Skift Travel News Blog

Short stories and posts about the daily news happenings around the travel industry.

Short-Term Rentals

Booking Holdings Is Compensating Hosts and Partners for Payments Failure

7 months ago

The problem surfaced in late Summer — Booking.com’s short-term rental hosts in Europe, Asia-Pacific and Latin America cited financial hardships because the company wasn’t paying them for guest stays.

A condo hotel that was listed on Booking.com. Source: Booking.com

CEO Glenn Fogel told financial analysts last week during Booking Holdings’ third quarter earnings call that Booking.com would begin letting partners know that compensation is on the way.

Missed Host Payments

“During the quarter, some of our partners at Booking.com experienced delayed payments due to a planned upgrade to our finance and payment platforms in early July,” Fogel said. “We’ve now cleared the backlog of outstanding payment issues related to the system upgrade. We plan to provide compensation to partners who experienced an extended delay, and we recorded this in our Q3 results. We plan to communicate to all partners who were impacted by these payment delays within the next few days.”

The company won’t specify precisely how much it would be shelling out to hosts as compensation.

A spokesperson said the amount of the payments are “meaningful, not material.”

In-House Payment System Is Strategic Priority

When the reports of missed payments for hosts first surfaced several months ago, the company downplayed the issue.

But in addition to the financial pain it inflicted on hosts, the snafu was an embarrassment to the company because it has been developing its own payments system over the last few years as a strategic imperative.

Pain for Hosts

Fogel discussed the issue with this reporter at Skift Global Forum in September.

Fogel: We did a very, very large change in our backend financial systems. Some things didn’t work so well. You do everything you can to make sure it’s going to be perfect. Wasn’t. Some people didn’t get paid a very, very, very small percentage. But even one person is one too many.

We have two types of customers. We’ve got the travelers and we’ve got the partners. And if we don’t provide good service to them, that’s on us. We screw it up, and there were mistakes. And if you don’t pay a very large company so much, well, it’s not a big deal.

By the way, in our agency business where we get paid by the partner who sends us money afterwards our commission, sometimes we don’t get paid on time either. So 30 days late, 60 days late, 90 days late, and during the pandemic, we didn’t get paid at all. Happens. This is not a pandemic, this is a mistake. And the thing is, for the smaller partners, partners that were really depending on that payment, I just felt so horrible.

Schaal: What kind of redress can you have for them?

Fogel: First thing is get their money as fast as you can, as fast as you can. And I’ll tell you, I get emails and I’ve read them and they are really heartbreaking. You just feel horrible when you do something wrong. And we have fixed it, it’s good now. But I’ll tell you, this is something where I say to the team, and I say that … I spoke out at a town hall for all of our 20 something thousand employees.

And I told them about this. I said, “Look, this is not the way we want to be. We got to do better. We should not ever, ever feel that this is OK.” Well, it’s only a small number of partners. That’s the wrong attitude. It’s always got to be, every partner counts. So the lesson from it was we have to do better.

Hotels

Scandic Hotels ‘Stronger Than Ever’ With $50m Profit in Third Quarter

7 months ago

Scandic Hotels Group has posted its third-quarter results today, with a $49.9 million net profit (559 Swedish krona) and a level of indebtedness that continues to shrink.

“We have delivered another record-breaking quarter and Scandic is standing stronger than ever. Scandic is continuing to make progress in increasing growth and has gradually become a more efficient and profitable company,” said president and CEO Jens Mathiesen.

Scandic operates 55,969 rooms across 269 hotels in the Nordics and wider Europe. The vast majority of its hotels are through long-term lease agreements with other operators, though, as Mathiesen states, an increasing chunk of the network is becoming Scandic’s own brands.

In September, Scandic opened its first Scandic Go with 124 rooms in Stockholm, it also signed two hotels under its Signature Collection that same month.

“We are now focused on growing our hotel portfolio with a stronger organization and intensified cooperation with property owners. For the fourth quarter, we expect occupancy at par with the same period last year at a higher average price per room,” added Mathiesen.

Looking at hotel-specific metrics, the quarter saw some of the highest revenue per available room (RevPAR) and average daily rate (ADR) levels on record for Scandic. RevPAR was up 6.5% compared to last quarter at $83.4 (933 Swedish krona) while ADR was up 5.7% to $117.4 (1,313 Swedish krona).

As of September this year, Scandic’s debt stood at $173.9 million (1.9 billion Swedish krona).

Becoming A Better Company

Mathiesen said in the earnings call that the company has remained focused on efficiency and costs post-pandemic, owing this approach to the group’s strong quarter.

He said: “There’s been a lot of prioritizations of our resources. We are on top of the market when it comes to gaining and taking advantage of opportunities [such as] OTAs and online sales. We are focused on being agile and speedy in our commercial activities.”

“We want to have the best version of everything thing we do. We’re always looking for opportunities to become stronger.”

As for next year, the CEO was hesitant to make any big promises, but said his group would benefit from the strong macro environment of global hospitality. He said: “Right now, globally, the hospitality market is doing extremely well. We’re keeping up a high momentum. There’s a willingness to prioritize traveling and events. It’s holding up. When we look into next year, that’s what we expect. We are well prepared.”

Hotels

Generator Hostels’ Forecasts 50% Jump in Earnings as Budget Travelers Seek Deals

8 months ago

Generator Group, which owns or runs 21 hotels, gave a financial update on Monday that underscored the post-pandemic boom in travel.

London-based Generator Group forecasted that it’s on track to produce revenues of about $238 million (€225 million) this year — which would represent a 25% jump over the company’s revenue in the pre-pandemic year of 2019.

The privately held company anticipates this year it will produce earnings before interest, tax, depreciation, and amortization of about $80 million (€75 million). That would represent a 50% jump in earnings compared with 2019 — highlighting strong pricing power in so-called “compression,” or high-demand, markets.

PE-Backed Hostels

Private equity firm Queensgate Investments bought Generator for $480 million (€450 million) in 2017, and the group’s flagship brand is Generator, a set of premium economy hostels. Queensgate spent about $400 million in 2019 to acquire Freehand Hotels, which operates properties in New York, Chicago, Los Angeles, and Miami, and folded that into the group.

Generator said it has nearly 12,000 beds in ten countries. It told the Financial Times, “in the next year, it is planning to launch 10 more sites worldwide under an asset-light model where it does not own the long-term lease, including a new hostel in Bangkok.”

Queensgate is a part or whole owner of nine Generator-run properties. Generator also acts as a management company for other hostels.

For more context on Generator’s strategy, watch the interview with its CEO from last year’s Skift Global Forum East (below) or read Skift’s piece Generator’s Takeover of Paramount Hotel in Times Square Is Part of Broader Hostel Reboot.

Hotels

Hotel Brand Selina Sees Upswing in Financial Performance

9 months ago

Selina, a hotel and experiences brand focused on youth travelers, said on Wednesday that its financial metrics were trending in the right direction as it reported earnings results.

In the second quarter, the company generated $52.5 million in revenue, a bump of 15.9% year-over-year. Factors included higher occupancy rates, reductions in corporate overhead, and essentially higher revenue per customer.

The company also narrowed its losses. It reported $700,000 in adjusted earnings before interest, taxes, depreciation, and amortization, compared to a $5.8 million loss in the same period a year ago.

Selina said it was “aggressively executing a comprehensive real estate portfolio optimization plan” that “includes renegotiating all leases through abatements, deferrals, and terminations.”

In the quarter, the company also collected $10 million as the first phase of a planned strategic investment of up to $50 million led by Global University Systems (GUS), which runs for-profit universities. It also drew $10 million under its $50 million credit facility with Latin America’s Inter-American Development Bank (IDB).

Selina’s stock price dipped below $1 last month, where it has remained. If Selina’s stock remains below $1 for about a month, the Nasdaq exchange will issue a notice of a plan to delist the shares from trading. Selina will then have 180 days to push the value of shares higher.

The company aims to report a continued upward trend, which could appeal to investors.

“Selina continues to focus on three key strategic areas: improving cash flow, advancing toward profitability, and building our brand,” said Rafael Museri, co-founder and CEO, in a statement.

Selina's earnings report

Airlines

AirAsia in the Black But Recovery Slowed by Aircraft Market Shortages

9 months ago

Southeast Asian budget airline AirAsia was back in the black in the second quarter but its rebound was slowed by the global shortage in aircraft parts and other supplies.

The aviation business of Malaysia-based Capital A, which includes subsidiaries in Indonesia, Malaysia, the Philippines, and Thailand, posted an earnings before interest, taxes, depreciation, and amortization (EBITDA) profit of $87 million (405 million Malaysian ringgit) in the June quarter. That was more than double the result last year, and down just 7% from its 2019 profit. The group took full control of its four subsidiaries, consolidating them under the AirAsia Aviation Group name, during the quarter.

The profit growth was buoyed by unit revenues, or the amount AirAsia makes flying a passenger one kilometer, that were up 32% from 2019 levels. Lower than expected capacity, which stood at 74% of pre-Covid levels, helped drive the unit revenue increase.

An AirAsia plane
(Laurent ERRERA/Wikimedia Commons)

The airline flew just 146 aircraft at the end of June, or about 54 fewer than in 2019. It attributed that number to the supply chain shortages affecting the industry globally and added maintenance needs as it fleet ages.

AirAsia plans to reactivate its remaining 54 aircraft by the end of the year, it said. A new subsidiary in Cambodia, AirAsia Cambodia, is set to launch imminently, AirAsia Aviation Group CEO Bo Lingam said.

The airline is preparing for its seasonally stronger third and fourth quarters, with unit revenues expected to rise through the end of the year. That could drive higher revenue and profits at Capital A as long as potential cost increases do not exceed the revenue improvements.

Capital A as a whole reported an EBITDA profit of roughly $100 million. And while its airlines were by far its largest businesses, newer segments like its Superapp saw revenue double from last year to $19 million; EBITDA profit for the app business was $8.6 million.

Hotels

IHG to Launch Midmarket Hotel Brand Designed to Grow Quickly

10 months ago

IHG Hotels & Resorts revealed on Tuesday that it has been pitching hotel owners on a new brand addressing an opportunity in the middle of the market it said is underserved.

“Our aim is that this new conversion brand will become the first choice for guests and owners in the midscale segment, accelerating our growth in a space that is already worth $14 billion in the U.S. market alone,” said CEO Elie Maalouf during remarks tied to the company’s quarterly earnings.

The Windsor, UK-based hotel group — whose brands include Holiday Inn, Crowne Plaza, and Six Senses — didn’t reveal the name of the new brand, which has become IHG’s 19th brand, or other details.

“We’re delighted that more than 100 hotels have already expressed definitive interest in the new brand,” Maalouf said.

Designed for Fast Growth

Maalouf likely wanted to prioritize a conversion brand over a new construction brand to help address IHG’s need to maintain steady growth in its hotel pipeline.

Unlike new-build brands that take time to grow because of construction delays, conversion brands can expand quickly, especially as many independent hotel operators or owners of properties flagged with older brands seek a refresh.

“Conversions represent a major growth opportunity for us, generating around 40% of first-half openings and signings globally,” Maalouf said.

Addressing the Mid-Market

The new brand is Maalouf’s first big move as CEO, having taken the top job last month.

Maalouf had previously led the group’s North American business for 8 years. During that time, he showed an interest in mid-market growth.

Maalouf led his team in debuting the new brand Avid, in 2017, which he said at the time targeted “a vastly underserved $20 billion segment of the U.S. midscale market.” Avid charges roughly $10 to $15 a night less than Holiday Inn Express, IHG’s midscale leader, and less than Candlewood Suites, IHG’s other mid-scale brand. (The difference in market size figures Maalouf has quoted refers to different segments of the overall mid-market.)

Given Maalouf’s sense that the mid-market is underserved, he has prioritized putting another IHG brand on the grid. That said, IHG’s board (on which he’s been a member for years) approved of this initiative before Maalouf became group CEO.

The hotel franchisor already has upper midscale with Holiday Inn and Holiday Inn Express, so the new brand is likely more affordable.

IHG expects to target around a 25% lower cost per room to convert to the new brand than that for Holiday Inn Express.

Facing Rivals

IHG’s rivals have also been looking at the middle of the market.

  • In June, Marriott International said it would expand into the “affordable midscale” hotel category in North America with a new hotel brand — which it hasn’t yet named. The move came after earlier this year, when it completed its acquisition of City Express, a midscale brand focused on Latin America.
  • Hilton CEO Christopher Nassetta said in his second-quarter earnings call that the “mid-market” was what he coveted long-term. “We’re not ashamed of saying we have every intention to have the best brands in every market to serve the mid-market because we think that’s where the most money will be made over the next ten or 20 or 30 years,” Nassetta said.
  • In May, Hyatt unveiled a new brand, Hyatt Studios, in the upper-midscale segment.

Hotels

Scandic Hotels Expects Strong Third Quarter With Steady Travel Demand

11 months ago

Scandic Hotels Group began the hotel earnings season with a financial update on Friday, voicing optimism about travel demand despite recent inflationary pressures.

“We expect a strong third quarter with high demand and increasing prices,” said president and CEO Jens Mathiesen on an investor call.

Scandic runs 55,930 hotels in Scandinavia and other European countries under the Scandic, Hilton, Holiday Inn, and Crowne Plaza brands — mostly under long-term leases. Friday was the 60th anniversary of the Stockholm-based company, one of Sweden’s most well-known brands.

“We expect a strong third quarter, driven by continued high levels of leisure travel during the summer as well as business travel and meeting gaining momentum in the latter part of the quarter,” Mathiesen said. “So based on the current booking situation, we expect occupancy to be on par with the same period last year, but also continuing at higher average prices per room.”

In the second quarter, the company enjoyed record high revenue per available room, or RevPAR — a key industry metric.

scandic hotels financial presentation july 2023 screenshot

In the second quarter, Scandic generated a profit of about $26 million (271 million Swedish krona) on net sales of about $556 million (5.69 million Swedish krona).

The hotel group has one of the lowest levels of indebtedness of any publicly held competitor. As of the end of June, it had net debt of 2.8 billion Swedish krona, which was only 1.1 times its adjusted earnings before interest, taxes, depreciation, and amortization on a rolling one year basis.

The company recently entered the economy segment with Scandic Go, a brand with 221 compact hotel rooms. The brand’s design aims to drive more room revenue per square meter at a lower capital expenditure and labor cost on average than its other brands. The new brand’s first property will open next summer.

Hotels

Choice Hotels Opens Properties at Faster Pace and Reaffirms Profit Outlook

11 months ago

Choice Hotels, a U.S.-based franchisor, said on Tuesday it had opened an average of more than four hotels a week in the first half of 2023 — a 39% jump year-over-year. The steady onboarding of properties was one reason it reaffirmed its profit forecast for the year despite some industry concerns about leisure demand patterns in the U.S. going into reverse.

Choice Hotels opened 107 hotels in the first half of the year, with an increase in conversion hotel openings of 45% and a rise in new construction hotel openings of 24%. The gains were impressive in a hotel sector where interest rate uncertainty had raised concerns about the willingness of banks to endorse hotel development.

The first-half openings growth was across all segments. Openings in the upscale segment were by 83%, the midscale segment by 42%, the extended stay segment by 50%, and the economy segment by 11%.

“The company remains optimistic about extended stay franchise business growth and expects the number of its extended stay units to increase at an average annual growth rate of more than 15% over the next five years,” it said in a statement.

The positive news helped the company re-commit to its previously provided financial guidance for full-year 2023, where it forecasts net income — a measure of profit — of between $255 and $265 million.

The news is positive at a time when analysts have become more cautious about the hotel sector. For more context, see “Analysts Pare Back Enthusiasm for Hotel Companies.”

Investors closely watch trends in another metric, adjusted earnings before interest, taxes, depreciation, and amortization (EBITDA). The news on that front was also positive relative to its peers.

“In 2024, Choice Hotels expects to generate more than 10% adjusted EBITDA growth at the midpoint, year-over-year, driven by approximately $20 million in incremental contribution from [the merger with] Radisson Hotels Americas as well as organic growth in more revenue intense segments and markets, strong effective royalty rate growth, and other factors.”

For more, see “Choice Hotels’ Brands, Explained.”

What is Choice Hotels?
Choice Hotels International, Inc. is a hotel operator based in Rockville, Maryland. The company operates nearly 7,500 hotels spanning 22 brands, including its flagship upper-midscale brand Comfort and roadside midscale brand Quality Inn. The company’s strategy consists of expanding its portfolio with hotels that generate higher royalties per unit, meaning higher-end properties. In addition to this, Choice Hotels also has a loyalty program known as Choice Privileges.

These are the most relevant articles I found:

Morgan Stanley Flags Headwinds for Hotel Companies – 06/30/2023

Choice Hotels Explores Buying Wyndham: Report – 05/23/2023

The Wyndham-Choice Merger Skeptics – 05/25/2023

Tourism

Dufry Earnings Boosted by Autogrill Integration

1 year ago

Swiss duty-free retailer Dufry on Wednesday reported a 113.4% jump in first-quarter turnover, supported by its acquisition of Italian motorway caterer Autogrill.

The retailer, which operates more than 2,300 shops at airports, on cruise liners, in seaports and other tourist locations worldwide, has benefited from a strong rebound in global travel, particularly in Europe and the U.S., since pandemic-related lockdowns were lifted.

The company reported a 113.4% jump in its first-quarter turnover to 2.35 billion Swiss francs ($2.64 billion), compared with 1.12 billion a year earlier.

Sales in the Asia-Pacific region soared 276.9% in the quarter, driven by the easing of restrictions in China.

The quarterly sales were 10% ahead of consensus, J.P.Morgan analyst Harry Gowers said in a note, but added no changes to outlook might dampen the share reaction.

“We wouldn’t be surprised if the shares are muted today having had a strong rally into results and no upwards changes to guidance,” Gowers said.

Dufry expects positive developments throughout 2023, but said it maintained a “prudent approach”, considering potential changes in the economic environment, operational challenges and impacts on consumer sentiment and travel spending.

Its shares were flat in early trading.

Dufry completed the deal to buy a 50.3% stake in Autogrill from Edizione in February, followed by a mandatory takeover offer for all shares.

“Autogrill integration and initiatives to realise full synergies underway,” it said, adding the mandatory offering was progressing as planned. ($1 = 0.8889 Swiss francs)

(Reporting by Ozan Ergenay and Anastasiia Kozlova in Gdansk; Editing by Kim Coghill, Milla Nissi and Louise Heavens)

Copyright (2023) Thomson Reuters. Click for restrictions

This article was from Reuters and was legally licensed through the Industry Dive Content Marketplace. Please direct all licensing questions to [email protected].

Tags: earnings

Hotels

MGM Resorts CEO Thinks Dubai or Abu Dhabi Might OK Gaming This Year

1 year ago

Executives at MGM Resorts International are hopeful that gaming may be approved by the United Arab Emirates, possibly as soon as this year.

The Las Vegas-based casino and hotel operator announced back in 2017 its plans for an MGM Resort in Dubai that wouldn’t have gaming but would instead have 1,000 rooms and 10 villas. Yet executives sounded more hopeful about running a casino in a Gulf State someday when talking with analysts during the company’s first-quarter earnings on Monday.

“As it relates to Dubai, that property continues to evolve,” said Bill Hornbuckle, president and CEO. “We’re the managers, but the owners want to upgrade the property, I think, with gaming in mind. But it’s up to Abu Dhabi and the national government to ultimately decide. … We’re hoping ‘any day.’ But I got to believe as the summer fulfills itself, we’ll hear more news on that.”

“We have had people on the ground there basically nonstop since the first of the year, trying to understand the opportunity in Abu Dhabi and then ultimately, if it will open up,” Hornbuckle said. “If they pass on it, [the opportunity] will open up to the other Emirates. Whether the rulers of each Emirate then take it upon themselves to approve it is up to them.”

“Obviously, we’re focused on Dubai, and we think it would be ideal,” Hornbuckle said. “There happens to be 150,000 to 200,000 square feet of space that could be converted into such a thing. But time to tell there, and we’re not saying no to Abu Dhabi either.”

MGM already has competition on the non-gaming front. Wynn is spending $3.9 billion in the region, as Bloomberg reported this week, noted Alan Woinski, editor of The Gaming Industry Daily Report and Skift’s Daily Lodging Report. The Wynn property is on an island and is said to have a “gaming area” though this doesn’t seem to have been approved yet.

Here are other key points about the operator of 32 hotels and casinos in the U.S. and Macau.

Expansion Continues

In April, the company received approval of its development plan in Osaka, Japan. MGM and its partners Orix hope to start building the nearly $10 billion integrated casino resort, with an opening now expected in 2030.

MGM’s application process in New York is “progressing,” the company said.

Hotel Boom:

In the first three months of the year, the overall MGM Resorts company generated $467 million of net income on revenue of $3.9 billion.

Its Las Vegas Strip resort hotels, in particular, generated $752 million in revenue. That was thanks to a mix of strong pricing — with rates 31 percent higher than a year earlier — and an average occupancy of 92 percent.

There’s further room to grow, executives said, if Chinese and other Asian travelers come back to Las Vegas in large numbers. In the first quarter of 2019, Asian Pacific customer made up about 45 percent of its business, while now they’re currently only about 25 percent.

“So if that comes back, from that perspective, it would be pretty meaningful,” said Corey Sanders, chief operating officer.