that American disparages.

American has raised non-New Distribution Capability fares more in smaller hubs such as Miami and Chicago compared to its larger ones, according to business travel platform AmTrav. American refuted that it raised fares, but the carrier acknowledged differences in pricing due to the changes in technology it made.